ČEZ launches legal action

ČEZ is planning legal action for damages after its license in Albania was revoked in the latest development in a long-running dispute over its power distribution operation in the country.

The Czech utility is launching international arbitration after the Albanian energy regulator also appointed an administrator to take over the running of ČEZ's Albanian electricity distribution company, ČEZ Shpërndarje. Company officials say the move breaks Albanian law.

It comes a month after ČEZ said it was putting ČEZ Shpërndarje up for sale after a breakdown in relations with the country's government and regulators.

In a statement, ČEZ spokeswoman Barbora Půlpánová said installing an administrator to run the company means ČEZ "loses all shareholder rights and thus has no chance to defend itself against this de facto expropriation."

"ČEZ in principle opposes this conduct, with decisions on the company's management and operation to be made solely by the regulating authority, and considers it incompatible with any European standards as well as any Albanian laws," Půlpánová said.

She said ČEZ would take legal action "immediately" and start international arbitration proceedings.

Arben Ahmetaj, a Socialist Party opposition member of Parliament in Albania, criticized the decision to remove ČEZ's license.

"There are a lot of possibilities to actually fix the situation without revoking the business license of ČEZ," he said. "The Albanian government has not done its job. … At the same time, ČEZ has not tried hard to fulfill its obligations."

In 2009, ČEZ paid 102 million euros for a 76 percent share in what became ČEZ Shpërndarje, but the company has sustained heavy losses, contrasting with healthy profits at ČEZ's Czech and other foreign divisions.

The company has been criticized for what have been perceived as inadequate attempts to prevent electricity theft and nonpayment for energy in Albania.

ČEZ blames the Albanian authorities for its difficulties, complaining the prices it had to pay the country's power producer were heavily increased, a move brought about by the need to import electricity after droughts cut output from the country's hydropower plants. At the same time, ČEZ said it was unable to increase prices to consumers sufficiently, and its financial position was worsened by heavy tax demands and fines.

Critics in Albania, among them Ahmetaj, claim ČEZ Shpërndarje paid excessively for consultancy fees, although the company has denied financial wrongdoing.

ČEZ CEO Daniel Beneš said in November he was looking to exit Albania, and a month later a crisis developed when the company cut power supplies to state utility entities that had failed to pay their bills, a move reversed on the orders of a court.

Daniel Bardsley can be reached at
business@praguepost.com