Czech competition authority reviews ČEPS's purchase of gas pipeline operator NET4GAS

The Office for the Protection of Competition (ÚOHS) has begun reviewing state-owned ČEPS's purchase of gas pipeline operator NET4GAS. It announced the move on its website. The acquisition, which is not expected to exceed five billion crowns, was approved by the government in September. It is intended to strengthen the Czech Republic's energy security, as NET4GAS holds the exclusive licence to transmit natural gas in Czechia.

„The proposed merger between the undertakings would primarily involve the transmission and storage of natural gas. No decision has yet been issued in the case,“ the authority said on its website.

NET4GAS operates 4000 kilometres of gas pipelines, five compressor stations and around 100 transfer stations, including three at the borders. NET4GAS Holdings is owned in equal shares by a consortium of Allianz Infrastructure Luxembourg and Borealis Novus Parent. The company is being acquired by ČEPS using its own available funds. ČEPS will take over the entire company, including its management and employees.

When it announced the signing of the agreement, ČEPS said it would pay a maximum of five billion crowns for the indebted company, although the final amount will depend on the company's performance and whether it meets the agreed economic parameters.

NET4GAS holds the exclusive licence to transmit natural gas in the Czech Republic. It manages the gas system in the event of an emergency and declares regulatory levels, thereby deciding on gas supplies to customers. Any problems with NET4GAS's pipelines would pose a serious threat to gas supplies to the country.

According to the Ministry of Industry and Trade, NET4GAS recorded total after-tax profits of 27.7 billion crowns between 2015 and 2022. The company also has financial assets of 6.8 billion crowns, but has issued bonds worth 18.5 billion crowns and has loans totalling 14.5 billion crowns, maturing between 2025 and 2028. The company's financial situation deteriorated after GAZPROM Export stopped paying for contracted gas transit through the Czech Republic.

In September, the state acquired RWE Gas Storage through ČEPS for 360 million euros (equivalent to 8.8 billion crowns). The company owned and operated six gas storage facilities, with a combined capacity equivalent to one-third of annual consumption. A year ago, Czechia also secured capacity at an LNG terminal in the Dutch port of Eemshaven, and the government is negotiating the construction of new gas pipelines.