CEZ AS (CEZ), the Czech Republic’s largest power producer, is weighing an arbitration suit against the Albanian government after its attempt to unhook power from non- paying utilities ended with police arrests of six employees.
Two of the six employees in the Adriatic nation remain in police custody, CEZ spokeswoman Barbora Pulpanova said by phone today. The Albanian energy-market regulator started a process of withdrawing the license from CEZ last week, she said.
CEZ, which started disconnecting the utilities in Albania at the end of last week, had to reconnect them again to comply with a Nov. 17 decision by a Tirana court. CEZ’s management is considering the arbitration as attempts at negotiations with Albanian government authorities have so far failed, she said.
“The situation is clearly heading to CEZ’s exit from Albania,” Miroslav Adamkovic, an analyst at Komercni Banka AS (KOMB) in Prague, wrote in a note to clients today. “CEZ is losing money there and Albania stopped all payments for power in the summer.”
The shares were down 1.2 percent at 679 koruna at 12:43 p.m. in Prague, a third day of declines. The stock lost 13.6 percent of its value this year.
The Prague-based utility has been locked in a dispute with the Balkan country’s government over tariffs and taxes, as well as over unpaid electricity bills from local utilities. CEZ reported a nine-month operating loss of 3.8 billion koruna ($190 million) in Albania, forcing the company to lower its full-year earnings forecast on Nov. 8.
CEZ claims the Albanian market regulator ordered it to pay the state-owned power producer higher tariffs without allowing the Czech utility to raise prices for customers. The state stopped paying for power altogether in the summer. CEZ will probably exit its business in Albania, Chief Executive Officer Daniel Benes said Nov. 8.
“So far we have had no word from the regulator,” Pulpanova said. “We have meetings scheduled this week with representatives of the Albanian government, but the government has been inscrutable.”
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