Government has authorized Power Corporation KESH to secure power imports until Dec. 31. The bill of imports for distribution losses will be covered by CEZ Shperndarje private distribution operator.
TIRANA, Oct. 2 – Government has warned Czech-owned CEZ Shperndarje power distribution operator it will face new penalties if it does not fulfill its legal obligations to secure imports for grid losses. The warning came by Finance Minister Ridvan Bode who called on the distribution operator to fulfill its privatization contract.
CEZ failed to make energy imports last September because of its difficult financial situation, forcing power corporation KESH to generate electricity at a maximum capacity which led to water levels in Fierza lake in the northern Drin cascade dropping to 260 metres, only five metres above the hydropower plant’s stoppage point.
“We have a Regulatory Entity which is independent of government and is dependent on Parliament and we are ready to undertake every measure that the Regulatory Entity will undertake at a certain moment. The Entity operates based on law. We have a privatization contract with this company and the fulfillment of reciprocal obligations is indispensable,” said minister Bode, concerned that subsidies to KESH will further aggravate public debt, already at the legal ceiling of 60 percent of the GDP.
Under a government decision made on Wednesday, government authorized Power Corporation KESH to secure power imports until Dec. 31. The bill of imports for distribution losses will be covered by CEZ Shperndarje private distribution operator.
Officials say the deteriorating situation in the northern Drin cascade could force government to award a subsidy of up to USD 50 million to help KESH buy power for the remaining of the year. In early 2012, government awarded KESH a 2 billion lek loan to secure emergency electricity imports.
Few weeks ago, Albania’s Energy Regulatory Entity (ERE) fined Czech-owned CEZ Shperndarje distribution operator 430 million lek (Euro 3 million) because of failing to cover grid losses. In a recent decision, the energy watchdog said it fined CEZ Shperndarje 1 percent of its annual turnover as the company did not buy energy to cover all losses in the distribution grid for 2012. Data show distribution grid losses accounted for 95.5 percent of total losses in the first half of 2012. Total power losses rose by 50 percent in the first half of 2012, according to INSTAT.
CEZ had previously notified ERE it could not continue with imports because of its severe financial situation also affected by a huge Euro 30 million fine imposed by the tax inspectors over VAT payments.
CEZ officials say the company’s financial situation remains complicated and planned investments are endangered.
CEZ hires UK-based legal firm
Recent disputes with the Albanian government over lack of imports and fines have forced CEZ Shperndarje to hire U.K.-based law firm Schindlers to negotiate its issues.
“The company is seeking through the hiring of Schindlers to help defuse tension in the manner of communication and take the necessary steps to resolve the situation in Albania,” CEZ Shperndarje said, describing Schindlers as experienced strategic negotiators who would help end the dispute, which it said was of a legal rather than a business nature.
