CEZ AS, the Czech Republic’s largest power producer, said it’s considering leaving Albania as it hasn’t been able to resolve its dispute with the government regarding tariffs and extraordinary taxes.
Visibility on the Albanian market is “nonexistent” and CEZ lacks a clear negotiation partner in the country, CEZ board member Tomas Pleskac said today at a press conference in Prague.
CEZ, which runs Albania’s electricity distribution network, reported a first-half loss of 2.3 billion koruna ($119 million) in Albania in earnings before interest, tax, depreciation and amortization as the country’s regulator ordered it to pay the state-owned power producer higher tariffs without allowing CEZ to raise prices for customers. The dispute with Albania escalated in the summer after the country slapped CEZ with an extra tax of 23 million euros ($30 million).
“Things in Albania really aren’t going well,” said Petr Bartek, an analyst at the Prague-based unit of Erste Group Bank AG. “But legally it will be difficult for CEZ to exit the country elegantly.”
CEZ can claim a 60 million-euro guarantee from the World Bank, Pleskac said. The Czech company stopped all investments in Albania in the fall, he said.
“The problem in Albania is that we reach an agreement with some state body, and subsequently another body starts making completely different claims,” Pleskac said. “There is no one clearly designated person with whom we could negotiate.”
The relationship between the Czech utility and the Albanian government deteriorated to the point that CEZ was forced to replace its management in the country with negotiation experts from the U.K. company Schindlers, the utility said at the beginning of October.
CEZ fared better in Romania, where it reported a first-half Ebitda of 16.9 billion koruna. The utility is finishing a 600-megawatt wind farm project in Fantanele and Cogealac near the Black Sea coast, the biggest onshore wind farm in Europe. It is also in “advanced negotiations” to purchase further wind projects, Pleskac said.
CEZ wants to have as much as 1,500 megawatts in wind farms in Romania by 2016. It may also bid for one of Romania’s three power distributors left in state hands should the government decide to sell its stake.
In Bulgaria, CEZ reported a first-half Ebitda of 14.4 billion koruna. The company, which controls the majority of Bulgarian electricity distributor, said it won’t bid for the remaining minority stake put up for sale by the government.