Czech NET4GAS purchase was strategic, loss was expected, Síkela responds to criticism

The loss reported by NET4GAS, which the state bought last year, was expected, according to Industry and Trade Minister Jozef Síkela (STAN). The main reason was Russian gas giant Gazprom’s failure to meet its contractual obligations. The company’s acquisition is a long-term investment motivated by the expected renewed growth in gas transit through the Czech Republic, Síkela wrote on X today. He was responding to criticism from ANO’s shadow prime minister and former industry minister Karel Havlíček, who said Síkela bore full responsibility for the company’s overpriced purchase.

NET4GAS recorded a loss of 1.7 billion Kč last year. The year before, it had posted a profit of more than 6.2 billion crowns. State-owned ČEPS bought the company late last year. It will pay a maximum of five billion crowns, although the final amount will depend on the company’s performance and whether it meets the agreed economic parameters.

„We openly stated NET4GAS’s financial position at the time of the purchase, and the expected loss for 2023 was included in all the expert valuations we commissioned to inform our investment decision. The experts clearly demonstrated that the company’s value was several billion higher than the price we paid for it,“ Síkela said.

The company is actively pursuing the claims it has against its Russian client through international arbitration. „NET4GAS has cash reserves approaching nine billion crowns. It is meeting its obligations, and in January Fitch Ratings upgraded its rating,“ the minister added.

He stressed that gas would gradually play a greater role in replacing coal-fired sources, both in electricity and heat generation. This would also increase demand for gas transmission, which NET4GAS provides. „A stable supply is therefore one of the conditions for a managed and secure exit from coal, and ensuring it requires, above all, the safety and reliability of gas transmission infrastructure,“ Síkela wrote. The purchase of NET4GAS was one of the steps taken to achieve this.

Havlíček, however, believes the purchase of the loss-making company was overpriced. „You paid far too much, and the only ones who made money from it are your friends in the banks. Households and businesses will pay the price,“ the opposition politician told Síkela.

NET4GAS operates 4000 kilometres of gas pipelines, five compressor stations and around a hundred handover stations, including three at the borders. It holds the exclusive licence to transmit natural gas in the Czech Republic. In an emergency, it manages the gas system and declares regulatory levels, thereby deciding on gas supplies to customers. Any problems with NET4GAS pipelines would seriously threaten gas supplies to the country.