State administrator Sahit Dollapi said CEZ Shperndarje had paid off USD 181 million out of USD 208 million in debts the distribution operator owed to third parties
TIRANA, July 9 – The Energy Regulatory Entity (ERE) has called on CEZ Shperndarje distribution operator which since January 2013 has been under state administration after CEZ Group had its Albania licence revoked, to resume electricity imports for its grid losses. In a meeting held on Monday, ERE commissioners described CEZ’s failure to meet its legal obligation to cover the huge losses in Albania’s distribution grid as unacceptable.
“This is a concern which must be given a quick solution by the company which has to fully cover losses in the distribution grid with electricity imports.” Grid losses in the Albanian dilapidated distribution grid stand at around 50 percent, most of which in unpaid electricity bills and thefts from illegal connections.
Since late 2012, when CEZ Shperndarje under Czech management declared its financial inability to make electricity imports for its grid losses, electricity imports have been carried out by state-owned KESH power corporation.
In late 2012, the country’s Energy Regulator fined CEZ Shperndarje 430 million lek (around Euro 3 million) because of its failure to import electricity.
CEZ’s state administrator Sahit Dollapi, said the distribution operator had not made electricity imports in order to pay off debts to other companies.
“I believe that that by early next August we will be able to pay off all old debts to other companies except for CEZ Group,” said Dollapi.
Reporting on CEZ’s situation under state management, Dollapi said the company’s bill collection and grid losses have improved but slightly deteriorated last June during the general elections.
CEZ distribution operator has launched a nationwide campaign after the June 23 general elections to cut off power to debtor customers and disconnect illegal connections.
Meanwhile, Socialist Party MP Erjon Brace has denounced what he describes a theft scheme involving companies with close connections to government who he says benefitted Euro 1.5 million for the collection of debts in the second half of 2012 at commissions ranging from 23 to 54 percent.
CEZ pays USD 181 million in debts
CEZ Shperndarje distribution operator says it has paid off the overwhelming majority of debts it owed to third parties during five months under state management. Introducing the company’s situation, state administrator Sahit Dollapi said CEZ Shperndarje had paid off USD 181 million out of USD 208 million in debts CEZ Albania subsidiary owed to third parties.
“The company has up to now paid USD 181 million of which USD 60 million to KESH Power Corporation, USD 20 million to OST transmission operator and USD 30 million in outstanding and new bills for electricity imports,” said Dollapi.
ERE says that the cancellation of the contract with CEZ Albania which served as a sub-contractor for CEZ Shperndarje’s financial, IT, counseling, procurement services and its integration within CEZ’s internal structure has considerably cut the company’s expenditure.
Dollapi said CEZ Shperndarje’s bill collection rose to 82.6 percent last May down from 47.8 percent last January while grid losses dropped to 44.6 percent in May 2013, down from 51 percent last January.
CEZ said it saved USD 12 million from the cut of spending which was used in grid investments.
CEZ’s state administrator Sahit Dollapi said the distribution operator had not imported electricity during April-June period but purchased it from KESH because of the abundant hydro reserves following heavy rains. Dollapi says electricity imports are expected to resume in August and September.
In mid-June 2013, Albania’s Power Corporation KESH suspended electricity exports after collecting around Euro 30 million in the past three months. KESH’s director Halit Velaj says the stop of electricity exports will allow KESH to meet the country’s needs with domestic hydro-electricity generation during summer guaranteeing 24/7 power supply, saving money in a period when Albania in general imports electricity. The situation is a result of the favourable situation in the country’s biggest hydropower plants in the River Drin Cascade where water levels are at their maximum levels following heavy rains in the past few months.
Czech Republic-based CEZ Group, whose Albanian power supply subsidiary CEZ Shperndarje, was stripped of its licence last January, says it has officially initiated international arbitration procedures to claim compensation for the damage incurred in Albania. CEZ says it will claim Euro 200 million in international arbitration while the Albanian government claims that CEZ’s failure to fulfill its contract obligations over imports, investments and reducing grid losses caused the state USD 1 billion in damage.
“The arbitration proceedings have been formally initiated by sending a ‘notice of arbitration.’ However, this does not prevent a potential out-of-court settlement between the parties.”
The CEZ Group entered the Albanian market in May 2009 by acquiring a 76 percent equity stake in the Albanian power distribution company for Euro 102 million.
CEZ blames the situation in Albania on tariff disputes with the Energy Regulatory Entity and heavy fines imposed by local authorities.
