The details unleveled just before CEZ is expected to initiate international arbitration procedures against Albania show the scheme was an intentional policy by CEZ which motivated its employees with extra wages and trips abroad for overbilling
TIRANA, April 16 – A task force unit of the Tirana Prosecutor’s Office has unveiled what it calls a fraud scheme involving the overbilling of 14,000 consumers by CEZ Shperndarje at the time the distribution operator was run by Czechs who in January 2013 had their licence in Albania revoked over failing to meet its contract terms. The details unleveled just before CEZ is expected to initiate international arbitration procedures against Albania show the scheme was an intentional policy by CEZ which motivated its employees with extra wages and trips abroad for overbilling.
The fraud scheme is alleged to have been based on an internal regulation which was modified several times to leave room to abuses of overbilling. The victims were carefully selected and involved mainly budgetary institutions or big businesses which wouldn’t worry about high power bills.
The scheme also involved illegal interventions into power meters by CEZ employees and the manipulation of data in meter reading. Four ex-CEZ directors have been summoned to be questioned over the allegations.
In late 2012, when Albania’s Energy Regulatory Entity (ERE) was undertaking procedures to strip CEZ of its licence, opposition Socialist Party MPs accused CEZ of overcharging citizens with 600,000 MW, worth 50 million euros.
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 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.
In an expected move following the aggravation of the electricity situation, and six months ahead of the general elections, Albania’s energy watchdog, ERE, revoked the licence of CEZ Shperndarje, the Albanian subsidiary of Czech Republic based giant CEZ Group which in 2009 acquired the majority stake of the country’s power distribution operator, returning the company under temporary state administration. The government-CEZ conflict reached its peak on November 16 after CEZ cut power to debtor water supply companies leaving half of Albania without water and sparking nationwide protests which lasted for only few hours after police intervened arresting several CEZ employees and forcefully reconnected power.
Under a unanimous decision taken on January 21, the Energy Regulatory Entity (ERE) Board of Commissioners decided to revoke CEZ’s licence in Albania, arguing that the company had failed to make compulsory electricity imports, reduce grid losses, make investments, provide all consumers with power meters, pay debts to state-owned operators KESH and OST, and stop collective power cuts.
ERE’s Board also appointed Sahit Dollapi, the director of the Tirana Water Supply and Sewerage company and former director of the state run distribution operator OSSH until the Czechs took over in 2009 as the temporary State Administrator of the company until issues with CEZ are settled and the licence is awarded to another operator.
Almost 40 percent of electricity fed into Albania’s grid is wasted due to massive thefts and technical losses in the dilapidated distribution network. The severe situation is confirmed in the 2012 electricity balance sheet published by the country’s state Institute of Statistics (INSTAT) which shows grid losses in 2012 rose to 3.2 million MWh, up 49 percent compared to 2011. Taking into account that power prices currently stand at 9.53 lek/kWh (9,530 lek/MW) the total grid losses are worth around 31 billion lek (Euro 217 million).
The overwhelming majority of around 95 percent of the total losses were caused in the problematic distribution network, managed by Czech operator CEZ Shperndarje. Since January 2013, the distribution network is back under state management after CEZ had its licence revoked because of deteriorating performance three and half years after taking over the system.
Distribution grid losses in 2012 rose to 38.6 percent of the total electricity available for use up from 28.9 percent in 2011, according to INSTAT data.
