State administrator to manage power distribution system

TIRANA, Feb. 8 – Albania’s Energy Regulatory Entity (ERE) is expected to appoint a state administrator for the power distribution system ahead of a decision to remove the licence of Czech-owned CEZ Shperndarje later this month. In a meeting scheduled for this week, ERE announced it would approve a regulation on the appointment of an administrator on the distribution and his competences.
While Albania’s Energy Regulatory is expected to revoke the licence of the Albanian subsidiary of Prague-based CEZ Group, CEZ Shperndarje, the distribution company has had bank accounts and assets, worth around Euro 5 million seized. Under two court decisions in late December 2012, CEZ was ordered to pay 409 million lek (Euro 2.9 million) to state-owned Transmission System Operator OST in unpaid bills. In another trial, CEZ has had bank accounts and assets, worth Euro 2.5 million, frozen for failing to pay a Romanian company which provided meter readers to the distribution operator.
Earlier in 2012, 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 been fined Euro 30 million by the tax administration over VAT payments. 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.
Albania’s power corporation KESH which has been handling all power imports on its own since September 2012 following CEZ’s financial inability says the Corporation has secured power imports even for January. Currently, the overwhelming majority of the country’s power needs are being handled through domestic hydro-electricity generation which is meeting 90 percent of the needs. Albania is currently importing only 2 million kWh/day from an estimated consumption of 21 million kWh.
While CEZ is expected to have its licence revoked in a meeting ERE has scheduled for January 20, the Entity has assured power supply will continue normally.
On the verge of having its Albania licence revoked, Prague-based CEZ Group has announced that it is offering its Albanian subsidiary, CEZ Shperndarje, for sale because of rising losses and disputes with the country’s authorities only three and a half years after taking over the majority stake of the former state-owned electricity distribution operator OSSH. However, furious that it has not been officially notified over CEZ Group’s intention of selling its Albanian unit, the Albanian government, which owns the minority 24 percent stake in the electricity distribution system, has warned it will undertake legal steps to block the sale. Government claims that CEZ’s failure to fulfill its contract obligations over imports, investments and reducing grid losses has caused the state USD 1 billion in damage which will probably end up as a claim when the dispute is examined by an international arbitration court.