CEZ signs contract for OSSH

TIRANA, March 11 – The Czech CEZ group and the Albanian Government signed on Wednesday the contract for the sale of 76 percent of Albania’s Electricity Distribution Company, or OSSH, for 102 million Euros.
CEZ selected in October 2008 as the winning bidder by the tendering commission. The decision was then confirmed by the Albanian Government after further consultations. IFC, a member of the World Bank Group, advised the Albanian Government about structuring the transaction and executing an open, transparent and competitive bidding process. The transaction is expected to be completed in the next few months.
“The selection of CEZ will significantly improve the supply of electricity in Albania, which will lead to increased customer satisfaction,“ said Albanian Energy Minister Genc Ruli also assuring local costumers there would be no rise in prices this year.
“For CEZ it is another step in consolidation of our position in the region of Southeastern Europe. From a long-term point of view analysts expect that the electricity consumption in Albania will grow by 5 % each year; a faster rate in the region is experienced only in Turkey where the CEZ Group operates as well,” said Martin Roman, Chairman of the Board and CEO of CEZ, in a comment on the signing of the transaction,
“CEZ Group has long-term and deep experience with distribution companies restructuring in the Czech Republic, Bulgaria and Romania. We are happy to offer this know-how for the benefit of the Albanian electricity distribution sector,” added Vladimir Schmalz, CEZ’s Director of Mergers and Acquisition during the signing ceremony.
In Albania the CEZ, which also operates in the Czech Republic, Bulgaria, Romania and Turkey, will attend to nearly a million of customers with an annual gross electricity supply of 5.3 TWh.
Albania has lately been affected by a devastating deficiency of electricity, in particular due to the absence of investment in power development in the last decades. The annual volume of imported electricity varies according to the availability of hydroelectric power plants in the country; in 2007, Albania imported approximately 40 % of its annual consumption.
Camille Nuamah of the World Bank said that “Today’s achievement is a major one for Albania, and one of the most important reforms taking place in the country in the last few years.”
The performance of the electricity distribution has been affecting the whole sector resulting in black outs for households, firms and state bodies, and fiscal challenges for the government, using funds that the state could spend more effectively to provide health, education and social assistance for Albanians that face hardships.
CEZ is expected to reduce losses over the next five years and also increase collections.
“However, we also emphasize that the agreement signed today is a first step and will become effective only when a number of conditions are met,” Naumah added.
Post-communist Albania has suffered frequent power cuts because of lack of rain for existing hydroelectric stations that produce the bulk of its electricity consumption, an outdated distribution system, and high consumer bills.
Multi-billion-euro projects have been signed in recent months with Italian companies to build alternative power plants.