Czech state’s investment in Net4Gas could pay off within ten years, says Prime Minister Fiala

State investment in Net4Gas could pay off within ten years, according to Prime Minister Petr Fiala (ODS). In his reply to a written interpellation by Marek Novák (ANO), the prime minister said that buying the company was economically advantageous. He also pointed to its strategic importance. The state-owned company ČEPS bought the debt-laden Net4Gas last year. As Novák was not satisfied with the response, the matter will now be brought before the full Chamber of Deputies.

In an interpellation submitted in mid-August, Novák wrote that „the investment could have a devastating impact on Czech citizens“. Net4Gas’s pipelines are barely being used because there is little interest in transporting gas through Czechia, he said, and the company is in financial difficulty.

„Although transit has now practically stopped, the costs of maintenance and debt repayment remain the same. If no other way is found to cover these costs, there is a risk that they will be passed on to Czech households,“ the opposition MP said.

Among other things, he asked the prime minister why the company was bought, whether the government had considered the risks, and how it would ensure that the costs of maintaining the pipelines were not passed on to Czech consumers.

„The investment in Net4Gas is economically advantageous,“ Fiala wrote in his reply in mid-September.

According to Fiala, the state had verified the company’s value using valuations by EY and the London branch of Citigroup. The valuations had already factored in lower revenue from gas transit, the prime minister said.

„The company’s estimated value was tens of percent higher than the price paid by the state. The investment is expected to pay off within ten years, which is usual for strategic assets,“ the prime minister wrote.

Fiala’s reply indicated that the government would not publish the valuations due to commercial confidentiality.

When it bought Net4Gas, the state said it would pay no more than five billion crowns for the company, although the final amount would depend on its performance and on meeting the set financial targets. The company made a loss of 1,7 billion Kč last year, after recording a profit of more than 6,2 billion Kč the year before. According to media reports, the downturn was caused by the interruption of Russian gas supplies to Central Europe following Russia’s invasion of Ukraine.

„In addition to its economic value, the company is also irreplaceable in ensuring reliable supplies to the Czech market,“ the prime minister continued.

Net4Gas operates 4000 kilometres of gas pipelines, five compressor stations and a hundred transfer stations, including three on the borders.

Fiala also wrote that „it is not true that state investment in Net4Gas could lead to an increase in the price of gas for Czech customers“. Payments for transporting gas from abroad do make up a significant part of the regulated component of the price, which is set by the Energy Regulatory Office (ERÚ), but the regulated component accounts for less than a fifth of the total gas price, he said.

The Seznam Zprávy website reported earlier, citing new regulatory tables from the ERÚ, that domestic customers would contribute 5,9 to 6,1 billion Kč a year to Net4Gas in the coming years. That is almost two billion more than the company is allowed to collect this year. As a result, households’ gas bills are expected to rise by tens of crowns a month, the website said.