* Regulator seeks to revoke CEZ license
* Dispute for CEZ comes after losing license in Albania
* CEZ convinced it can retain its licence
By Jan Korselt and Tsvetelia Tsolova
PRAGUE/SOFIA, Feb 20 Bulgarian regulators on
Wednesday pledged to press on with the cancellation of Czech
power group CEZ's distribution licence announced by
Prime Minister Boiko Borisov but also suggested there could be
room for compromise.
CEZ, central Europe's largest listed company with market
capitalisation of $17.4 billion, has been caught in the middle
of nationwide protests against high electricity bills that on
Wednesday prompted the resignation of Borisov's government.
Borisov, who now faces a tough task to prop up eroding
support ahead of a probable early election, tried to stem the
protests on Tuesday by promising to revoke CEZ's license and
fine other foreign power firms.
CEZ denies breaking any Bulgarian laws and said at a news
conference on Wednesday that none of the some 20 comments it had
received from regulators proved serious wrongdoing.
"They do not confirm any significant malpractice on the part
of CEZ," said Tomas Pleskac, CEZ board member responsible for
distribution and foreign assets. "Therefore, they cannot
constitute a ground for license revocation."
Earlier in the day, Bulgaria's State Energy and Water
Regulatory Commission said that CEZ had evaded public
procurement laws by subcontracting many operations without
holding public tenders. But it left the door open to being
persuaded not to revoke the license.
"The process has only started and if the commission is
convinced the breaches are reparable and CEZ agrees to comply
with regulations, they may also not be revoked," Andon Rokov, a
member of the energy regulator, told reporters. "They, however,
will be revoked if the breaches cannot be repaired."
CEZ said the situation has been politicized. It blamed
higher electricity bills on a colder winter and higher
consumption this year, and said prices were last changed in July
under the order of regulators.
The row in Bulgaria comes at a difficult time for CEZ, which
is 70 percent owned by the state, as it deals with the loss of
its license in Albania, faces police investigations at home over
past deals and is negotiating to end an EU probe in Brussels.
CEZ shares dropped 0.9 percent down to 605.70 crowns, just
off a three-week low on Tuesday and close to four-year lows at
the height of the global financial crisis.
SPACE TO DEAL
Pleskac said he was convinced CEZ would retain its license
in Bulgaria, unlike in Albania, where it lost its license in
January as part of a running dispute over power imports and
prices. CEZ has started arbitration proceedings in the Balkan
country, which if it loses could mean up to 200 million euros in
CEZ has invested 72 billion crowns ($3.79 billion) in its
international operations since 2005, including 15.6 billion
crowns in two distributors and a coal-fired power plant in
After posting a record profit of 51.9 billion crowns in
2009, CEZ's annual profits have dropped by about a fifth and the
company has re-concentrated on its home market, where it is
running the largest energy tender in the country's history: an
expansion of its Temelin nuclear power plant worth around $10
CEZ is also running into questions over past deals. The
company said on Monday Czech police were investigating four
deals, including the sale of a German coal mine and its
investment in Albania.
CEZ has also offered to sell a power plant to meet European
Commission demands after an investigation into suspected
CEZ has a week to comment on the process in Bulgaria before
an open hearing is held on April 16.