Ever since the Czech government pushed through a retroactive 26 percent tax on solar companies’ profits at the end of 2010 to stem an ongoing solar power boom the threat of a massive law suit has loomed large. Now, 11 foreign investors, all members of the International Photovoltaic Investors Club (IPVIC), have told the Ministry of Finance that within six to eight weeks they will file a lawsuit against the Czech state.
The main architect of the Czech state’s legal defense strategy in the looming solar arbitration battle — which, if lost, could cost taxpayers hundreds of billions of crowns — has shown Czech Position a few of the cards in his tightly held hand. Radek Šnábl, an adviser to Finance Minister Miroslav Kalousek (TOP 09), is looking to assemble a “dream team” of expert arbitration lawyers from the four corners of the Earth. And talk of a financial settlement is nonsense.
The Ministry of Finance’s chief adviser over a looming arbitration battle with foreign solar power investors has dramatically cut the estimate of damages the Czech state could face. Radek Šnábl says the bill could come to Kč 25 billion, a tenth of the figure put forward by the ministry only a week earlier when it demanded a special fast track procedure to recruit the lawyers to fight the expected wave of claims.
Revenue from solar power stations is expected to plummet due to the retroactive tax. But at the currently legislated lower purchase price for electricity from the plants, and factoring in a further increase in electricity prices for consumers, there may be a surprise in store — the free market might offer a higher price to the solar power plant owner than the price guaranteed by state subsidies.