PM Boyko Borissov: We will revoke the licence of CEZ Group

The licence of CEZ Bulgaria will be revoked, Prime Minister Boyko Borissov said at an emergency press conference at the Council of Ministers on Tuesday. He reminded that, when the GERB party came to power, the initial inspections discovered violations by the company and a fine of BGN 1 mln was imposed. PM Borissov promised that there will be no intermediaries in the trade with electricity, as well as that electricity prices will decrease by 8% as of March 1. However, this will happen without the nationalisation of EDCs.

The Prime Minister added that the other two electricity distribution companies operating in Bulgaria, EVN and Energo-Pro, will be fined for violations that have been discovered, but he did not specify what kind of violations these were and to what amounts.

"We gave CEZ time, so that they could correct their mistakes," Borissov said, adding that the inspection of the Public Financial Inspection Agency (PFIA), which ended on February 8, 2013, discovered more violations, on the grounds of which the licence of the Czech company can be revoked.

Options for the reduction of the price of electricity before July 1 are being considered, interim Chairperson of SWERC Juliana Ivanova said, who, on the insistence of the Prime Minister, will chair the committee for the election of a new President, despite the resignation she submitted.

Ivanova did not specify in advance what the options for the reduction of the price of electricity are since electricity prices, according to the law, are determined annually and enter into force as of July 1. She also said that CEZ and EVN received several penalty acts and inspections at Energo-Pro still continue.

Following the news about the withdrawal of the licence, the shares of CEZ Distribution Bulgaria JSC fell by 10.78%, to BGN 1,258.759 per lot, on average.

The revocation of the licence in Bulgaria is the second consecutive blow to the company's business in the region, after Albania expelled the Czech company in January and accused it of owing the Government more than €1 bn. CEZ launched arbitration proceedings against the decision of the Albanian Government and it can be expected that the company will attempt to defend its position in Bulgaria in the same way. On Tuesday, the company announced that it has been fulfilling its privatisation contract.

Since when has CEZ been working in Bulgaria

CEZ Group entered the Bulgarian energy market in 2004 by acquiring a majority stake (67%) of the three distribution companies in Western Bulgaria - Electricity Distribution Stolichno JSC, Electricity Distribution Sofia Oblast JSC and Electricity Distribution Pleven JSC. Later, these merged into one company, CEZ Bulgaria. In October 2006, the company expanded its presence in the field of electricity production by purchasing 100% of the capital of TPP Varna Ltd.

The structure of CEZ Group in Bulgaria includes the electricity company CEZ Distribution Bulgaria JSC, public supplier of electricity and licenced trader CEZ Electro Bulgaria JSC, licenced electricity trader CEZ Trade Bulgaria Ltd and TPP Varna Ltd. The activities of all companies in the group are managed and coordinated by CEZ Bulgaria Ltd.

Since the introduction of the Czech company in Bulgaria, it announced that it has invested more than BGN 1.7 bn and improved the collection of bills in the regions of Western Bulgaria in which the company operates.

Last year, when the State sold its last shares in electricity distribution companies, the companies controlled by CEZ were listed on the stock exchange.

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