Albania's move to revoke Czech utility CEZ's license is a "very negative" signal for relations between the countries and raises questions about the Balkan country's commitment to EU entry, Czech Prime Minister Petr Necas said, newswires reported.

"The action taken by Albanian authorities towards CEZ is a big disappointment," Petr Necas said in a statement, in which he vowed to back the company's efforts to seek damages.

The utility said it would seek international arbitration after Albania's power regulator on January 21 followed through on its threat to revoke the Czech utility's distribution license in the country. The move was the latest twist in a long-running saga that has seen CEZ at loggerheads with the Albanian government since it bought, with World Bank backing, the distribution company for EUR102m in 2009 as a way to help improve the sclerotic power sector in the country.

Albania claims CEZ failed to invest in order to limit electricity losses in the distribution system, and failed to import the required amount of power needed to meet the percentage of Albania's power deficit agreed in the license. CEZ counters that it has been forced to run the company at a loss due to a hike in wholesale prices from the state-owned generator, while not being allowed to raise consumer tariffs. Furthermore, many households and businesses, both state and private sector, simply dont pay their electricity bills.

Necas warned that Albanian relations between the Czech Republic and the whole of the EU will suffer. Necas said Czech relations with Albania had traditionally been very good and friendly but the CEZ affair raised questions over Albania's commitment to joining the European Union.

"The Czech Republic cannot ignore the approach toward a Czech investor in the context of Albania's integration aspirations," Necas said. "For membership in the European Union, Albania must prove that it has rule of law, that it meets fundamental rules that shape standard market environment."

Source: bne