CEZ may lose over $500 mln in next 3 years

TIRANA, May 9 – Distribution electricity operator CEZ Shperndarje may face losses of up to 10.15 billion crowns ($523 million) over the next three years because of a regulatory decision on electricity tariffs in Albania, the company said in its 2011 annual report as quoted Czech media.
CEZ has been locked in conflicts with the Albanian government over prices its 76 percent-owned subsidiary in the country can charge final customers.
“CEZ Shperndarje Sh.A challenged the decision on tariffs after its publication in an official gazette. The company would record a negative impact of up to 10.15 billion crowns in 2012-2014 as the result of the application of the new tariffs,” CEZ said.
CEZ said this included 6.5 billion crowns worth of uncollectible receivables from customers. The distribution operator says that under a 2009 privatisation deal that brought CEZ into Albania, these should be reflected in regulatory decisions on tariffs.
CEZ has complained that regulatory decisions in Albania force it to sell power under cost, following a rise in prices CEZ has to pay to producers that was not reflected in the tariffs it can charge customers.
It has asked the World Bank to seek action from the Albanian side or face a payment on its 60 million euro guarantee related to the privatisation.
State-controlled ČEZ paid Euro102 million (approximately Kč 2.8 billion) for a 72 percent stake in the Albanian power distribution monopoly in 2009. According to the Czech daily Lidov noviny (LN), the 91 percent tariff hike introduced by the Albanian state power company at the end of last year is set to cost ČEZ around Kč 3.5 billion over the next three years. The projected loss is also based on the fact that Shp쳮darje has not been allowed to raise power prices for end consumers.
ČEZ says it faces further losses of up to Kč 6.5 billion as a result of the Albanian state power company and the country’s government refusing to allow distributor Shperndarje to pass the cost of loses from the distribution network נcaused by technical shortcomings and theft נand unpaid debts, to consumers.
The Czech power major says it is now preparing to appeal to the World Bank which provided a guarantee for its Albanian investment and if successful would receive around 60 million in compensation. ČEZ would then have to launch arbitration proceedings against the Albanian state to recuperate the remainder of the loss on its investment and for compensation on loss of profits.
“In a legal dispute we will demand compensation for damages which could in the coming years potentially arise unless there is a resolution of the situation concerning regulation of electricity prices,” ČEZ spokeswoman Eva Nov⬯vᡴold LN, adding that the firm hopes an amicable resolution will be found out of court.