ČEZ investment abroad at CZK 72bn, has problems in Albania

Czech energy group CEZ has made Kc72bn worth of foreign investments since 2005, when it launched foreign expansion, and all of them bring the expected return on investment except for Albania, CEZ spokeswoman Barbora Pulpanova has said.
Albanian authorities revoked CEZ’s licence to distribute electricity and CEZ lost control over its distributing firm in Albania. It is preparing for arbitration proceedings.
In Bulgaria, demonstrations are held against CEZ over high electricity bills.
Foreign investment makes up around one-fifth of the firm’s total investment since 2005.
Overall return on foreign investment reached 71 percent, according to data from Q3 2012.
CEZ has the biggest problems with Albanian operations. In 2009 it bought 76 percent of the Albanian distributing company CEZ Shperndarje for EUR102m (Kc2.6bn). In 2010 and 2011 the Albanian firm had a positive EBITDA but last year it sank into loss. CEZ said the loss was due to a two-fold increase in purchasing prices of electricity which, however, local authorities did not allow to be reflected in the final price of electricity.
This year, CEZ has been revoked the licence and at the same time a state administrator was appointed to head CEZ Shperndarje.
CEZ has taken steps to prepare an arbitration against the Albanian state over damages for the failed investment. CEZ has lost an estimated Kc5bn in Albania.
In 2005 CEZ bought a majority in three distributors in Bulgaria for Kc9bn. The firms were then merged into one. In 2006 CEZ acquired the 1,260 MW black-coal-fired power plant Varna for Kc6bn. Last year it launched the solar plant Oreshec with the installed capacity of 4.9 megawatts.
CEZ’s retained earnings before depreciation stand at Kc14.4bn in Bulgaria. Return on investment is better than expected, according to CEZ.
Last week, however, thousands of people staged a protest against high electricity bills and Bulgarian energy minister Delyan Dobrev ordered a check of the bills. The opposition called for nationalisation of all the three distributing companies in the country, one of them owned by CEZ.
In Romania, CEZ bought a majority in the local power distributor in 2005, and also made investments into renewable energy sources. In 2010 the firm launched the first turbines in the wind park Fantanele and Cogealac. After its completion last year it is the largest onshore site in Europe, with the installed capacity of 600 megawatts. CEZ acquired four hydroelectric plants with a total output of 18 megawatts in Romania in 2011.
Retained profits before depreciation amount to Kc16.9bn in Romania. Return on investment is better than expected, according to CEZ. It is also owing to the fact that CEZ managed to recover Kc1.5bn debt from the Romanian railways.
CEZ has owned majority stakes in Polish black-coal-fired power plants Chorzow and Skawina since 2006. In 2011 it acquired a stake in a developer project for the construction of wind farms. CEZ CFO Martin Novak said the development of the wind parks will be a strategic priority of CEZ in the area of foreign investment. Retained profits before depreciation total Kc12.4bn which is in line with the expected return on investment.
CEZ has a stake in the Turkish company Sedas through Akcez. Sedas supplies electrical power to around 1.3 million customers in the industrial area in the north-west of Turkey. CEZ also has a block of shares in the energy company Akenerji. Retained profits before depreciation reach Kc6.4bn in Turkey.
CEZ has been active in Slovakia since 2007. It is engaged in trade in electricity and natural gas and is taking part in a project of a steam and gas power plat near the Slovak capital of Bratislava. CEZ has a stake in the nuclear firm Jadrova energeticka spolocnost which is participating in preparations of a new nuclear plant in Jaslovske Bohunice. CEZ may, however, withdraw from the project over the expected high costs of the expansion of Czech nuclear power plant Temelin. CEZ would be replaced by Russia’s Rosatom.
CEZ is also operating on the Hungarian market. In cooperation with the local group MOL it was preparing a project of a steam and gas facility in the town of Szazhalombatta. This project came to a standstill, however.

Prague Monitor, 18.02.2013