Prague Stock Exchange Co. Ltd.

07/27/2021 | Press release | Distributed by Public on 07/27/2021 10:21

Czech CEZ concludes Bulgarian assets sale, arbitration continues

Prague, July 27 (CTK) - Czech energy group CEZ has concluded the sale of its Bulgarian assets to local financial firm Eurohold for EUR335m (some Kc8.6bn), but international investment arbitration proceedings against Bulgaria, which CEZ started in 2016, continue, CEZ spokesman Ladislav Kriz told CTK today.

The completed sale includes seven Bulgarian companies of CEZ - CEZ Bulgaria, CEZ Elektro Bulgaria, CEZ Razpredelenie Bulgaria, CEZ Trade Bulgaria, CEZ ICT Bulgaria, Free Energy Project Oreshets and Bara Group, he said.

CEZ started withdrawing from the country in 2017 when it sold coal-fired power plant Varna, Kriz said.

The total revenue from the sale exceeded Kc10bn and CEZ is leaving Bulgaria with a surplus of over Kc1bn, Kriz said.

The sale being settled does not have any impact on the arbitration against the Bulgarian state and the claim represents a potential additional revenue for CEZ and its shareholders, CEZ board member Tomas Pleskac said today.

CEZ has filed a lawsuit against Bulgaria for not fulfilling conditions it committed to during privatisation and not meeting energy market commitments it made when it entered the EU in 2007.

Bulgaria has broken its promises concerning purchase prices of electricity, electricity export and market liberalisation, according to CEZ.

The state prevented CEZ from making the Varna plant environmentally friendly and the group then shut it down.

The arbitration claim was recently registered by the International Centre for Settlement of Investment Disputes (ICSID) in Washington, D.C..

CEZ penetrated the Bulgarian market in 2004, at the same time as Austria's EVN, Germany's E.ON and other European energy companies that started investing in the country expecting energy market liberalisation.

CEZ bought a part of Bulgaria's distribution network, and the Varna plant in 2006.

The energy group decided to leave the country after disputes with Bulgarian authorities, and other foreign energy companies are gradually reducing or ending their activities in the country, too.

Czech PM Andrej Babis has repeatedly said CEZ's expansion to the Balkans was unsuccessful.

CEZ is about 70 percent owned by the state via the Finance Ministry.

At the end of March, CEZ concluded the sale of its assets in Romania. The price of the transaction has not been disclosed, but analysts have estimated it at Kc25bn-Kc30bn.

The sales are in line with CEZ's new strategy approved in 2019, which envisages that the group will gradually sell its assets in Bulgaria, Romania, Turkey and Poland, except energy service companies (ESCO).

Eurohold Bulgaria AD is the biggest publicly-listed company in Bulgaria.