The Energy Regulatory Entity (ERE) has postponed a meeting to start procedures on removing the licence of CEZ Shperndarje distribution operator for Oct. 22
TIRANA, Oct. 11 – The cut of annual funds to local government units because of debts owed to private CEZ Shperndarje distribution operator has put many municipalities and communes around the country into serious financial difficulty. Under a normative, government has frozen a total of 2.5 billion lek (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. The decision favours CEZ which has been facing severe financial difficulty, failing to make even compulsory imports for its grid losses last September.
Speaking at the parliamentary economy committee, deputy Finance Minister Nezir Haldeda described the government decision as harsh but necessary. “With this intervention we testify to CEZ and KESH that we try to be fair in fulfilling our obligations,” added Haldedaj.
Opposition MPs described the government decision to cut funds as a collapse to the local government units which they say won’t be able to pay their staff wages not to mention investments and services to citizens. The intervention also affects private companies contracted by local government units. Opposition Socialist Party MP and former Finance Minister Arben Malaj suggested a reschedule of debts as a solution which can be reached between local government units and CEZ. The decision has had immediate impacts on some municipalities. The Permet Municipality in southern Albania says it has temporarily suspended work because of lack of funds even to pay its staff.
Finance Ministry data show local government revenues in the first eight months of this year were 8.1 billion lek while expenditure at 17 billion lek.
Apart from forcing municipalities and companies to pay debts to CEZ, the normative act also sets 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.
On Thursday this week, the Energy Regulatory Entity (ERE) postponed a meeting to start examining a proposal on the removal of licence for CEZ Shperndarje, a subsidiary of Czech-Republic based CEZ Group which has been operating the Albanian distribution network since 2009 when it signed a contract with the Albanian government buying the former OSSH majority 76 percent stake for 102 million Euros. CEZ will be required documents on the investments it has made and the level of grid losses.
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.
