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June 9, 2014

Prague ready to block Albania’s EU alignment over ČEZ dispute

ČEZ has taken Albania to international arbitration over the loss of its distribution license

Prague/Brussels, June 9 (ČTK) — The Czech Republic is prepared to block the granting of the EU candidate land’s status to Albania over a dispute between the ČEZ Czech state-controlled power utility and the Albanian state, high-ranking EU sources told The Czech News Agency (ČTK) today.

ČEZ will not comment on the government’s stance, ČEZ spokeswoman Barbora Půlpánová told ČTK.

Last year, Albania stripped ČEZ of a license. The firm therefore sought an international arbitration with Tirana.

In early June, the European Commission recommended that Albania be given the status of a candidate land. An EU summit is to deal with it at the end of June.

According to ČTK sources, Prague criticizes the fact that the talks between Albania and ČEZ in Vienna led nowhere. This is why it sent a signal to Albania some time ago, indicating that this dispute might affect the approval of its candidate land’s status, which all 28 member states must approve.

This issue is yet to be negotiated. However, the Czech Republic is reportedly prepared to block Albania’s EU integration as a last resort.

Czech Prime Minister Bohuslav Sobotka (Social Democrat, ČSSD) said today the Czech Republic generally supports the EU enlargement in the Balkans.

“In this connection, the Czech Republic will be definitely interested in the protection of foreign investments in Albania, stability of its business environment and the fight against organized crime,” Sobotka said.

Each country to be given the EU’s candidate land status should meet the respective conditions, he added.

Sobotka said he expected the Czech Republic’s stance to be on the agenda of one of the next government meetings.

“Every country that is fulfilling its commitments trustworthily has the right to advance on the EU integration path and we firmly believe that Albania will succeed in taking a step forward on this path,” state secretary for European affairs Tomáš Prouza told ČTK.

Albania asked for the status of a candidate country in 2009. However, the process was impeded by a slow pace of judiciary reforms and anti-corruption fight as well as a high crime rate in this Balkan country.

ČEZ entered the Albanian energy market in 2009 when it bought 76 percent in the local distributing company ČEZ Shperndarje for €102 million euros.

In January 2013, the Albanian regulatory office revoked ČEZ Shperndarje’s licence. A state administrator was installed at the helm of the company as a result of which ČEZ lost control over the distributor.

ČEZ launched an international arbitration against Albania on the basis of the Energy Charter Treaty, which both the Czech Republic and Albania ratified and which sets the rules of international investments protection in the energy industry.

ČEZ demands damages for Albania’s failure to protect its investment in ČEZ Shperndarje.

The Czech government challenged the steps taken by the Albanian authorities previously.

The Czech state is a majority shareholder in ČEZ, owning 70 percent of the stock. Last year, ČEZ’ net profit dropped by 12.3 percent to 35.2 billion Kč.

ČEZ has long faced problems in the Balkans. It is threatened with losing a licence in Bulgaria, too.

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