By Jan Lopatka and Jason Hovet
PRAGUE/BUDISOV, Sept 26 (Reuters) - The Czech government agreed on Wednesday to ease a ban on the sale and export of spirits after police found the source behind the spread of deadly bootleg booze that has killed 26 people.
The state banned the sale of hard liquor on Sept. 14, a tough step in one of the world's hardest-drinking nations and a popular party destination for Britons and other Europeans. Exports were stopped last week under EU pressure.
From Thursday, the government will allow the sale of newly made and stamped bottles, although police are still searching for up to 15,000 litres of liquor containing methanol. The worst health scare for decades in the EU member country of 10.5 million was still bringing new patients to hospitals this week.
"This does not mean that everybody should charge into all the bars and start drinking everything they come across. The risk is still here," Agriculture Minister Petr Bendl said.
The ban will also be lifted for drinks made earlier than January. Millions of litres in storage must be certified or destroyed, and pubs must pour away bottles with broken seals. Exports of certified spirits may restart in a few days, upon consultations with the EU, Prime Minister Petr Necas said.
Some distilleries have shut down production in the past week, costing them hundreds of thousands euros a day in revenue, and plan to seek compensation from the state for their losses.
Police have caught two men who face up to 20 years in prison for distributing the methanol, meant for windscreen wiper fluid but instead used to mix vodka and fruit-flavoured spirits.
For Tomas Sova, a father of two who lost part of his vision after drinking tainted vodka with friends at his 34th birthday party, the maximum punishment is not enough.
"The bootleggers should be forced to drink what they made," he said at his house in Budisov nad Budisovkou, 350 km east of Prague and near where the majority of deaths have occurred. "They will get 10 years, get out after five, what is that for?"
The scare is Europe's biggest single poisoning case since methanol killed 68 in Estonia in 2001.
BLACK MARKET FLOURISHES
Liquor makers believe that illegal spirits, made either by chemical purification of industrial denaturised alcohol but also by moonshine operations of official distilleries, account for up to 25 percent of spirits sold.
The government, criticised after reports police had been tipped off in the past but rarely took action, says the share is about 10 percent of the 55 million litre per year market.
Taxes, hiked in 2010 to help the budget during the global financial crisis, can make up over 80 percent of the retail price of cheap brands, which makes the black market flourish.
The missing poisonous bottles mean that the government will try to enforce the destruction of part of the stock, mainly in bars and shops, which may be hard to police.
"It will be total chaos," Tomas Otta, deputy chief of a drinks makers' union, said on Czech Television.
Producers say the ban has tarnished their reputation in the EU. Exports were worth $80 million last year, mostly to Slovakia and Poland.
Popular small-scale distillation at state-sanctioned distilleries, as well as illegal home brewing, has kept running although people have become more cautious.
Michal, 38, who makes his own plum brandy, or slivovice, illegally, throws away some of each batch to reduce the risk but now will take more precautions.
"This really scared me. I will distil all of my last year's production again to make sure there is no methanol," he said. (Editing by Andrew Roche)