Czechia's ČEPS files criminal complaint over doubts surrounding NET4GAS purchase

State-owned company ČEPS has filed a criminal complaint over the circumstances surrounding its purchase of gas pipeline operator NET4GAS. An audit commissioned by the company in connection with the acquisition confirmed serious doubts about the purchase process, it said. ČEPS informed ČTK of the matter today. Due to the ongoing criminal proceedings, the company did not disclose further information on whom the complaint targets or details of the audit's findings.

Following a decision by the government of Prime Minister Petr Fiala (ODS), ČEPS bought NET4GAS Holdings in 2023. The company operates an extensive system of gas pipelines and transfer stations in Czechia. Its previous owner was 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 sum depended on the company's performance and whether it met the specified economic parameters. The company did not disclose how much it ultimately paid for the acquisition.

"The acquisition of NET4GAS has been a major issue that has resonated in the public sphere in recent years. After taking over as head of ČEPS, I therefore familiarised myself in detail with the process of purchasing the gas companies. Together with my colleagues on the board of directors, we decided to commission an audit. The audit revealed serious doubts as to the circumstances under which the NET4GAS acquisition took place. ČEPS has therefore filed a criminal complaint in the matter," said ČEPS chairman of the board Jan Kalina. Kalina became head of ČEPS in April this year, replacing Martin Durčák.

Former Industry and Trade Minister Jozef Síkela (STAN) justified the acquisition in 2023 by citing the need for a stable gas transmission company, which he said should play an important role in decarbonising the Czech energy sector. "It is necessary to ensure the company's stable future development," Síkela said at the time. In 2023, the Ministry of Industry and Trade (MPO) said it had commissioned three expert valuations for the purchase, which, according to the ministry, put the company's value above the agreed purchase price after taking its debt into account. According to reports at the time, NET4GAS had interest-bearing debt of around CZK 33.8 billion, cash of around nine billion crowns and assets with a book value of approximately 49 billion crowns at the time of the transaction. The opposition at the time, however, criticised the purchase.

NET4GAS operates 4,000 kilometres of gas pipelines, five compressor stations and 100 transfer stations, including three at the borders. Last year, the company recorded net profit of more than 2.05 billion crowns, improving on the nine million crowns reported the previous year. The company's revenue also rose significantly, by roughly one fifth year on year to 6.46 billion crowns.

The ČEPS Group includes the electricity transmission system operator and its subsidiaries, including NET4GAS. Last year, it recorded net profit of more than 6.8 billion crowns, an increase of roughly 35 percent year on year.