CEZ Takes Bulgaria to Arbitration

Czech-based CEZ Group says it has filed a request for international investment arbitration against Bulgaria.

The claim is worth "hundreds of millions of Euros."

A CEZ subsidiary is the largest electricity grid operator in Bulgaria covering the needs of several million customers.

On its website, the group cites Bulgaria's "failure to observe the investment protection provisions of the Energy Charter Treaty."

CEZ decided to turn to the International Centre for Settlement of Investment Disputes (ICSID) with the World Bank Group after "a number of actions of Bulgarian authorities damaging ?EZ companies in Bulgaria, causing the long-term critical situation on the local energy market that is not improving."

Bulgaria has not used the opportunity for an amicable settlement of the dispute despite repeated notifications and demands from the company.

CEZ spokesperson Barbora P?lp?nov? blames the pricing decisions of the local energy regulator, KEVR, for not meeting "the expectations at the time of the privatization process" in the long-term, causing businesses in the energy sector to face "declining profitability or losses in low liquidity".

The move comes weeks after an announcement that Bulgaria has lost another arbitration suit, with Russian energy company Atomstroyexport, and is ordered to pay EUR 550 M over the abandoned Belene nuclear power plant project, also buying the equipment manufactured for the plant (the price is included in the sum above).

Previously CEZ, alongside other power distribution companies, have been involved in long disputes with Bulgaria, with debt claims on either sides. These, however, have never been referred to arbitration. 

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