CEZ says to defend Bulgaria power licence by all legal means

SOFIA Fri Feb 22, 2013 10:00am EST

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SOFIA Feb 22 (Reuters) - Czech utility CEZ will defend its power distribution licences in Bulgaria by all legal means, it said on Friday, adding public outrage against high utility bills could only be eased by fully liberalising the electricity market.

Bulgaria's energy regulator this month launched a process to strip CEZ of its licences in the Balkan country, saying it had evaded public procurement law among other malpractices.

The move followed protests by thousands of Bulgarians against high utility bills that forced the centre-right government to resign.

"The launch of the process to revoke our licences is inexplicable to us and we will do everything possible to prove that there are no grounds for such a move," CEZ Bulgaria regional manager Petr Dokladal said in a statement.

"We have always worked in line with the laws and regulations and will continue to do so," he said.

In the last two weeks, tens of thousands of people have demonstrated across Bulgaria, the European Union's poorest country, and demanded the government renationalise power distributors CEZ, Czech firm Energo-Pro and Austria's EVN.

Czech diplomats and politicians on Thursday called on EU partners to stop Bulgaria from stripping majority state-owned CEZ of its licences.

The Bulgarian regulator has given CEZ a week to comment on the process, and indicated there was room for compromise if the company could prove the malpractices could be repaired. It will not rule on the licences before April 16.

CEZ has denied any wrongdoing and said a fully liberalised energy market, with a chance for consumers to freely and easily choose power providers, was the only way to ensure transparency and better conditions for customers.

Bulgaria has regulated the electricity prices for households since the fall of communism, keeping them below market levels in attempt to prevent the type of public demonstrations that have now toppled the rightist government of Boiko Borisov.

Bulgaria still has one of the lowest electricity prices for households in the 27-member EU despite a 13-percent increase in prices last July.

But with average monthly salaries of just 400 euros and pensions around 100 euros, electricity costs - especially during the winter - have proved unbearable for many in the country.

As well as pressure from regulators, utilities like CEZ are being squeezed by high fuel costs. (Reporting by Tsvetelia Tsolova; Editing by Mark Potter)

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