October 1, 2008 / 4:01 PM / in 10 years

Czech CEZ to spend 420 mln euros for Albania power unit

TIRANA, Oct 1 (Reuters) - The Czech power utility CEZ CEZsp.PR will spend more than 420 million euros ($594.1 million) to buy a controlling stake in Albania’s power distributor, upgrade its grid and pay its debts, Albania’s sale advisers said on Wednesday.

Angelo Dell’Atti, the World Bank’s International Finance Corporation (IFC) representative, said the IFC saw the sale as a success because CEZ was a “very good company that had paid a very high value” for the Distribution System Operator (DSO).

CEZ offered 102 million euros on Monday to win a 76 percent stake in DSO after Albania found Italy’s ENEL (ENEI.MI) did not meet the technical performance criteria. Austria’s EVN (EVNV.VI) and Energie Steirmark withdrew.

“We do consider this as a success. This is a very good company, who will bring improvements for the public and who is paying a high level of value for what is the audited value of the assets,” Dell’Atti told a news conference.

He added CEZ would pay 102 million euros to Albania for a 76 percent stake in DSO, invest 200 million euros during the five years of operation and repay DSO’s old debt of 15 billion lek (around 122 million euros).

“When we put everything together...the total commitment that the new company will have to take on is over 52 billion lek. This is over 420 million euros,” Dell’Atti said.

The final award of the contract will happen after a commission consisting of government officials and IFC advisers asks the government to approve the sale.

A FORMALITY

The final seal of approval by Prime Minister Sali Berisha’s government is expected to be a formality. “I can say the tender was transparent. When there is less corruption, there is more power,” Berisha told reporters.

Albania hopes the sale of DSO will gradually reduce chronic power shortages that have plagued the quality of life and growth for more than a decade in Europe’s second poorest state.

Deputy Energy Minister Neritan Alibali, who chairs the government commission, told the same news conference the sale followed the successful sale of the ARMO refiner to a U.S-Swiss group for 125 million euros. “After the earlier successful sales, success is now normal for us,” Alibali said.

Dell’Atti said the sale price could have been higher if the government had not asked the potential buyers to take over the debt and make big investments, but Albanian consumers would not have benefited as much they were to gain now with CEZ.

He said DSO auditors had valued its net assets at 8.05 billion lek, adding CEZ’s price of 102 million euros for 76 percent of DSO’s shares was the equivalent of 134 million euros for 100 percent of its shares.

“This is equivalent to 16.5 billion lek. When you compare it to the net value of the company’s assets, which as I said is 8.05 billion lek, the company CEZ is actually paying more than twice the audited value of the assets of OSSH (DSO).” (Reporting by Benet Koleka, editing by James Jukwey)

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