CEZ Risks Losing 200 Million Euros on Failed Albania Investment

CEZ AS, the largest Czech energy producer, risks losing as much as 200 million euros ($266 million) in Albania after a regulator revoked its license.
CEZ bought Albania’s power distributor in 2009 for 102 million euros and has invested 90 million to 100 million euros in repairs and expansion, Barbora Pulpanova, a spokeswoman for the Prague-based company, said by phone. The utility will seek to exercise a 60 million-euro guarantee from the World Bank that was negotiated before it entered the Balkan country, Pulpanova said.
The Albanian energy regulator revoked CEZ’s license in the country yesterday following almost a year of disputes over tariffs and taxes, as well as unpaid electricity bills from local utilities. CEZ has argued the regulator ordered it to pay the state-owned power producers higher tariffs without allowing the Czech utility to raise prices for customers.
“We’re now taking steps towards starting international arbitration,” Pulpanova said. “At this point it’s unclear how much, if anything, we can get back.”
CEZ fell 0.9 percent to 641.7 koruna at 10:43 a.m. local time. The stock has lost 5.8 percent so far this year.
The company plans to sell its 76 percent stake in CEZ Shperndarje, the Albanian distributor. CEZ is scheduled to release full-year earnings on Feb. 28.

Bloomberg, 22.01.2013