ČEPS Files Police Report Over NET4GAS Purchase — Audit Finds Serious Irregularities

State-owned power grid operator ČEPS has filed a report with the police concerning its purchase of NET4GAS Holdings, a major operator of the Czech gas transmission system. According to ČEPS board chairman Jan Kalina, an internal audit uncovered serious doubts about the circumstances surrounding the deal.

The acquisition of NET4GAS took place in 2023 under a decision by Prime Minister Petr Fiala's government. The company's previous owners were a consortium of Allianz Infrastructure Luxembourg and Borealis Novus Parent. According to reports at the time, ČEPS was to pay a maximum of five billion crowns for the indebted company, though the final amount depended on the company's financial performance and compliance with set economic parameters. ČEPS has not disclosed the exact sum ultimately paid for the asset.

How the deal was explained in 2023

At the time, then-Minister of Industry and Trade Jozef Síkela (STAN) justified the purchase by citing the need for a stable company to transport gas, which was expected to play an important role in decarbonizing the Czech energy sector. "We need to ensure a stable future development of the company," Síkela said. The Ministry of Industry and Trade reported at the time that three expert valuations had been prepared for the deal, which, according to the ministry, valued the company above the agreed purchase price, taking its debt into account.

According to figures from that period, NET4GAS had interest-bearing debt of around 33.8 billion crowns at the time of the deal, cash reserves of about nine billion crowns, and assets with a book value of roughly 49 billion crowns. The opposition at the time criticized the deal.

New ČEPS head orders review

Jan Kalina took over as head of ČEPS in April this year, succeeding Martin Durčák. He said that after his appointment, he examined in detail the process behind the gas companies' purchase and, together with colleagues on the board, decided to commission an audit. That audit uncovered the grounds for the police report.

What NET4GAS does

NET4GAS operates 4,000 kilometers of gas pipelines, five compressor stations and around a hundred metering/transfer stations, including three at the country's borders. Last year the company posted a net profit of over 2.05 billion crowns — compared with just nine million crowns the year before. Revenue also grew significantly, by roughly a fifth, to 6.46 billion crowns.

The ČEPS group includes the electricity transmission system operator and its subsidiaries, including NET4GAS. Last year the group posted a net profit of more than 6.8 billion crowns, about 35 percent higher than the previous year's figure.

Source: novinky.cz