Prague – The Prague City Hall will lend two billion crowns to its company Pražská plynárenská (PPAS) to buy gas for the next winter. The loan was approved by Prague’s deputies today. We have also decided that the company lends on behalf of the company with which it lends. The reason is gas prices, which have been rising sharply since last year’s support. According to PPAS representatives, they have increased tenfold. Other costs are also significantly higher, such as guarantees from the market operator OTE, which the company will not cover from the approved loan. Securing gas supplies for the next winter period will thus be significantly more expensive.
Pražská plynárenská is one of the largest domestic suppliers of energy, supplying approximately 425,000 consumption points with gas and electricity. Its sole shareholder is Pražská plynárenská Holding, controlled by Prague.
The decision was accompanied by a multi-hour discussion of the deputies. Opposition ODS and ANO criticized the functioning of the company and the loan. According to them, responsible politicians and managers should draw personal consequences. Representatives of the company and the city management rejected the criticism. The deputies finally agreed with the opposition’s proposal that an audit be carried out in the PPAS.
Experts: It is logical that Pražská plynárenská is turning to Prague
It is logical that Pražská plynárenská is turning to the capital city of Prague, which is its shareholder. The company is backed by a strong and reliable shareholder who will not let the company disappear. They told the experts that ČTK addressed today. At today’s meeting, the Prague deputies will discuss a two-billion loan from Pražská plynárenská to buy gas in the storage facility for next winter.
“Pražská plynárenská has the luxury of having such a strong and socially responsible shareholder. I personally reckon to the supplier that Pražská plynárenská would end up as the last gas in the Czech Republic, even if it has no source, just buys and distributes. The city of Prague has huge “The city should rather lend to Pražská plynárenská itself and then repay the loans.” said Capitalinked.com analyst Radim Dohnal.
According to Natland economist Petr Bartona, the approach of the Prague Gas Company is logical. “The fact that the company addresses Prague as the owner is logical. The company usually turns to its owner as the first possible source of finance, because they can expect the greatest flexibility from the owner. Negotiations with external creditors are more complicated and expensive,” he said.
Barton pointed out that Pražská plynárenská was one of the cheaper suppliers to households. “If the price falls or at least stops having another major increase, it’s really just a cash flow problem. The old fixed low prices for customers will gradually end, the new fixations will be at a higher level, the cash flow will gradually start to improve again. Then the loan can really be taken as a help with cash flow, “said Bartoň.
According to the spokesman of Pražská plynárenská, Miroslav Vránek, it has additional financing for the supply, especially of disposing of natural gas in underground spaces, including the now tightening requirements for increasing reserves, for the winter season 2022/2023. “Combined with high prices, this represents a significant increase in financing requirements for Pražská plynárenská, in the order of billions. The supply of natural gas to customers and the operation of the company are not affected,” said Vránek.
Pražská plynárenská is one of the largest domestic suppliers of energy, supplying approximately 425,000 consumption points with gas and electricity.
Prague administration