site.btaCEZ Power Distributor Files Hefty Claim against Bulgaria over Its Failure in Investment Protection

CEZ Power Distributor Files Hefty Claim against Bulgaria over Its Failure in Investment Protection

Sofia, July 13 (BTA) - The CEZ group of electricity companies has filed an arbitration request against Bulgaria with the International Centre for Settlement of Investment Disputes (ICSID) over its failure to observe the investment protection provisions of the Energy Charter Treaty. Announcing the start of legal procedures, CEZ said that their step follows a number of actions by Bulgarian authorities damaging CEZ companies in Bulgaria and causing a long-term critical situation on the local energy market.

The claim amounts to hundreds of millions of euros.

CEZ says that it has repeatedly asked the Bulgarian government for speedy rectification of the current state of affairs and for compensation for the damage caused. In November 2015,it sent a notice of dispute to the government of Bulgaria requesting an amicable settlement of the dispute but Bulgaria has not used the amicable settlement opportunity. "We are prepared to protect our investments by all possible means and arbitration is therefore the next logical step," explained Ivo Hlavac, Chief External Relations and Regulation Officer.

The CEZ Group entered the Bulgarian market in 2004 and now serves some 3 million Bulgarian customers, mainly in western Bulgaria. The CEZ Group also owns other assets in Bulgaria, among which is a coal-fuelled power plant in Varna that ceased operations in January 2015.

The company says in its press release that the situation in the Bulgarian energy sector is critical and the pricing decisions of the local regulator have not been in line with the expectations at the time of the privatization process. "Therefore, businesses operating in the energy sector have in recent years faced declining profitability or losses and low liquidity," the statement says.

CEZ is the last of the three power utility companies suing the State for failing to provide conditions for investors to protect their investment, mediapool.bg writes. The first such claim was lodged in the summer of 2014 by the Austrian EVN (power supplier in southeastern Bulgaria) and in it the company claimed over 1 billion euro for detrimental pricing policy by the energy regulator and outstanding payments by the National Electricity Company for the mandatory purchase by EVN of green electricity.

The second power utility, Energo-Pro, which operates in northeastern Bulgaria, filed a 54 million euro claim in June 2015.