The Energy Ministry has reminded CEZ that the debt it owes to state owned Albanian Power Corporation (KESH) and Transmission System Operator (OST) is far bigger than the debt water companies owe to CEZ
Tirana Times
TIRANA, August 8 – Government has announced it has set up a working group to consider liberalizing the electricity distribution market, currently a monopoly whose majority stake is owned by CEZ Shperndarje, part of Czech Republic’s CEZ.
The announcement came after the Economy and Energy Ministry criticized CEZ Shperndarje of cutting power for debtor water supply companies, especially in coastal areas, which is damaging the tourism industry at its peak time, leaving dozens of municipalities and communes without water supply.
“The Ministry of Economy, Trade and Energy (METE) calls on CEZ Shperndarje to immediately restore electricity to water companies, ending the situation created in some of country’s towns, especially in tourist areas,” says a statement by the Ministry, reminding CEZ that the debt it owes to state owned Albanian Power Corporation (KESH) and Transmission System Operator (OST) is far bigger than the debt water companies owe to CEZ.
Considering the power cuts as an unacceptable measure of pressure, the ministry blames the company’s mismanagement for the low collection rate CEZ Shperndarje has more than two years after acquiring the majority stake of former state-owned OSSH.
Reacting to the ministry’s statement, CEZ Shperndarje said the measure was taken because some water companies owe the distribution company 1,1 billion lek, (USD 11 million), which is one of the reasons it cannot pay off its debts to state owned KESH and OST power companies.
In a meeting held later on Monday at the Economy Ministry, the Consumer Protection Commission asked detailed information from representatives of CEZ Shperndarje who had been summoned in a hearing to report on abuses customers complain most.
Prolonged power cuts, the company’s failure to deliver electricity invoices and the application of fixed rate invoices are some of the most common complaints customers file.
CEZ has recently borrowed 100 million euros from the EBRD and the IFC to refurbish the distribution network and improve the quality of electricity supply.
CEZ says electricity losses in 2010 dropped to 30.4 percent, down from 33.92 percent in 2008 and 2009. Its bill collection rate also slightly improved to 78 percent compared to 76 percent in 2009.
In March 2009, CEZ signed a contract with the Albanian government after buying 76 percent of OSSH’s state-owned shares for 102 million Euros.
Competition Authority over market liberalization
The Energy Ministry and ERE have been asked to take further steps liberalizing the country’s highly monopolized electricity market by allowing competition which would lead to better service and lower prices. Under some recent recommendations made to government and ERE, the latter being a legally independent institution, the Competition Authority demands that both state owned electricity producer KESH, and private electricity distribution operator CEZ should operate financially and functionally separated from their wholesale and retail public suppliers.
Currently, state owned KESH, is composed by two vertically integrated segments known as KESH-Gen and the public wholesale supplier. Meanwhile, CEZ Shperndarje (Distribution) also continues operating under the same vertical structure, with two units known as CEZ Distribution and the Public Retail Supplier which are a single economic unit.
The Competition Authority says that the continuation of such a situation by KESH runs counter to a March 2008 government decision envisaging that both its units should operate financially and functionally independently.
The functional and financial independence of the public wholesale supplier from KESH-Gen would create the conditions for competition for all the interested electricity producer operators such as independent, small ones or qualified suppliers.
The Authority also says that the separation of the retail public supplier from CEZ Distribution would ensure efficient competition, offer consumers the option of choice, and eliminate inter-subventions in these segments of the market. The Competition Commission concludes that the current state of the liberalization of the energy market does not allow or create spaces for new operators in the retail electricity supply, denying the consumers the right to get power supply from another operator.
According to ERE, the functional separation of CEZ from the public retail supplier cannot be carried out before 2014 even though this is an already legal obligation.
