* Power board to seek damages from CEZ
* Places unit in temporary administration
* CEZ to seek international arbitration
(adds details, regulator comment)
By Benet Koleka
TIRANA, Jan 21 Albania's power regulator has
revoked the distribution licence of Czech utility CEZ,
holding it liable for damages for importing insufficient
electricity and not investing in the Balkan country's power
The ERE board's 5-0 vote to revoke the licence of CEZ's
loss-making local unit, CEZ Shperndarje, is the latest twist in
a long-running battle between central Europe's biggest utility
and Albania over issues including power imports, prices,
ownership and debts.
ERE Chairman Sokol Ramadani said that CEZ had breached its
licence mainly by failing to limit electricity losses in the
distribution system, which led to the company's failure to
import the required amount of power under Albanian law.
The regulator did not specify the amount it would seek in
damages from CEZ, but the Albanian government has estimated the
cost of the company's failures at $1 billion.
"The main thing is they could not control the power losses
and that's the main problem ... That means they could not
control debt and they could not control problems in the
industry," Ramadani told Reuters after the hearing.
In November CEZ trimmed its 2012 profit outlook because of
the Albanian operation's losses and said that an exit from the
Balkan state was the most likely solution to its problems.
The utility put its 76 percent stake in the loss-making
Albanian distribution unit up for sale a month ago, but the
government has vowed to block the deal and hinted that it wanted
to buy the business for one euro ($1.33).
CEZ criticized the ERE's decision and said that it would
seek international arbitration.
"Such a move is in violation of local laws and CEZ will file
a formal protest. At the same time, the company will take
initial steps toward international arbitration," it said.
The regulator also used Albania's energy law to put the CEZ
unit in temporary administration and appointed a new manager to
oversee the business during the dispute with the company.
CEZ Shperndarje is under contract to import enough energy to
make up for network losses above 24 percent last year in the
hydro-dependant Balkan nation.
It failed to import power at times during the dispute last
year, and in November the Czech company cut off power supply to
a number of utilities to collect debts worth 38 million euros.
($1 = 0.7524 euros)
(Additional reporting by Jason Hovet; Writing by Michael Kahn;
Editing by Mark Potter and David Goodman)