Ahead of its Oct. 22 scheduled meeting to start procedures on the removal of CEZ’s licence in Albania, ERE officials say CEZ’s failure to import electricity to cover its grid losses is the key concern
TIRANA, Oct. 17 – Failure to import electricity for its grid losses, debts to state-owned power companies and lack of investments are the three main reasons the Energy Regulatory Entity (ERE) intends to strip CEZ Shperndarje, a subsidiary of Czech Republic CEZ Group, from its power distribution licence in Albania. Ahead of its Oct. 22 scheduled meeting to start procedures on the removal of CEZ’s licence in Albania, ERE officials say CEZ’s failure to import electricity to cover its grid losses is the key concern.
“CEZ has a legal obligation to import the total amount of electricity losses in the distribution network, an obligation which it is not fulfilling. This is the main reason, other violations to the terms of the licence include failure to pay debts to state-owned KESH power corporation and OST transmission operator. There is also the issue of lack of investments which we are monitoring on the ground,” Entela Cipa, an ERE representative told reporters.
ERE’s refusal to allow CEZ put the distribution system’s assets as collateral for a Euro 100 million loan from the EBRD and the IFC has further aggravated its relations with the regulatory watchdog.
Three and a half years after taking over Albania’s distribution system management, CEZ has failed to lower its network losses which according to latest INSTAT data climbed to 50 percent in the first half of 2012, twice higher than planned.
Government’s latest move of cutting 2.5 billion Euro (17.5 mln) in unconditional grants to local government units because of debts water supply companies under their administration owe to CEZ Shperndarje operator is a sign no drastic measures will be taken against CEZ which has faced two huge fines this year.
Apart from forcing municipalities and companies to pay debts to CEZ, the normative act also set a Euro 40 million guarantee for state-owned power corporation KESH to compensate lack of imports by CEZ Shperndarje to cover its distribution grid losses.
Facing a reduction in domestic hydropower generation because of lack of rainfall, the Albanian electricity system has plunged into a chain of debts involving KESH, CEZ and local government institutions.
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 with imports. 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.
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.
CEZ Shperndarje, a subsidiary of Czech-Republic based CEZ Group has been operating the Albanian distribution network since 2009 when it signed a contract with the Albanian government buying the former OSSH 76 percent majority stake for 102 million Euros.
