CEZ – government conflict

“The possible options are the appointment of an administrator from the government, the government taking the majority package or the CEZ Company selling them to someone. If they will be taken by the Energy Regulator Entity (ERE) it would mean appointing an administration from the state”, declared Sokol Ramadani, ERE Chairman.

The appointment of an ERE administrator means that the company that was privatized three years ago will fully return to the state.

But experts fear that the privatization’s failure could encourage the return of a chaotic situation in the market, which would deteriorate the losses and the encashment situation.

The mysteries of a privatization

The situation created in the energy sector brings great uncertainties that also concern the entire economy. Eight months before the Parliamentary elections, the government will be obliged to decide whether they will admit the failure with their most important privatization in the energy sector or not.

But both decisions would have a great cost for the Albanian citizens. The current situation, with the government importing energy through the Albanian Power Corporation without being paid by CEZ, which blames the lack of encashment and financial difficulties, will burden the budget with millions of dollars taken from the citizens’ pockets, while the undoing of the privatization would open unknown high risk scenarios.  If CEZ will leave and if the company will return to the state, the situation might deteriorate by encouraging people to not pay the energy, a problem that has already reached the worst levels in its history.

Secondly, the temporary return to the state control would raise questions about the future of the sector, since the failure with the first privatization increases the chances for a possible new privatization of the energy distribution.

CEZ on the other hand has mentioned more than once the encashment problem as a permanent concern. The company has no other options left than cutting energy for obliging the citizens to pay, while they have had no support from the state on this matter. The Prime Minister has never appealed the consumers to pay the energy bills, while CEZ has declared that it is impossible for them to find a credible negotiation partner.

The entire situation is created by the government’s bad decision to proceed with a privatization that already started badly in the electoral year 2007, and which was badly supervised in the next years, with an end that was almost expected. The cost of this failure will go to the citizens. Only during this year, the state budget has given 100 million USD as guarantee for importing energy, while the economic damage will be much higher. And the ones to pay will be once again the citizens.

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