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CEZ to Lose Bulgarian Power License Today, Borissov Says

Feb. 19 (Bloomberg) -- Bulgaria will cancel CEZ AS’s power-distribution license today after an investigation into the local units of the largest Czech utility, Prime Minister Boyko Borissov said.

The State Financial Inspection Agency started a probe into the units last year and submitted a report on Feb. 8, saying CEZ “evaded requirements of the Law for Public Tenders,” the Energy, Economy and Tourism Ministry said on its website yesterday. The ministry asked the authority to conduct a similar probe into the local units of Austria’s EVN AG and Prague-based Energo-Pro.

CEZ’s license will be revoked “in the course of the day,” Borissov told reporters in the capital Sofia today.

The decision comes after thousands of Bulgarians marched through Sofia and other cities demanding lower electricity bills and higher wages in the run-up to elections in July. The anti-austerity demonstrations in the European Union’s poorest country led to the dismissal of the finance minister yesterday.

CEZ said in a statement today the Bulgarian government has no grounds to revoke its license and that only an independent energy regulator has the authority to start the procedure of a license withdrawal.

“We consider media statements by the Bulgarian prime minister and the prosecutor’s office to be a gross violation of legal norms in Bulgaria as a member state of the European Union,” CEZ said in the e-mailed statement.

Its shares dropped 2 percent to 603.9 koruna at 12:10 p.m. in Prague, falling for a fifth day and valuing the company at 325.5 billion koruna ($17.1 billion). Its local units supply electricity to Sofia and the northern city of Pleven, which together account for 41 percent of Bulgaria’s power consumption.

To contact the reporter on this story: Elizabeth Konstantinova in Sofia at ekonstantino@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

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