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CEZ Group is withdrawing from the Bulgarian market after 17 years of operation

Czech utility group CEZ is withdrawing from the Bulgarian market after 17 years of operation.

The divestment process started in 2017 with the sale of the decommissioned Varna coal-fired power plant and has now been completed with the sale of the distribution and sales companies in the country.

The buyer, Bulgaria’s largest publicly traded company Eurohold has paid 335 million euros to CEZ for seven Bulgarian companies, thanks also to a 60 million euros loan from the European Bank for Reconstruction and Development (EBRD).

“The divestment process was challenging but ultimately successful,” said Tomáš Pleskač, Member of the Board of Directors and Director of the New Energy Division. “Compared to the earlier exits of other foreign energy investors from Bulgaria, we managed the divestment with honour. CEZ Group leaves Bulgaria with a positive cash balance. The settlement of the sale has no impact on the international investment arbitration against the Bulgarian state, which is independently pending. Therefore, the arbitration claim represents additional potential proceeds for CEZ and its shareholders.”

The international investment arbitration, which CEZ has been conducting against the Bulgarian state since 2016, advanced to the next stage in March this year, when the arbitration tribunal deciding the dispute confirmed the legitimacy of the international arbitration within the relevant jurisdiction. In early July, CEZ subsequently filed a statement of the case, which was registered with the International Centre for Settlement of Investment Disputes (ICSID) in Washington.

The arbitration claim is based on the Bulgarian state’s failure to comply with its obligations under the privatisation agreement and its commitments when it joined the European Union in 2007. The arbitration claim covers all areas of CEZ Group’s operations in Bulgaria, including the generation, distribution and sale of electricity.

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