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05.11.2012 12:36

CEZ Might Sell Its Albanian Electricity Distribution Branch

Separately, CEZ and Hungarian gas company MOL Nyrt are nearing a final decision on whether to build a gas-fired power plant in Hungary

AUTHOR: publics.bg

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Czech electricity company CEZ AS (BAACEZ.PR) Wednesday said it aims to make a final decision by the end of this year whether it will build a gas-fired power plant in Hungary and sell its troubled Albanian electricity distribution unit.

CEZ has invested roughly 120 million euros (USD 155 million) in its Albanian unit, but due to ongoing regulatory and commercial hurdles the company posted a first-half 2012 loss on earnings before interest, tax, depreciation and amortization, or Ebitda, of 2.3 billion koruna (USD119 billion).

"In Albania there are two main problems, the level of [electricity theft] from the network and [lack of] creditworthiness of customers," said Tomas Pleskac, CEZ board member and head of international business, as quoted by Reiters. He added that Albanian authorities have been dragging their feet since CEZ took over the company in 2009 and preventing CEZ from generating a profit.

On Tuesday CEZ officials met with the Albanian prime minister and both sides agreed to quickly solve the situation, that CEZ may leave the country, and that the prime minister will nominate a negotiating team by the end of October.

CEZ will decide by the end of the year if it will sell the distribution company and has indications of interest from potential buyers, including the Albanian government, venture capital funds and electricity traders, Pleskac said.

Separately, CEZ and Hungarian gas company MOL Nyrt (MOL.BU) are nearing a final decision on whether to build a gas-fired power plant in Hungary. Pleskac said the two companies are exploring whether electricity prices make the plan economically feasible.

In Bulgaria, where CEZ holds a 67% stake in electricity generation and distribution companies, the company isn't going to increase its stake. The Bulgarian government is selling its 33% stake on the Sophia stock exchange.

CEZ is slated to release its third-quarter financial results on Nov. 8.