Czech state-owned ČEPS completes acquisition of NET4GAS

State-owned company ČEPS has completed the purchase and takeover of NET4GAS Holdings, which operates an extensive system of gas pipelines and handover stations in Czechia. The deal was approved by Czech and European regulators, and both parties signed the transfer documents yesterday. ČEPS informed the Czech News Agency (ČTK). The company will pay a maximum of five billion crowns for the debt-laden business, although the final sum will depend on its financial performance and whether it meets the agreed economic targets.

NET4GAS operates 4000 kilometers of gas pipelines, five compressor stations and 100 handover stations, including three on the borders. NET4GAS Holdings was previously half-owned by a consortium of Allianz Infrastructure Luxembourg and Borealis Novus Parent. ČEPS is financing the acquisition from its own available funds. It has taken over the entire company, including its management and employees.

„A stable NET4GAS is essential for transporting gas through our territory and for the further development of the gas system. Since natural gas will play a significant role in the energy sector’s decarbonization process in the coming years, we need to ensure the company’s stable future development,“ said Industry and Trade Minister Jozef Síkela (STAN).

He noted that gas will play a significant role in the Czech energy mix in the coming years as the country plans to move away from coal. „We expect its consumption to rise by 25 to 50 percent in the coming years, so the state’s investment in NET4GAS is a very important step towards strengthening energy security,“ the minister added.

The agreed purchase price consists of two parts. ČEPS paid three billion crowns today. „ČEPS will pay the second part if NET4GAS meets the economic performance targets, in two instalments of up to two billion crowns in total,“ said ČEPS Chairman Martin Durčák.

The purchase of NET4GAS has been criticized in recent weeks by the opposition and some energy experts. Former Industry and Trade Minister Karel Havlíček called the acquisition a gamble for the state. He warned that the company is heavily indebted and that the investment will not pay off in the future. In response to the recent increase in the regulated component of energy prices, the Czech District Heating Association said that the price of NET4GAS would in fact be higher. According to the association, the Energy Regulatory Office passed on to customers unpaid invoices owed by Russia’s Gazprom to NET4GAS, increasing the regulated component of the gas price by ten percent. Among other things, NET4GAS has a claim of around 70 billion crowns against Russian company GAZPROM Export, which stopped paying for contracted gas transit through the Czech Republic.

NET4GAS holds the exclusive license to transport natural gas in the Czech Republic. It manages the gas system in emergencies and declares regulatory levels, thereby deciding on gas supplies to customers. Any problems with NET4GAS pipelines would pose a serious threat to gas supplies to the country.

According to the ministry, NET4GAS recorded total net profit 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 of 14.5 billion crowns maturing between 2025 and 2028. The company’s financial situation worsened after GAZPROM Export stopped paying for contracted gas transit through the Czech Republic.

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