EU integration unaffected by CEZ dispute, officials say

11/02/2013

According to Albanian energy authorities, CEZ failed to import sufficient electricity and to invest in the power grid, causing the country $1 billion in damage.

By Erl Murati for Southeast European Times in Tirana -- 11/02/13

photo

CEZ group entered Albanian energy market in 2009. [AFP]

Albanian officials believe that the country's integration efforts in the EU will be unaffected by the energy authority's decision to revoke the license of Czech power group CEZ to operate the electric grid in Albania.

"Albanian ministry of foreign affairs is convinced that CEZ issue will be solved in bilateral relations between Albania and the Czech Republic, no other aspects," Eva Kushova, media adviser for the Albanian Foreign Ministry, told SETimes.

"This is a problem of commercial nature, due to CEZ failure to respect contractual obligations," Edmond Haxhinasto, deputy prime minister told Albanian media, adding Albania membership in the EU aims the perfection of free market standards and regulations.

Albania's government accuses CEZ of important insufficient electricity and not investing in the power grid. It puts the country's damages at $1 billion.

CEZ has begun international arbitration on the issue. Petr Necas, Czech prime minister, said the dispute may hurt Tirana's EU integration chances.

"To be part of the EU, Albania must show it is a country that respects the rule of law. The basic prerequisite for any country aspiring to become a member of the Union is the ability to secure the rule of law and a healthy investment environment, including protection of foreign investments," Necas said.

The Czech government owns two thirds of CEZ.

CEZ declined to comment if the Czech Republic will condition Albania's EU integration, saying this is more a political matter she won't comment.

From a business view, for foreign investors the CEZ Albania situation could be a clear signal that the country is an unstable and unpredictable business environment," Barbora Pulpanova, CEZ Group press officer, told SETimes.

Albania's socialist party opposed the county's CEZ decision, warning of a corrupted process that would have consequences on the citizens.

"CEZ issue is connected more to the investment environment in Albania and all optimal parameters Albania should create. The Czech prime minister has the right to defend Czech businesses and investments," Ditmir Bushati, socialist MP, told SETimes.

"Albanian government has left a really bitter taste for other investors with this move to cast CEZ out of the country. Nevertheless, I don't think it will be good that bilateral issues become part of EU integration agenda," Bushati said.

CEZ group informed it has lost all shareholder rights and started international arbitration over its long-running dispute with Albania.

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Analysts think if Albania is found guilty in causing damage to CEZ group, it will have to compensate the company.

"If Albania fails to pay this compensation, than Czech Republic has the right to condition Albania's EU integration process, with the full implementation of legal and contractual obligations," Gledis Gjipali, director of European Movement in Albania, told SETimes.

NATO membership and EU integration are an important element for growing foreign investments, but big company experiences are the main indicator of a country's commitment to offer conditions on a successful business development," Gjipali said.

CEZ Group entered Albanian market in 2009 acquiring 76 percent of the local distribution company for 102 million euros, while the Albanian government kept the remaining 24 percent. Rating agency Moody's stated in November that Albania's exit will cost CEZ less than 200 million euros.

This content was commissioned for SETimes.com.
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