Environmental risks arise from hydro-plant in Vjosa riverbed

Environmental risks arise from hydro-plant in Vjosa riverbed

TIRANA, May 16- A group of scientists from the University of Natural Resources in Vienna and the Polytechnic University of Tirana presented on Tuesday in Tirana the results of a two-year study on the river Vjosa. According to experts engaged

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Municipalities aren’t paying social security to employees

Municipalities aren’t paying social security to employees

TIRANA, May 19- Through an information request by business and economy magazine Monitor, the General Directorate of Taxation (GDT) provided a list where all municipalities and former former communal centers resulted in tax liabilities, mainly for unpaid social security. By

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EU integration scares some Albanian businesses

EU integration scares some Albanian businesses

TIRANA, May 21-  Albania has turned its eyes to Brussels for this summer, keeping its spirit up to the decision for opening accession negotiations with the European Union. If the answer is negative, most likely a wave of pessimism will

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Territorial reform doesn’t bring improved services

Territorial reform doesn’t bring improved services

TIRANA, May 20- Revenues from local sources, namely local taxes and tariffs, assets and other assets, of all municipalities in the country recorded a value of about 24.2 billion lek (197.2 million euros) by the end of 2018, up by

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Majority of mayors fail the wealth test

Majority of mayors fail the wealth test

TIRANA, May 16- Balkan Insight in Albania has prepared a report based on long investigation and data provided by the High Inspectorate of Declaration and Audit of Property and Conflict of Interest (HIDAACI) regarding the wealth of mayors from all

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Economy in Brief

Economy in Brief

Currency exchange rates face stabilization Following the resumption of the abroad money transferring from the Tirana International Airport, (which stopped following a robbery within the airport’s perimeter) has brought a stabilization to the previously jarring currency exchange rates. The exchange

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Budget results in surplus from capital expenditure savings

Budget results in surplus from capital expenditure savings

TIRANA, May 15- The government will not be increasing capital investment on this electoral threshold. According to fiscal statistics of the first quarter of the year, capital expenditures for January-April were 14.6 billion lek (117 million euros), down 20 percent

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Agriculture faces a difficulties regardless of funds available

Agriculture faces a difficulties regardless of funds available

TIRANA, May 15- Albania and EU signed a 71 million euros agreement in Brussels in 2015, that sought to provide monetary assistance to Albanian agri-businesses with EU funds from 2016-2020. What would happen was the absorption of EU funds for

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Energy sector faces difficulties due to energy imports

Energy sector faces difficulties due to energy imports

TIRANA, May 14- In the first five months of the year, the Electricity Power Distribution Operator (OSHEE) had to develop several dozen procurement procedures to buy energy in the unregulated free market. Due to the unfavorable hydrological situation, the amount

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Tirana Municipality collects high revenues from infrastructure tax

Tirana Municipality collects high revenues from infrastructure tax

TIRANA, May 13- The Municipality of Tirana has collected 44 million euros in revenues from the infrastructure tax, which amount to 40 percent of overall taxes and tariffs the City Hall imposes. This tax is affected by the construction boom

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                    [post_content] => TIRANA, May 16- A group of scientists from the University of Natural Resources in Vienna and the Polytechnic University of Tirana presented on Tuesday in Tirana the results of a two-year study on the river Vjosa. According to experts engaged in the study of the river Vjosa sediment and the impact of two hydropower plants along it in Pocem and Kalivac, the plants would adversely affect the natural course of sediment.

Dr. Christoph Hauer from the Water Management, Hydrology and Hydraulic Engineering Institute in Vienna estimated that because of the high rates of transport of Vjosa sediments, the samples show an annual loss of the reservoir of about 2 percent in the case of Kalivac and more than 2 percent in the case of Pocem.

“This is more than twice the global average of accumulated annual losses, which significantly reduces energy production starting from the first year of operation,” Hauer said.

Experts estimated that this is expected to have very high economic costs for sediment management and treatment if it is intended to avoid technical problems. Researchers also estimated that the lack of sediment transport will lead to fragmentation of the river bed in the downstream, affecting groundwater levels and will cause coastal erosion and biodiversity loss. For the leader of the environmental organization EcoAlbania focused on biodiversity protection of Vjosa, Olsi Nika, the results of the study prove that the Albanian government will not meet the energy expectations it has in Vjosa.

“On the contrary, these projects will only bring a threefold loss situation - in economic, environmental and social terms,” ​​Nika said.

Present at the presentation of the study was also Theresa Schiller who is coordinator of the campaign “Save the Blue Heart of Europe” by EuroNatur, which promotes the protection of the rivers in Europe, drew attention to the importance of Vjosa's defense. She said Vjosa is a rare river in Europe and should be preserved as part of our natural heritage. Hydropower projects will completely and irreversibly destroy this unique river ecosystem.

Experts warned the government that the plants will have adverse effects on the tourism and agriculture sector in the watershed of Vjosa, which is one of the last wild rivers in Europe. In 2017, an international team of scientists recorded during a short expedition hundreds of new living species in the River Vjosa, two of which were previously unknown to science, adding rumors of its basin protection from hydropower plant construction projects. Hydropower plans have been incessantly criticized by environmental activists, residents of the area, and the European Parliament in recent years. They are seen as a shortcut taken by the government for the exploitation of rivers at the expense of the severe environmental consequences, residents and the future of the country.

Meanwhile CleanTechnica, which calls itself the “#1 cleantech-focused news & analysis website in the US & the world, focusing primarily on electric cars, solar energy, wind energy, & energy storage,” praised the building of the new floating solar panels in Banje of Elbasan. We recall that Statkraft Albania signed a contract with Norwegian company Ocean Sun AS on March 2019 for cultivating solar panels with a maximal capacity of 2 MW at the hydropower tank of Banje. The project will consist of four floating units with 0.5 MW capacity each, and the overall investment amounts to 2.3 million euros.

CleanTechnica used this example to further write an article on the beneficence of solar panels for electricity production. They made an interview with Christian Rynning-Tønnesen who is CEO of Norway’s Statkraft, about his insights on renewable energy in general and floating solar in particular. Rynning-Tønnesen described a scenario in which 50 percent to 66 percent of electricity production globally will come from renewables within the next 20 years. Statkraft foresees solar taking the biggest share, followed by wind and hydropower in that order. According to that scenario hydropower comes in last, but floating solar gives hydro-centric companies like Statkraft a hand in the first place position as well.

“Solar by day and hydro by night can all be done in one plant, at a large scale,” Rynning-Tønnesen explained.

Floating solar panels can get a conversion efficiency boost, thanks to the cooling effect of the water upon which they rest. There are some technological challenges, but on the other hand there isn’t much need to invest in site prep when there is no ground to prep. Rynning-Tønnesen pointed out several other benefits at play in the Albania project, such as having no conflict with land area, since they will be using the surface of the reservoir. 

“It is quite convenient to use the same power lines and some of the electrical equipment, and we already have people on the site,” Rynning-Tønnesen said 

One criticism of floating solar is the cost compared to conventional ground or roof-mounted installations. According to Rynning-Tønnesen, the cost of the Albania project is about double the typical market rate. However, he noted that the project is a first generation, first of its kind thing. He pointed to the downward spiral in conventional solar costs as an indication that floating solar can become competitive, without subsidies, within a few years. 

CleanTechnica said that an interesting thing about Albania is that it is almost entirely dependent on hydropower for electricity. The news site wrote that hydropower is subject to management issues as the impacts of climate change build up. The addition of floating solar panels to hydro plants could provide for more 24/7 stability, as Rynning-Tønnesen noted. In that context, consider that the Banja plant is practically brand new, having opened in 2016 as a project of Statkraft’s Albanian wing, Devoll Hydropower. It is the first of a series of hydropower stations under the umbrella of the Devoll River. When Banja’s sister plant, Moglicë, opens later this year the two facilities will have a total capacity of 256 megawatts. They will also increase Albania’s total energy production by an impressive 17 percent to 20 percent. That’s not including new clean megawatts from the floating solar project, which developer Ocean Sun puts at 2 megawatts. 

This is a sort of demo project however, as our country is only putting its legs on the renewable energy choice, and if all goes well, Albania’s hydro reservoirs could be blooming with solar panels. CleanTechnica also added that a third hydropower plant could also be in the works on the Devoll River, depending on how it goes with the first two. All this is by way of saying that Albania does not appears to be on track for building its long-coveted nuclear power plant. According to the news site, Albania has been eyeballing nuclear power since at least 2007, though neighboring Montenegro is not so keen on the idea of locating it at Durres on the Adriatic Sea. That’s in line with Statkraft’s forecast. Rynning-Tønnesen told CleanTechnica that globally “we will see a massive change from coal and natural gas to renewables and natural gas,” which does not leave much wiggle room for nuclear energy.
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                    [post_content] => TIRANA, May 19- Through an information request by business and economy magazine Monitor, the General Directorate of Taxation (GDT) provided a list where all municipalities and former former communal centers resulted in tax liabilities, mainly for unpaid social security. By the end of 2018 unpaid social security debts amounted to 14 billion lek or 114 million euros, and a considerable part of it belongs to local government. GDT did not separately report the debt created by the vendors due to confidentiality reasons, referring to the law on tax procedures.

The former mayor of Kukes was sentenced to jail in May 2016 by the court, accusing him of abusing about 45 million lek (367 thousand euros) of social security contributions to sponsor the city's football team. It seems that almost all local government units, former communal centers and all municipalities continue to follow the same practice today by not paying employees social security, which in the expenditure hierarchy are the first to be paid as a liability arising from law.

The General Directorate of Taxation has currently imposed a measure of forced execution of unpaid tax obligations for the municipalities of Libohova, Memaliaj, Permet, Tepelena, Pustec, Sukth, Himara, Polican, Fushe-Kruja, Kruja, Kavaja, Rrogozhina and Divjaka. However, all municipalities in the country are tax debtors. Official sources at the GDT stated that the debt of municipalities and communes is comprised of unpaid social security. From a legal point of view, GDT must act for municipalities as well as for businesses, confiscating bank accounts and selling valuable items to cover liabilities, but in practice this does not happen. 

“If a municipality can not pay social security, the finance experts have dropped the bells that the municipality is in danger of real bankruptcy,” argues renowned economist Arben Malaj who is also a former finance minister. According to him, in a functional democracy and a legal state, municipalities, like any other country's governing body, must face the risk of bankruptcy. Malaj added that for the municipalities in difficulty, the central government should buy their debt with five to seven year instruments/bonds, and should set these fusions clear and sound conditions and restrictions on their financial management where after the payroll , insurance, and fiscal obligations, the payment of the annual proportion of the purchased debt must be ahead any other expense or investment.

Beqir Nuredini who is the Mayor of Rrogozhina, said the cause for the financial situation was the early suspension of payments from the central government treasury last year. During 2018 the treasury payments to local government were blocked in November, when the deadline in the previous years was December 15, as the new budget was opened late in January. Nuredini said that blocking treasury operations for more than two months created arrears. He also said that  settlements are being made on the meantime.

Executive Director of the Association of Municipalities Agron Haxhimali, explained that non-payment of social insurance by the municipalities is intolerable. He said that budget planning for a public institution, such as the municipality, is based on rules and laws, and clearly expenditure planning starts off with wages and social security that are inseparable. He said there can be no salary payment without paying off the social security in accordance to the percentage stipulated by the law. Haxhimali added that finance offices in the municipality, municipal councils, and internal auditors should take responsibilities. According to a United Nations Program (UNDP) analysis however, as fiscal decentralization has risen after territorial reform, budgeting and internal audit in local government structures had some shortcomings in some cases. The Ministry of Finance for its part, claims that local government structures are often not correct in bringing payroll sheets in the Treasury and abuse treasury payments instructions.

 

Municipalities in bankruptcy

In most major cities, the municipality is the largest employer. Lack of economies of scale and the massive takeoff of people has put the private sector at a disadvantage to develop at a sustainable pace, as the public sector and local government are the main employers. When the territorial reform took place in 2015, preliminary analysis by the Ministry of Finance predicted to save over 60 million euros from cutting the communal administration. According to data from the Association of Municipalities the local government had employed about 33,500 persons in 2018, from 22,000 in 2015. From the transfer of new functions there are no more than 10 thousand employees. Even without the transfer of new functions such as pre-school education, forest management, maintenance, fire protection etc., the municipal administration is more swollen than prior the reform.

For this reason, municipalities throughout the country have failed to pay social security for employees. Because of this situation the crisis in some municipalities may be described as a bankruptcy, as taxes have started seizure procedures in some of them.The financial problems of local government have in some cases been exacerbated by the central government, which has transferred the administration's functions, but not all funds for their administration. According to a State Supreme Audit Report, the transfer of functions has created additional problems in the financial administration of municipalities. At national level nearly 7,300 educators and support staff working in preschool and pre-university education institutions are managed by municipalities since 2017. The administration function of the fund for pre-university education was transferred to the Municipality of Shkodra in 2016.

In the specific 2016 transfer, funds were allocated to educational and assisting staff of pre-school education as well as funds for assisting staff of pre-university education. In this transfer to the Municipality of Shkodra funds for salaries and social security (not in the full value required to be transferred) of staff (employee and educator), and operating expenses for dormitories were not included. The other municipalities are in a similar situation as well, which in the absence of solutions, were unable to meet the tax obligations related to social security, putting them in a theoretical state of affliction.

 

Municipalities that don’t pay security rose

According to an official list provided from the General Directorate of Taxation through the right to information, all municipalities are debtors for non-payment of insurance. The list was further expanded after the territorial reform. However, the list of taxes currently includes over hundreds of state entities and institutions that have not paid employee benefits. In the list of institutions, debtors are many state water utilities that have not made insurance payments. If a business is struggling to pay tax debts, the first to be paid are insurances. This also applies to state institutions. According to the Law on Tax Procedures, payments of insurance contributions and tax liabilities are made in this order:
  • compulsory health insurance contributions;
  • compulsory social security contributions of the employee;
  • compulsory supplementary social security contributions;
  • compulsory social security contributions of the employer;
  • taxes;
  • interest rate delays,
  • fines and, finally, administrative costs.
  Even when debts are received by force, after the court hearings are completed, the first to be settled are insurance liabilities. But in the case of the state this order does not work because no paralyzing or blocking measures have been taken against water companies, municipalities and regional agencies, even though they have not paid the insurances. Social Security Institute (SII) experts advise that all state employees should routinely verify whether their institution is actually deposited the insurances taken off their wages. For the last six years, these checks can be made online at the E-Albania portal. They advise that these checks should be made by employees at the retirement age so that they can solve the problem created while still at work. The accumulated tax liabilities in the form of unpaid social security by the end of 2018 amounted to 13.8 billion lek or 112.9 million euros. According to official data from taxes, these liabilities expanded by 20 million euros in 2018 or by 18 percent. Taxes claimed that a large part of these obligations belong to public entities and local government, as private companies have been subjected to coercive measures. If businesses do not pay employee obligations in time, their bank accounts are blocked. For state institutions this approach cannot be taken. The bank accounts of water utilities are difficult to block because of the strategic function they have in services to the public. Tolerance against state entities is formalized, as the state is supposed to settle liabilities at a second moment after it has created the debt. SII experts argue that unlike other obligations that the state may create from non-payment of other taxes, the negative effects of the social security debt are multiple. The damage to monetary benefits is far greater than the pay now and on the other hand, the social consequences that are created to the persons are immaterial.  tabela-bashkive (1) [post_title] => Municipalities aren’t paying social security to employees [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => municipalities-arent-paying-social-security-to-employees [to_ping] => [pinged] => [post_modified] => 2019-05-22 13:54:26 [post_modified_gmt] => 2019-05-22 11:54:26 [post_content_filtered] => [post_parent] => 0 [guid] => http://www.tiranatimes.com/?p=141836 [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) [2] => WP_Post Object ( [ID] => 141826 [post_author] => 338 [post_date] => 2019-05-21 16:12:16 [post_date_gmt] => 2019-05-21 14:12:16 [post_content] => TIRANA, May 21-  Albania has turned its eyes to Brussels for this summer, keeping its spirit up to the decision for opening accession negotiations with the European Union. If the answer is negative, most likely a wave of pessimism will cause very damaging consequences for the country's economy rather than the tough process of EU membership itself. In the real aspect regarding benefits, the economy as a whole will not benefit from any additional EU funding at least in the next four years, whether negotiations start or not. On the other hand “Made in Albania” production can take the final blow if membership talks start. The Balkan Eurobarometer for 2018 found that 4 percent of businesses in Albania think that EU integration is a very bad thing, 19 percent think the situation will be the same, and 75 percent of them consider the integration process as a good thing. The survey showed how both Albanian businesses and citizens alike want EU integration more than any other Balkan country. Tired of the destructive internal policies and the high level of poverty, both citizens and Albanian businesses tend to take every offer from abroad without being clear about the consequences. In this case the integration requires high-cost standards that will put Albanian businesses in the face of real bankruptcy. But if negotiations are opened, then the Albanian businesses are too late to cope with the consequences. Alban Zusi from the Exporters Association said the government should have started a consultation process with manufacturing businesses in time to inform them about the consequences. Businesses affected by the EU integration process need to conduct in-depth analysis of costs in order to have arguments to demand protective measures from EU products. Nikolin Jaka who is Chairman to the Chamber of Commerce and Industry in Tirana, said implementation of standards is a long process which will continue even after Albania's EU membership. Their full implementation requires not only a lot of time, but also considerable funds that Albania does not hold today. Full implementation of these standards will also require a further increase of EU financial support. Jaka said this situation requires rigorous cooperation with the private sector, especially in terms of monitoring, information, and support with technical assistance and financial funds for businesses to achieve the implementation of these standards.   Two negative effects by the negotiations Zusi said the Albanian businesses will be negatively affected in two directions by the integration process. Firstly, the abolition of customs tariffs for all EU imports will make Albanian products uncompetitive in domestic markets as well. Albania has high costs because it lacks economies of scale and consequently the goods coming from the largest and most advanced economies risk destroying Albanian production at the beginning. This process will most probably affect the agro-processing industry. Secondly, meeting the standards that the membership process requires is costly and only affordable in some cases by small industries like those of Albania. If in the case of customs tariffs there is negotiation space, there is no tolerance for the standards. Each production line should invest at least 300 to 400 thousand euros in water discharge plants and hundreds of thousands of euros in terms of environmental standards and food safety. This means that if the negotiations are opened the profits through years of Albanian businesses will go to meeting the standards rather than activity expansion or new technology investments. When Bulgaria and Romania joined the EU in 2008, many businesses were definitively or temporarily closed because they did not meet the standards required by the EU. Slovenia negotiated that Gorenje electrical household products were also protected with tariffs, even four years after EU membership. The protective measures are negotiable. Albanian meat or milk producers may require EU products to enter our market with customs rates of over 10 percent, both during the negotiation period and post-accession, until our industries become competitive. Zusi said that as soon as Albania joins the EU, local producers will either block production or make important investments, unaware whether they can afford them due to high costs. The dairy processing sector, the fruit-vegetable processing industry, such as cottage cheese, pickled peppers or cucumbers, the chicken, egg-producing industry, and the confectionary one which uses milk and eggs, are expected to be the most affected . Zusi said the EU does not allow subsidies for more than 200,000 euros for a company, however the needs of Albanian companies today only for improving water spillings need higher investments than that amount. Hypothetically, if Albania joins the EU all Albanian companies need to be shut down.   Costs if negotiations won’t start Adrian Hackaj who is a renowned economist from the Cooperation and Development Institute (CDI), said the opening of negotiations is not linked to direct benefits to the Albanian economy at least in the first three to fours years of the process. Even if negotiations are opened Albania will continue to be treated financially by the EU through IPA funds, as well as currently. Hackaj said that if the negotiations are not opened the country's image is mostly damaged in the eyes of investors. If the European Union decides to open negotiations for Macedonia and not for Albania, it would position Albania at a non-competitive level, especially in terms of foreign investment. If a foreign company wants to expand into the Balkans and hypothetically all countries offer the same regulatory and fiscal conditions, it would choose Serbia, Macedonia, or Montenegro because of their opened membership negotiations. Hackaj said that from an economic point of view this would cost the economy as a whole. The prolongation of the integration process would have a negative psychological effect on the citizens who seeing themselves in the EU, will be more urged to migrate to other Union member countries. According to the Gallup International survey, Albania has the highest emigration potentials in Europe. 60 percent of Albanians expressed the desire to leave the country in 2018, as Albania has the highest number of asylum seekers in the EU since 2015. The high level of emigration is restraining the country's economic development because the Albanian businesses are beginning to feel the lack of workforce. In the absence of opening negotiations, Albanian citizens will be deprived of the standards offered by the accession process, especially in terms of food security. They will also be deprived of freedom of movement, to work and stay without deadlines in the union countries. Precedents from other Eastern European countries which have joined the EU, show that the countries' GDP has increased after accession. Trade with EU countries would further expand and with full membership EU import prices would become cheaper. Currently, about 80 percent of Albanian imports come from EU. Integration will provide a better business climate as the regulatory framework in this area needs to be aligned with EU standards. Perspectives on employment and education will also become easier and cheaper. Trade and goods costs will be reduced by lifting barriers and tariffs. Jaka said that in the rapid reaction, the opening of the negotiations for Albanian entrepreneurship is undoubtedly an encouraging signal and strengthens the confidence of investors, both domestic and foreign, which in turn creates the premises for growth of employment and economic growth. He added that entrepreneurship confidence is strengthened as to clarify its plans for long-term investments, but also as a reflection to prepare for laying the foundations for a competitive economy focusing on priority sectors and offering competitive advantages. In the short term, Jaka said that a large market in which Albanian producers can export their products will open. But on the other hand Albanian producers will be even more exposed to the risk of high competitiveness from European goods. Jaka said this competition should be counteracted by the growth of Albanian exports, as well as by the opening of new businesses with Albanian or foreign capital, in order to create more export space to the European Union market.   How the egg industry will be affected The agri-food industry will be the most affected by the EU integration process. The dairy processing sector, the fruit-vegetable processing industry, the poultry and confectionary industry that uses milk and eggs, are expected to be the most affected as they will be put in front of huge and immediate investment obligations at the time of imposing EU food security measures. Sami Gjergji who is a doctor of sciences in the field of zootechnics, explained how the integration process will affect the egg business. He said that currently the Ministry of Agriculture is preparing the standards of coding and trading of eggs according to EU standards, with four codes where the Code 0 is for biological eggs produced by chickens which grow in an open environment and have the entire chain from land to bio foods. Code 1 is the open access system for chickens with outside access which requires 4 square meters for each chicken. Code 2 is growth in land without outside access, and code 3 are industrial eggs from chickens grow in cages. Since 2012 the EU directives have changed the cage residence rate, reducing the number of poultry in the cage. Another requirement for the eggs that are traded is the code that must be stamped on the egg, which contains the state, region, enterprise code, and date of production. According to EU rules, eggs should be consumed up 28 days after production, then the eggs should pass for industrial use. None of these standards apply today. The eggs are all according to the standard of industrial production and the manufacturers here set the exit from the warehouse date, and not the production one. When enforcing standards and putting codes, companies will be forced to lower the number of chickens. Gjergji predicts that at the moment of EU accession, our egg production industry will automatically collapse. He adds that today integration is seen as a political process when it is far more than that, and preparing for standard implementation should receive maximum attention.   Micro-businesses will be less competitive The Albanian economy is characterized by small businesses with one to four employees which account for over 90 percent of the total enterprises, where self-employment prevails. These businesses are often at the margins of existence and do not have sufficient capital to adapt the standards that will need to compulsory meet as the country will gradually integrate. Gentian Elezi who is an expert on integration issues, believes that market opening and integration with the European market puts small entrepreneurs in trouble, as has happened elsewhere. Consequently, this process will also bring changes in the economic structure within the sector, enhancing competition and the need for scale economies and businesses that can withstand the market. It anticipates that the consequences are gradually expected in these ventures, but the impact will not be the same in each sector. In the medium to long term, a reallocation of the labor force according to the needs of the new integrated market will occur. Stefan Pinguli who is an entrepreneur and the producer of Birra Stela, said that for domestic products in Albania, the measures for the balancing of prices between the small and the big producers don’t apply. Concretely in the European Union an agreement is set that big producers, whether of beer or other products, will have differentiated tax levels to balance the high costs of small business. He proposed that this EU directive should be extended to all industries, but above all to those foodstuffs for which the country has installed most of the industry and labor forces.   31 chapters with difficult obligations The opening of the negotiations and Albania's accession to the European Union will go through a long process which consists in the compliance of 31 chapters involving all of the country's vital activity from democracy and its institutions, to economic and social criteria. Currently, 31 chapters are in effect since the country assumed the status of candidate. To date, the 31 chapters are at the initial stage of implementation which implies the compliance of Albanian legislation with that of the EU in all sectors. Later, law enforcement will be the challenge of the process of opening negotiations and full membership. The first chapter is the free movement of goods, which basically removes the trade barriers and national safeguards for specific categories. Albania has received an average rating in this chapter for the required stage, as we have not met the legislation yet and we have not strengthened market surveillance institutions. The progress report provided positive assessments for public procurement procedures, copyright and food security, as well as fully assessed without progress the developments in the agricultural sector and investment in science and technology. The latest progress report that gave the positive recommendation for the opening of negotiations emphasized the establishment of a functioning market economy, and the ability to cope with competitive pressures and market forces within the Union. According to the report, Albania has made some progress and is moderately prepared for the development in the functioning of the market economy. The European Commission notes that reforms to improve the business environment are crucial and require further efforts. “The laws and rules that support the business climate remain difficult and the gaps in the rule of law continue to hinder businesses and investments,” the report notes.   Primitive agriculture fades the perspective Developments in the agricultural sector received a negative assessment from the latest Progress Report, which noted that the Albanian government is not progressing on elementary EU issues such as property titles and farm registers. The government failed to make accounts in the agriculture sector, which also suffers from land fragmentation where about 350 thousand farms own an average of one hectare. It is not known how far the farm business goes because sales and profit are not reported in the sector. At these levels, a technology-based sector development is farfetched, and competition with the EU can’t even be discussed at this stage. The Progress Report notes that public spending on farmers' support is very low and there is no yearly follow-up on the amount of aid provided. Regarding the organization of the common market, two legal acts have been adopted in olive oil, which partially approximate the relevant national legislation with the EU. There are currently no special support schemes aimed at protecting landscapes, natural habitats, and biodiversity, or preventing adverse effects. Our economy is driven by the service sector, but agriculture still plays an important role. Services accounted for about 54 percent of the GDP in 2017. Agriculture remained the second most important sector with about 22 percent contribution, the industry with 13.3 percent has gradually increased its share of the economy over the last 10 years  mainly as a result of the growth in crude oil production. Within industry the production is relatively small at 6.4 percent, and mainly produces low value products and high-intensity products such as textiles and footwear at 10.5 percent.   Problematic food security EU overseers confirm the concerns of Albanian experts that food security will be the most problematic issue in the country's integration process. EU’s hygiene rules for the production of foodstuffs provide a high level of food safety. Animal health and food safety of animal origin prevail. Also, the food production chain from plant to processing requires high quality assurance. In the EU's 2018 progress report it was noted that Albania has started preparing on the fields of food security, veterinary and phytosanitary policies. Some progress in implementing relevant policies in the field of food and veterinary safety are made, but the problem remains to update the relevant legislation to bring it into line with the latest EU legislation on animal health and plant health checks, and enforce food safety rules including controls on imports and maximum levels of waste pesticides. The EU requires Albania to complete the restructuring of the veterinary sector in accordance with the duties and functions set out in the amended legislation. Albania needs to update animal registries to provide solid traceability systems for food of animal origin. On the general food safety, the National Food Authority for the second consecutive year will carry out official controls under a risk-based plan adopted at the beginning of 2017. The EU notes that Albania needs to match internal control procedures with those of the EU. The National Food Authority began using the TRACES system during 2017, to issue veterinary export certificates for animal products such as fish and eggs. As far as veterinary policy is concerned, mass vaccinations against rabies, brucellosis, skin diseases in cattle, and anthrax in infected areas have continued. Although positive efforts have been made during the second half of 2017 to update information on the animal identification and registration system, there is still insufficient or inaccurate data on the ground due to the lack of reporting in previous periods. The veterinary services reform announced since 2015 was intended to consolidate the veterinary to create a clear chain of communication. The EU assessed that the pace of reform is slow, the services remain fragmented, and there are no personnel with various remaining functions that are being discovered, such as animal waste management, farm biosecurity, or aquaculture. Monitoring of unwanted substance residues has covered pesticide residues in ten plant products. Albania's capacity to improve food security in the market is expected to grow further in 2018 with the help of IPA funds. Improvements are recorded in the microbiological monitoring methodology of raw materials such as milk, based on samples from each milk processing unit or dairy factory with a capacity of more than one ton per day. Samples are analyzed for counting somatic plates and cells every three months. This approach provides a clearer picture of the situation for crude milk. In addition to the general rules contained in the Food Law, no progress has been made in preparing the legislation required for specific food rules.   The precedent Croatia is the last Balkan country to join the European Union through a lengthy negotiation process of almost nine years, from 2004 to 2013. Croatia was the most developed country in the region after Slovenia. The shipping industry and tourism brought the country 10 billion euros exports a year prior membership, but now, four years after joining the EU the country is going through a difficult period. Public debt has risen 10 percentage points since 2013 while the deficit in goods trade has deepened further as the country is facing aging populations and high emigration that incited membership. The country faced difficulties in the recent years after Agrokor, the country’s biggest company which used to employe 60,000 persons, filed bankruptcy as among other things it could not withstand competition from opening up markets with the EU. But membership has further strengthened institutions and democracy in the country at all levels, and Croatian citizens benefited from the opening of trade with the EU by buying more quality goods at cheaper prices. Foreign investment has been on the rise and air travel tickets have become cheaper. Following Croatia from other regional countries, Montenegro and Serbia are in the process of negotiating membership with the EU and are expected to join by 2025, while Albania and Macedonia are expected to receive the green light in June for opening the talks that could lead to membership in the next decade. Albania's biggest challenge is facing the EU markets opening up and preparing its businesses to become competitive in this process. Unlike the entire region, agriculture in Albania accounts for a large part of the economy, at 20 percent in GDP and around 40 percent in employment. The European Commission  gave a low rating to this sector in its latest Progress Report, compared to other chapters that received the most average rating. “During the negotiation process, Albania needs to diversify into value-added sectors and find the way to become part of the EU's economies of scale,” the report wrote.   Balkan Federation prior EU integration The prime ministers of Serbia, Albania, Macedonia, Montenegro, Bosnia, and Kosovo, have signed an agreement, and an action plan is currently underway to create a free trade zone by 2023, as in the EU countries. In some respects, this facilitation which has started with the CEFTA agreement, significantly reduces barriers and trade procedures between countries, but puts some industries in difficulty to become uncompetitive with the opening up of markets for several reasons. Adi Haxhiymeri from the Flourery Processing Association and administrator to Bloja factory, said that even under conditions when the market was not fully liberalized, the Albanian industry is not coping the competition of the regional flour. Serbia, Macedonia and other countries in the region apply subsidy policies for wheat production, while Albania does not. Although Albanian flour-mills have invested in modern technology, they do not have the same access to raw material as other flour-processing businesses in Serbia and Macedonia. Haxhiymeri said that if measures are not taken to prevent subsidies, the flour industry in the country will go bankrupt in the face of customs-free trade. But as the free trade agreement has taken the consensus of the respective prime ministers, Albanian businesses are not informed and are not even aware of the process. Albania is undergoing an internal transition  this year due to elections, the political crisis, and the crippled justice system. The Regional Cooperation Council (RCC), set up with the contribution of the six countries to create the common WB6 market and with the support of donors, has started to operate. In addition to the free trade space, progress has been made on the establishment of a common energy market. A study on a common foreign investment platform has been completed, where it will intervene in six areas since the laws and the level of taxation for investors. The transport sector has completed a study on regional corridors and businesses to be developed by infrastructure and logistics. In the field of tourism, countries have drafted a joint bid for the Balkan tour that has started to be applied this summer. Also, a regional task force has been set up for anti-corruption and improvements in justice systems. In the field of free movement it is agreed in principle for the recognition of diplomas in the field of medicine, dental services, engineering, and architecture. At the service of all these reforms there are already available 2 billion euros donated by the donors to be used according to the initiatives for each reform. The prime ministers of the six countries have signed that until 2023 in our region the goods, services, investments, and people can freely move without tariffs just like the EU today, without quotas or barriers and where trade is facilitated by the World Trade Organisation (WTO) rules. Joint border control with one stop should start working during 2018-2019. The lifting of barriers to trade in services and the electronic recognition of certificates should take place by 2023. By 2020 additional protocol for the settlement of CEFTA disputes should be implemented and countries should also have completed investments in the internal trade infrastructure without a fee. By 2020, a Task Force must also be in place to stop the secretive subsidies of individual states to certain sectors. Albania currently has limited trade with the countries of the region. According to CEFTA data, Albania's trade with these countries has not been significantly affected as expected since the signing of the agreement in 2013.   Why should Balkan countries unite Macroeconomic stability has been difficult in the Western Balkans, especially after the 2008 crisis. The global financial crisis tensed fiscal positions in the six countries, significantly reducing fiscal performance and boosting public debt pressure on the other hand. Countercyclical policies led to doubling of primary deficits in the region from 1.7 percent of GDP in 2008 to 3.8 percent in 2009, continuing by over 2 percent by 2016. As a result the average gross debt in the region grew from about 30 percent of GDP in 2008 to over 50 percent in 2016, where Albania and Serbia have the highest level in over 70 percent. The crisis also highlighted some other structural weaknesses. The World Bank (WB) analyzed that there is a need to improve efficiency, equity, and transparency of fiscal discipline and policies for more effective resource mobilization, and improve the delivery of public services. Public spending in the region remains concentrated on salaries, pensions and social payments, leaving little room for investment. The WB estimates that there is room for improving tax collection and for greater progress in tax policies. After the financial crisis, there is now a common need in the Western Balkans to ensure macroeconomic stability to consolidate public finances and to increase capacities in attracting direct investment flows. Transition towards the consolidation of the market economy remains incomplete in the Western Balkans. The region has made considerable progress in price liberalization, foreign trade, and privatization, but structural transformation remains lagging behind and at the back of other small transitioning economies. Particularly today, the result of transition in the Western Balkans is similar to that of other European transitioning economies in 1996. Progress has been slow in the areas of competition, governance, restructuring of state-owned enterprises, and large-scale privatization. In recent years the convergence to reach EU countries has been low in the countries of the region. Albania, Bosnia and Herzegovina, Kosovo, Macedonia, Montenegro, and Serbia, marked a sharp decline in poverty since the beginning of transition to market economies. Living standards increased nearly sixfold in Bosnia and Herzegovina, almost tripling in Albania, and doubling in Serbia between 1995 and 2015. During 2000-2008, living standards in the Western Balkans expanded faster than in other countries of the world and the EU average. During this period, creating new jobs helped reduce poverty. In the early 2000s, nearly one in three people in the region lived in less than 5 dollars a day. By 2008, this figure dropped to only one in five. Indicators such as longevity, skill, and access to services also improved during this period.  [post_title] => EU integration scares some Albanian businesses [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => eu-integration-scares-some-albanian-businesses [to_ping] => [pinged] => [post_modified] => 2019-05-21 16:12:16 [post_modified_gmt] => 2019-05-21 14:12:16 [post_content_filtered] => [post_parent] => 0 [guid] => http://www.tiranatimes.com/?p=141826 [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) [3] => WP_Post Object ( [ID] => 141823 [post_author] => 338 [post_date] => 2019-05-21 13:00:55 [post_date_gmt] => 2019-05-21 11:00:55 [post_content] => TIRANA, May 20- Revenues from local sources, namely local taxes and tariffs, assets and other assets, of all municipalities in the country recorded a value of about 24.2 billion lek (197.2 million euros) by the end of 2018, up by about 19.1 percent in annual terms, about 3.9 billion lek (31.7 million euros) higher than the previous year's level. Revenues from municipal resources themselves doubled comparing to 2013, where only 12 billion lek (97.7 million euros) were collected. The increase in revenues from its own resources came as a result of the increase in taxes and fees from new municipalities that emerged from territorial reform. Infrastructure impact tax doubled, property taxes increased, and cleaning fees as well, while a special tax for education was imposed in Tirana. But as the tax burden on local government has increased, analysis show that services for citizens have not improved. Even in rural areas due to communal shutdowns the municipalities have not provided routine services for the maintenance of roads and public buildings. According to the Supreme State Audit, with the implementation of the administrative-territorial reform, the ratio between capital expenditures and current expenditures is the same as the 2010-2011 report, with insignificant changes. In a comparative analysis this shows that the past 300 municipalities and 60 municipalities have the same ratio of current/capital expenditures with the 61 new municipalities from the territorial administrative reform. Personnel costs increase (in 2017 twice as high as in 2013) and operating ones did not meet with the major objective of administrative and territorial reform, the increased operational efficiency, and shrinking administrative costs. Also, a Co PLAN analysis has shown that current expenditures essentially exacerbate local budgets. During 2018 they recorded a level of about 58.8 billion lek (478.8 million lek), up by about 9.5 percent in annual terms. Current expenditures expanse was largely driven from increased operating and other costs, by about 10.8 percent in annual terms. In the same direction but to a lesser extent, it also contributed to the increase in personnel costs. Municipalities spent about 21.2 billion lek (172.6 million euros) per person in 2018, increasing by about 7.2 percent in annual terms. By contrast, investment expenditures amounted to about 23.4 billion lek (190.5 million euros), down by about 12.0 percent in annual terms. Administrative-territorial reform aimed at increasing the investment performance, which in fact further marginalized the rural population of the municipalities because taxes are taken across the territory, while investments are mainly made in municipal centers.   Local taxes overspending Despite the source of financing, the local government spent 82.1 billion lek (668.4 million euros) by the end of 2018. This value increased by about 2.4 percent in annual terms, determined by the increase in current expenditures. According to the Co Plan analysis in the breakdown by economic nature, the current expenditures amounted to 72.6 percent and capital expenditures accounted for about 27.4 percent of total expenditures carried out in 2018. Out of the total expenditures of 82 billion lek (667.6 million euros) from local government, the expenditures carried out with the municipalities’ own funds recorded a level of about 48.3 billion lek (393.2 million euros), slightly increasing by 0.9 percent compared to the previous year. Current expenditures marked a level of about 35.2 billion lek (287 million euros) at the end of 2018, up by about 17.2 percent in annual terms. The rate of developments in spending through its own funds over the last three years has been largely determined by the current expenditure performance. The expansion of current expenditures in 2018 constituted the main determinant in the growth rate by 0.9 percent of spending with its own funds. By contrast, the performance of capital expenditures with its own funds contributed negatively to the performance of total expenditures. The municipal budget analysis shows that among the components of current expenditures, staff expenses for wages and salaries, accounted for about 20.5 billion lek (167.2 million euros) during the period considered, increasing by about 8.5 percent compared to 2017. Personnel expenses continue to follow upward annual trend, albeit at more moderate rates, and impacted by the effect of increasing the number of employees as a result of the transfer of new functions. Thus, following the increase of about 53.4 percent ​​in 2016 (following the transfer of new functions), the growth rate was progressively moderated to 21.2 percent in 2017 and to about 8.5 percent in 2018. Operational and other expenses recorded a level of about 14.7 billion lek (119.9 million euros) at the end of 2018, an increase of 32 percent compared to the previous year. At a detailed level, operating expenses incurred with its own funds for this period amounted to 13.4 billion lek (109.3 million euros), an increase of about 32.9 percent in annual terms. All categories of operating expenses have been expanded during 2018. Expenditure on office supplies increased by 31.3 percent, services from third parties by 24.5 percent, transport costs by 24.8 percent, travel expenses by 12.1 percent, other operating expenses by 46.2 percent, and common maintenance by 49.3 percent. Starting from 2015, the performance of operating expenses is clearly following an upward trajectory, with the end of 2018 marking their maximum level. According to Co Plan's analysis, although the increase in expenditures in this category appears to be spread across almost all component sub-items, their performance in the medium to long term needs to be monitored with caution as it may create financial sustainability problems for municipalities. Capital expenditures or investments constitute an important item of local budgets and a precondition for long-term economic development in local government. Over the years, the level of capital expenditures has been volatile, although it presents a good correlation with the performance of its municipality's own financial resources, particularly with revenue from infrastructure impact tax from new construction. After accelerating growth in 2017, investment expenditures amounted to 13.1 billion lek (106.8 million euros) at the end of 2018, down by about 26.7 percent in annual terms. According to government functions, capital expenditures for the functions ‘economic issues’ which also includes transport infrastructure, and ‘community housing and commodities’ which includes housing and urban planning, water supply and sewerage, public lighting, cover the main expenditure burden capital in all periods analyzed with 50.1 and 25.7 percent respectively. However, expenditures on investments in the function of ‘economic issues’ halved in 2018, recording a reduction of 6.6 billion lek (53.8 million euros) from about 13 billion lek (106 million euros) in 2017, down by 49.4 percent a year. Meanwhile, investments in the ‘community housing and commodities’ function have increased significantly by about 37.7 percent in annual terms. With the transfer of new competencies in pre-school and pre-university education, municipalities have increased the level of investment in educational infrastructure. Namely, investment in education recorded a level of about 1.3 billion lek (10.6 million euros) in 2018, up by about 75.2 percent in annual terms.   Municipal expenses per capita The data on expenditure per capita incurred by its own funds point to significant differences between municipalities with the ability to spend their own funds in the period considered. Based on the average index for the last three years built by the Co Plan, the Municipality of Himara represents the highest expenditure per capita at about 49,463 lek (403 euros), followed by the Municipality of Dropull at about 42,563 lek (347 euros) per capita. At the other end, the Municipality of Shkodra appears to have recorded the lowest level of expenditures per capita with its own funds, averaging at around 10,137 lek (82.5 euros) in the last three years, followed by the Municipalities of Kamza, Kurbin, Peqin and Vau i Dejes. The marked difference between the minimum and maximum level of per capita spending through its own funds signals the existence of deep differences in the fiscal capacities of the municipalities and the need to mitigate them in the function of providing local public services. As an initial step in this direction it is estimated to address the calculation of the potential fiscal capacities of the municipalities and further evaluate their performance versus the potential. Further, the performance indicator related to the rate of revenue collection can be factored into the unconditional transfer allocation formula as an element to neutralize the differences for municipalities in an unfavorable fiscal position. Along with spending of funds from their own resources, municipalities also incur expenditures with conditional funds, namely funds that are transferred from central institutions, such as line ministries which should be used according to their intended purpose. For this category of entries in the local budget, municipalities do not have decision-making authority on the amount or manner of use of these funds, therefore they are spent according to the line ministries' definitions, or otherwise with a definite destination. These funds are transferred from line ministry budgets in the form of conditional transfers to finance delegated functions and/or special projects considered by local, regional, or national interests where cooperation with municipalities is required. In the years under review, expenditures made with contingent funds have followed upward trend, mainly following the changes applied to the scheme of benefiting economic assistance for families in need. Contingent expenditures in 2018 fell by about 33.7 billion lek (274.7 million euros) in total, increasing by about 4.7 percent in annual terms. This growth rate results to be moderate compared with the double digit growth recorded in 2017 by 26.2 percent in annual terms). Based on the economic classification, expenditures made with contingent funds focused on two main items. The first were transfers to family budgets such as economic aid, disability payment, etc.. The other was capital expenditures or investments, including the Albanian Development Fund. Of the total conditional transfers, the funds allocated by the Ministry of Health and Social Protection represent about 62 percent of the total or about 21 billion lek (171.2 million euros) by the end of 2018, down slightly by about 0.7 percent in annual terms. By contrast the funds allocated to capital expenditures result to have  significantly grown for the second consecutive year. Thus, capital expenditures financed with contingent funds marked a level of about 8.7 billion lek (70.9 million euros) in 2017, from about 3.3 billion lek (26.9 million euros) that was in 2016. Although at moderate rates, investment by funds from central institutions continued to grow in 2018, marking a pre-order level of around 10.3 billion lek (83.9 million euros), up by about 18.3 percent in annual terms. Investments made with conditional funds in 2018 focused mainly on the ‘Housing and Commodity Commitment’ functions with about 7.8 billion lek (63.5 million euros), and ‘Education’ with about 2.2 billion lek (17.9 million euros).   Crude budgets Despite the size of the financial resources “cake,” the structure of revenues from its own local resources remains an important indicator of local fiscal autonomy. During the last year, the ratio of local personal source revenues to total financial resources was 29.1 percent, the highest historical value since 2010. Although in summarized terms for the 61 municipalities this indicator results in improvement, detailed analysis at the municipal level and according to specific voices, signals a subtle state of local autonomy. Thus, the improvement indicators are determined by the increase of revenues in a limited number of municipalities and their budgets. This improvement is dictated by the increase in infrastructure income tax from new constructions. The unstable nature of the income from this tax,- which is indicated by seasonality and concentration of developmental pressure on a limited number of municipalities or being the subject of development policies-, and the collection of over 75 percent of its revenues in three municipalities, signals structural weaknesses in local fiscal autonomy. By contrast, real estate tax revenues signal a positive performance in the last year and the expectation of increasing its share in local own resources, following the application of a new methodology based on the value of the property. In this context, CO Plan experts estimate that it would be worth determining the theoretical potential of revenues that can be collected from this tax to facilitate and further monitor its administration by municipalities in the country. Expansion of local public spending continues to be largely determined by current spending, such as personnel and operating expenses. Delaying the effect of the transfer of new functions in 2016 and the presence of an upward trend in this spending category does not support one of the main arguments on the basis of administrative and territorial reform, which is increasing efficiency in the provision of public services. At the same time it is difficult to assess whether the increase in current spending has been translated into better services for citizens. Conversely, capital expenditures have been shrunk in 2018, with its own funds and conditional ones. [post_title] => Territorial reform doesn’t bring improved services [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => territorial-reform-doesnt-bring-improved-services [to_ping] => [pinged] => [post_modified] => 2019-05-21 13:00:55 [post_modified_gmt] => 2019-05-21 11:00:55 [post_content_filtered] => [post_parent] => 0 [guid] => http://www.tiranatimes.com/?p=141823 [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) [4] => WP_Post Object ( [ID] => 141783 [post_author] => 338 [post_date] => 2019-05-17 14:33:52 [post_date_gmt] => 2019-05-17 12:33:52 [post_content] => TIRANA, May 16- Balkan Insight in Albania has prepared a report based on long investigation and data provided by the High Inspectorate of Declaration and Audit of Property and Conflict of Interest (HIDAACI) regarding the wealth of mayors from all municipalities in Albania, which was acquired while holding office. It turns out about half of them can’t justifying their wealth based on their income and declarations. On June 30, Albanian citizens will turn to ballot boxes to elect the mayors of 61 municipalities in the country. Candidates to be elected for the first time, like those who will receive another mandate, are required to submit annually their property declarations to the HIDAACI . Since 2015, the HIDAACI has referred to the Prosecution three mayors on charges of false declaration of wealth-issues which have been dismissed with the argument of lack of evidence. However, the data provided by BIRN through requests for information suggests that the level of discrepancies in local property politicians' declarations is many times higher than the number of lawsuits raised by this Inspectorate. An analysis of all property declarations that 61 current mayors have filed by the end of 2017 reveals that 54 percent of them can not justify raising their wealth for at least one year of career. In total, the unjustified amount from the declared resources reaches the value of 201 million lek, or 1.6 million euros. Property Statements of current Mayors were analyzed with the assistance of three financial experts who categorized and put the data provided by property declarations into a database. The information was analyzed using the arithmetic-logical control method, which is similar to the forms the Inspectorate uses when verifying the wealth of public officials. Arithmetic-Logic Control compares household financial records as well as other information with previous statements to identify hidden income data in transactions conducted by politicians, according to the Council of Europe's Income Analysis Handbook and the assets of public officials. In other words, this check explains whether the money that the politician claims to have benefited is consistent with the assets and the money spent by him. The inconsistencies between incomes and expenses incurred are not necessarily illegal. However, these discrepancies do raise red flags, which normally require in-depth verifications from the High Inspectorate of Declaration and Audit of Assets and Conflict of Interest.   Unjustified wealth Albania underwent a deep administrative-territorial reform in 2014, reducing the number of local units from 384 to 61. The reform wiped out divisions between townships and municipalities, and defined the consolidation of power in larger administrative units, with the purpose of using the  financial resources better, as well as providing services to citizens. According to the HIDAACI annual report, 4746 public officials periodically declare their property and private interests. Declaration of property includes property of officials and family members, property source as well as financial obligations. Mayors hold only 1.3 percent of the total number of public officials. Focusing on local mayor declarations, 509 property declarations were administered, and  excluding the first year of the declaration of each of them, 436 statements were subjected to the method of arithmetic-logical control. The data analysis obtained through the arithmetic-logical control method shows that 60 out of 436 statements supplemented by mayors over the years 2003-2017 failed to pass the test. Problem statements account for 13.8 percent of the total analyzed. Of the 61 verified mayors, only 28 resulted with no problems with the claimed property, while 33 mayors or 54 percent of the total had at least in one year of their career a negative difference between the declared income on one hand, and the assets or expenditure on the other side. Among the 33 mayors who failed in arithmetic-logical control, 22 resulted in unhenged margins only for one year of their career. 11 other mayors appear with negative differences from 2 to 6 years of wealth declaration. The total unjustified value with legal resources from 33 mayors, is estimated at 1.6 million euros, or 10 percent of the total assets declared by the current 61 current chiefs. The analysis of asset declarations also shows that none of the mayors declared livelihood expenses over the years 2003-2017. If their financial statements were to add to the minimum living costs for the family, the number of problematic statements would increase from 60 to 139 or 32 percent of total statements. This means that out of the 61 mayors in office, 57 would have at least one year of their career unwarranted wealth through declared resources.   Plenty of red flags In parallel with arithmetic-logical control, BIRN undertook an in-depth analysis of the structure of assets declared by 61 mayors for the purpose of identifying red flags in their statements, including gifts and loans from family members, real estate transactions in high values, shares in private companies or large cash savings. The structural analysis the media agency used is based on an already consolidated methodology developed and used by BIRN Albania in previous studies on the wealth of judges and prosecutors currently undergoing the vetting process as part of a reform aimed at purging the judicial system from corruption and restore public confidence in the institutions. The insured data show that 61 mayors have jointly declared crude assets worth 14.2 million euros before starting their mandate as local elected candidates, with an average fortune for each of them at the value of 233,890 euros. By the end of 2017, the total wealth of mayors is estimated at 18.7 million euros, marking an increase of 4.5 million euros. However, the division of property among mayors is not the same. The data show that six mayors have assets of more than 1 million euros, 28 others had assets estimated between 100 thousand and 1 million euros, and 15 mayors declare in the band 50 thousand to 100 thousand euros. Only 12 mayors have declared assets of less than 50 thousand euros. Of the total assets of 18.7 million euros, 76 percent consists of real estate, 11.4 percent of bank liquidity, and 5.6 percent or 1,047,202 euros are kept in cash. A smaller value, 251,595 is claimed to have been lended to third parties. High value of money held out of the banking system or loans to third parties, which together constitute 6.9 percent of total assets are considered a red flag by best international practices. This should have encourage HIDAACI to undertake in-depth financial controls. Another red flag identified by the qualitative analysis of mayors’ property declarations is the fact that none of them ever declares objects of special value more than 300,000 lek (2400 euros). Ownership of shares in private companies is estimated at 0.3 percent of total assets. However, because these companies generate large revenue for the chief architects, these assets should also be subject to verification. The analysis of the obligations declared by the 61 mayors raised other red flags. By the end of 2017, the 61 mayors together had 3.8 million euros worth of liabilities, of which 55.2 percent belonged to banks, 32.1 percent were loans received to third persons, and 12.6 percent were unpaid liabilities to construction companies. The fact that 45 percent of the liabilities declared by 61 mayors were borrowed from third parties or unpaid obligations to construction companies marks another problem to be investigated. About 61 percent of the expenses declared by local mayors go for the payment of obligations, which should also raise alarm bells for domestic investigators. Total revenues of 61 mayors during their years in office amount to 8.7 million euros. About 66.5 percent of this income stems from the salary as a mayor and family payments. A significant part, about 14 percent of revenues comes from dividends from businesses and another 5.9 percent from real estate transactions. The high value of income derived from businesses and real estate transactions, rents or cash gifts are also considered red flags for the wealth of local politicians. These red flags identified in the BIRN analysis do not necessarily prove to be illegal assets, but underline the need to strengthen the property declaration control mechanism to identify hidden assets or unjustified lifestyles by top local officials. [post_title] => Majority of mayors fail the wealth test [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => majority-of-mayors-fail-the-wealth-test [to_ping] => [pinged] => [post_modified] => 2019-05-17 12:41:09 [post_modified_gmt] => 2019-05-17 10:41:09 [post_content_filtered] => [post_parent] => 0 [guid] => http://www.tiranatimes.com/?p=141783 [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) [5] => WP_Post Object ( [ID] => 141780 [post_author] => 338 [post_date] => 2019-05-17 12:31:51 [post_date_gmt] => 2019-05-17 10:31:51 [post_content] => Currency exchange rates face stabilization Following the resumption of the abroad money transferring from the Tirana International Airport, (which stopped following a robbery within the airport’s perimeter) has brought a stabilization to the previously jarring currency exchange rates. The exchange of foreign rates drastically dropped, the rates saw a slow growth. However, the euro remains low, because the demand for currency remains weak and the bid high. Meanwhile, the added dose of the political crisis is giving its impact on curbing consumption, and the interest rates on euro deposits remain close to zero, which discourages individuals to keep euro in banks. Furthermore, as summer season approaches, market actors predict that the euro will remain weak as a result of increased inflows of foreign currencies by tourists who have already begun to arrive, and later on immigrants who culminate in August.   Unemployment based on education level The industries (call center, tourism, apparel) which don’t need high qualifications have been expanding lately which have led to a decrease in unemployment levels among middle and high school graduates by 2.4 and 1.2 percentage points, respectively. This group is the highest among which remained unemployed in 2018 amounting to 34.5 and 32 percent, respectively. The industry expansion however has led to an increase of unemployed PhD holders at 0.2 percent of the total, or 346 persons. University diploma holders employment increased by 0.3 percentage points during 2018, but the group’s unemployment level remains high at 22.5 percent, or 38 thousand persons. Persons with vocational education were unemployed at only 10 percent of the total, the total of unemployed in 2018 being 173,207 persons.   Political turmoil keeps tourists off Albanian Tourist Union chairman and managing director at “Happy Tours Albania” Rrahman Kasa, said that their partnering agencies from the Czech Republic, Poland, Nordic countries, etc., have expressed their concerns as their clients are canceling their reservations for Albania because of the political turmoil in our country portrayed in their home-country's media. Most cancellations came from the Nordic countries and Germany, who previously were of the highest number in tourist visitors to Albania. Apart from tourists, foreign visitors are cancelling their reservations for conferences and trainings are well. Even though exact numbers haven’t shown up yet, Kasa’s partners are trying to calm their clients down while expecting news developments.   Lifestyle is a factor for death rates amongst Albanians According to the Albanian Institute of Statistics (INSTAT), hypertension, diabetes and smoking are the number one lethal causes to mortality rates amongst Albanians for 2018. 870 in 10 thousand persons had hypertension, and 274 persons in 10 thousand suffered from diabetes. 5 percent of females aged 15-49 smoked and 28 percent (1 in 4) drank alcohol, whereas for males the numbers were 36 percent for smoking, and 60 percent (6 in 10) for alcohol consumption. Only 36 percent of females and 14 percent of males in the age group consumed the recommended amount of fruits during the day, but only 6.8 percent of females and 2.6 percent of males consumed the recommended amount of vegetables. The death toll decreased by 1.9 percent in 2018, but natural causes are the number one factor, followed by accidents.   15 percent of Albanians keep their money off banks Data from the Bank of Albania estimate that 15 percent of Albanians prefer not to keep their savings in banks. The 13 percent said they keep the money in their homes, while the rest 2 percent said they have invested their money in usury lendings. Of 1200 families surveyed, 39 percent of them did not have any kind of savings. But only 40 percent of households have bank accounts, while the rest have invested financial assets in pension funds, insurance companies and treasury bills though with very small percentages. This survey is in accordance a BoA initiative to reform the small value payment system towards digitalisation, which aims to increase the number of bank account holders by 38 percent in its last measurement, to 70 percent in 2022.   Albanians are optimist for their children and grandchildren future Albania is ranked alongside countries like Finland, Sweden and Denmark for optimism regarding the future of children or grandchildren. 75 percent of Albanians surveyed in the Quality of Life Survey drafted by the European Commission stated that they look optimistic about the future of children and grandchildren, while a quarter of respondents gave a different view. Comparing to the region, Albanians have been the most optimistic about the future of succeeding generations, followed by Serbians, where 68 percent of them expressed optimism for their children's future. Montenegro follows suit with 66 percent of respondents optimistic and Macedonia with 65 percent. The least optimistic were Turks with only 50 percent admitting to being optimistic.   Tirana heads on penal cases for fraud The penal cases on fraud marked an increase by 21 percent during 2018. The figures made public in a recent Prosecutor's Office report suggest that the specific weight this offense has in the criminal offense group “Fraud” was 85.85 percent for 2018, while in 2017 it was 59.2 percent. 51 percent of the total number of proceedings in the country were made in Tirana, followed by Durres with 12 percent. The specific weight of “Insurance Fraud” in the group of penal offenses “Frauds” was 8.5 percent for 2018, while in 2017 it was 36 percent, with a significant decrease in the number of such cases. The specific weight of “Violation of industrial property rights” in the group of offenses against fraud for 2018 was 2.3 percent, while in 2017 it was 1.7 percent with a slight increase. [post_title] => Economy in Brief [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => economy-in-brief-9 [to_ping] => [pinged] => [post_modified] => 2019-05-17 12:31:51 [post_modified_gmt] => 2019-05-17 10:31:51 [post_content_filtered] => [post_parent] => 0 [guid] => http://www.tiranatimes.com/?p=141780 [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) [6] => WP_Post Object ( [ID] => 141748 [post_author] => 338 [post_date] => 2019-05-15 17:00:13 [post_date_gmt] => 2019-05-15 15:00:13 [post_content] => TIRANA, May 15- The government will not be increasing capital investment on this electoral threshold. According to fiscal statistics of the first quarter of the year, capital expenditures for January-April were 14.6 billion lek (117 million euros), down 20 percent compared to the same period a year earlier. In relation to what was planned at the beginning of the year, the government's spending on roads, hospitals, water supply, schools etc., were 26 percent less, or 5.3 billion lek (45 million euros) in nominal values. While being economical in terms of investment spending, government institutions have not been so sparing for other expenditures. In total, budget expenditures increased by 3.4 percent compared to the same quarter last year, reaching 144.6 billion lek (1.17 billion euros), yet 4.8 billion lek (38.8 million euros) less than the previous year, a saving that came largely due to lower capital investment. The highest rates were recorded in current expenditures by 1.1 billion lek (8.9 million euros) more than planned, mainly for wages, interest and maintenance, which increased by almost 7 percent. Salary expenditures were nearly 2 percent higher than those of January-April of the previous year. The government spent nearly 11 percent more to pay up debt interests from loans received, where the highest growth had the interests of the external debt. The government also spent nearly 54 billion lek (437 million euros), or 37 percent of its total spending to subsidize pensions, as the increasing number of retirees and the deterioration of the contributor-benefit ratio is increasingly aggravating the pension scheme. Unemployment and economic assistance payments increased by 76 percent and 15 percent respectively over the first four months of 2019, compared to the same period last year. Nevertheless, overall with revenues totaling about 149 billion lek (1.2 billion euros) and expenditures of 144.6 billion lek (1.1 million euros) as a result of saving from capital expenditures, the budget again resulted in a surplus of 4.3 billion lek (34.8 million euros) in January-April, much higher than the forecast of 338 million lek (2.7 million euros). Even compared to the same period of the previous year, the budget surplus was about 31 percent higher. Revenue Taxes and customs collected for the budget about 149 billion lek (1.2 billion euros) in the first four months of the year, an increase of 4 percent compared to the same period last year, or about 5.8 billion lek (46.9 million euros) more. Compared with the previous months, April was the best as it collected nearly 40 billion lek (323.5 million euros), the highest level so far in 2019 (in January, for example, collected only 34 billion lek). This has caused the failure to realize the plan to be less than 1 percent for the first four months. Tax revenues amounted to 140.4 billion lek (1.1 billion euros), with an annual growth of 4.5 percent, with a slight failure to complete the plan. Regardless, their revenue performance wasn’t as high as anticipated as it grew by only 1.8 percent with an unrealized plan of 3.1 billion lek (25 million euros). This failure was due to the poor performance of VAT, one of the main taxes in the budget, revenues from which declined by 2.3 percent in relation to last year’s first quarter. Finances have claimed that this poor performance of VAT is related to the decline in the work activity in the Trans Adriatic Pipeline (TAP) pipeline project. Together with the project no longer operates the chain of companies that have connected the supply of goods and services with the TAP project. According to the Ministry of Finance, this has created weaknesses in collecting VAT revenues.Poor performance also had national taxes, while the most positive item was profit tax, with a 17 percent increase and exceeding the plan by almost 1.7 billion lek (13.7 million euros), which somewhat amortized the failure to realize the plan from VAT and national taxes. Failure to implement the plan from customs duties has been compensated almost entirely by the good performance of local government from its local and wealth taxes with a 2.5 billion lek (20 million euros) more than planned. Income tax revenues, following a weak performance in the first three months of the year, swayed in April. Local government collected nearly 1.5 billion lek (12.1 million euros) only in April, from 847 million lek (6.8 million euros) collected in the first three months together, with a surplus of 1 billion lek (8 million euros) for the plan of the four month period. During this year it is expected to start the collection of the property tax based on the new formula based on the value of the property. Exceeding the 1.5 billion lek (12.1 million euros) plan had revenues from local taxes, with a 40 percent increase compared to the same period of the previous year. Municipalities are rejoicing more revenues as a result of the infrastructure tax they are receiving from construction permits, especially in the capital. Income from social and health insurance was about 33 billion lek (267 million euros), in line with the plan. Non-tax revenues amounted to 7.7 billion lek (62.3 million euros), with a slight overrun of the plan. [post_title] => Budget results in surplus from capital expenditure savings [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => budget-results-in-surplus-from-capital-expenditure-savings [to_ping] => [pinged] => [post_modified] => 2019-05-15 17:00:13 [post_modified_gmt] => 2019-05-15 15:00:13 [post_content_filtered] => [post_parent] => 0 [guid] => http://www.tiranatimes.com/?p=141748 [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) [7] => WP_Post Object ( [ID] => 141745 [post_author] => 338 [post_date] => 2019-05-15 15:58:16 [post_date_gmt] => 2019-05-15 13:58:16 [post_content] => TIRANA, May 15- Albania and EU signed a 71 million euros agreement in Brussels in 2015, that sought to provide monetary assistance to Albanian agri-businesses with EU funds from 2016-2020. What would happen was the absorption of EU funds for giving agriculture the opportunity not only to stay on its feet, but to develop further as the sector provides about 20 percent of the country's GDP. However, challenges still manifest regardless the approaching deadline for closing this year’s application for farmers who want to receive state subsidies. Last year, the Ministry of Agriculture announced that at the conclusion of the call for the National Financial Scheme of Subsidies and Grants of 20 million euros, almost 90 percent of applicants were declared winners. The deadline for the National Agricultural Support Schemes 2019 is May 17. Head of the Agency for Agricultural and Rural Development (AARD) Frida Krifca, said in an interview with business and economy magazine Monitor that about 3281 applications were filed. The highest requirements are for Measure no. 1, “For the matriculate base,” for farms with no less than 100 heads of sheep and/or goats at the value of 1000 lek (8 euros) per head with 1071 applications. Then follows Measure no. 2. for the “Delivery of first raw milk” with 1051 applications, at 10 lek per liter at the processing points from cows and cattle growing farms, versus the sales tax invoice. 610 applications were received for Measure no. 3 for beekeeping support. Measure no. 5 for “Olive planting” in the amount of 350 thousand lek (2800 euros) per hectare for intensive cultivation forms, and 250 thousand lek (2000 euros) per hectare for traditional forms received 344 applications. Last but not least, the Measure no. 6 for “Improvement of irrigation techniques through installation of drip irrigation in olives” with financing up to 250 thousand lek (2000 euros) per hectare had 191 filed applications. Krifca said that the 2019 program focuses on the support of small farmers and livestock farmers, through direct payments from detailed matrices, for delivering first raw milk at 10 lek/liter at processing points, and for cattle breeding farms, against the sales tax invoice. Another added detail to this year’s program is the “zero documents” initiative which was launched last year, and gave results in easing the application and accuracy for farmers by providing only the ID card and their taxpayer identification number (NIPT in Albania), avoiding confusion, queues, saving time and with no additional administrative cost. This arose because farmers often complained for bureaucracies in getting hold of documents from state institutions, and thus now the AARD gets each farmers documents on its own by contacting the other institutions itself. Krifca also expressed her support and likeness for agritourism which has become a motor of economic development for very deep agricultural and livestock areas. This comes given the growing tourism trend in general and the special requirements of foreign tourists for agritourism activities where the tourist meets with the farm, the farmer, the host, explores the Albanian tastes, hospitality, tradition and bread. Albanian farmers and entrepreneurs are understanding the potential this sector offers for diversifying business activities, and consequently for revenue growth, and thus the government funding is also directed towards this practice to support them. Krifca said there has been an increasing interest for funds from farmers, and the AARD has provided 18 grants at the value of 80 million lek (648 thousand euros). As regarding Albanian government funds and subsidies, a 5 million euros subsidy fund was approved in the 2019 budget for the Ministry of Agriculture and Rural Development, which provides nearly 4 million euros to increase the competitiveness of livestock and fisheries products, and reduce production costs through matriculated animal payments, for delivery of milk, fished shellfish and sardines. Another part will go to support the diversification of economic activities in rural areas, and another 1 million euros will go as grants for the project “Sustainable Development of the Olive Sector” and will be used for the addition of olive-growing areas to improve mechanization and increase the production of olive oil.   Bank of Albania findings The Bank of Albania conducted a study for the activities of farming enterprises in the first half of 2017, from which it found a generally wretched situation. The financial result of agricultural enterprises has remained unchanged or it decreased compared to the previous six months. As far as activity or investment is concerned, the 79 percent of agricultural enterprises claim that they have not expanded their activity during the first half 2017 nor will they change their activity or investments during the second half. The main problems identified by agricultural enterprises during the first semester of 2017 for their activity are problems related to sector specificity, market finding, competition and cost of financing. The main source of financing of agricultural enterprises is their sales and own funds, while the loan is quite negligible. Only 18 percent of agricultural enterprises have a loan to pay, while 82 percent of them report that they do not. Agricultural enterprises that have borrowed say that they mainly received it from banks, other persons and non-bank financial institutions. The loan received was mostly used to meet their current spending for 73 percent of enterprises, and 46 percent said they used the loan to make a long-term investment. 40 percent of the surveyed agricultural enterprises claimed that their sales had fallen during the first semester of 2017, while 43 percent of them said the sales had not changed during this period.  Only 16 percent of the agricultural enterprises claimed that their sales had increased in this six-month period. The stagnation and decline in sales has also affected the profit trend and expansion plans. Thus, with regard to the financial result, 48 percent of agricultural enterprises claimed that during the first semester of 2017 it had remained unchanged, 37 percent of enterprises claimed that the financial results dropped, and 15 percent of agricultural enterprises claimed that their financial results increased during the first semester 2017. In terms of expansion or not of activity (or investment), on average 78 percent of agricultural enterprises claimed that they had not changed their activity during the first semester and expected no changes even during the second semester 2017. Some of the difficulties agricultural entities encountered were classified as access to finance, cost of financing, availability of qualified staff, cost of production or labor, competition, market finding, adaptability of the legislation in force or other than these. Agricultural enterprises pointed out that other factors, market finding, competition and the cost of financing are among the main problems that they have faced most during the first semester of 2017. These data could also be supported but not necessarily indicate the slow production growth of produce from farms. According to data from the Albanian Institute of Statistics (INSTAT), vegetable production in 2018 increased by 1.24 percent compared to the previous year. Growth also had the production of beans and potatoes with respectively 15.8 percent and 1.9 percent. A downward trend during 2018 was noticed in the number of livestock heads. Compared to the previous year the number of cattle decreased by 1.7 percent, the number of sheepskin by 3.2 percent, and the number of goats with 1.7 percent. Meanwhile, poultry production increased by 6.7 percent and the number of pork by about 2.2 percent. A special attention has been paid to bee breeding where an increase in the activity of farmers in some areas of the country was noticed. In 2018 the honey production increased by 8.9 percent compared to the previous year, egg production by 2 percent, and overall meat production by 0.1 percent. Milk production also dropped by 1.0 percent compared to 2017, while its production structure amounts to 85.1 percent cow milk, 7.4 percent sheep milk, and 7.5 percent goat milk. Cereal production also fell by 3.3 percent in 2018. A slight decrease was also noticed in the production of aromatic and medicinal plants, and spices by 2.1 percent compared. The production of aromatic, medical and spice plants in 2018 amounted to 12,531 tons. The production of fruit trees has grown from year to year. The production of fruit trees in 2018 increased by 4.5 percent, olive with 9 percent, citrus fruits 10 percent, while grape production decreased by 8.9.    [post_title] => Agriculture faces a difficulties regardless of funds available [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => agriculture-faces-a-difficulties-regardless-of-funds-available [to_ping] => [pinged] => [post_modified] => 2019-05-15 15:58:16 [post_modified_gmt] => 2019-05-15 13:58:16 [post_content_filtered] => [post_parent] => 0 [guid] => http://www.tiranatimes.com/?p=141745 [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) [8] => WP_Post Object ( [ID] => 141738 [post_author] => 338 [post_date] => 2019-05-14 14:15:47 [post_date_gmt] => 2019-05-14 12:15:47 [post_content] => TIRANA, May 14- In the first five months of the year, the Electricity Power Distribution Operator (OSHEE) had to develop several dozen procurement procedures to buy energy in the unregulated free market. Due to the unfavorable hydrological situation, the amount that has been purchased from this market has been high and in some cases at steep prices, putting the public distribution company in financial difficulties. Official OSHEE data show that from January to May, 1.3 million MWh of energy were imported, with an average price of 73.47 euros, which makes total purchases in the unregulated market to meet consumption in the country to have caught a value of 96.8 million euros, excluding the Value Added Tax (VAT). OSHEE started 2019 with high costs on imports. Because of the minimal production of the Albanian Power Corporation (KESH), the largest amount of energy was provided in the unregulated market. Specifically, in January, more than 338 thousand MWh of energy was purchased in this market at an average price of 89.86 euro/MWh, resulting in a bill of about 35 million euros without VAT. This is the month with the highest costs of OSHEE for energy purchased from the unregulated market. In February, the distribution company purchased 173 thousand MWh of energy at a price of 69.81 euros/MWh. This is also the smallest amount contracted by this market in these 5 months, with a bill of 12 million euros. The cheapest average price was in April sith 62.92 euros/MWh, which despite the considerable amount of over 236 thousand MWh of imports, the bill had a value of 14.8 million euros without VAT.   Difficulties from costs OSHEE is not experiencing its best days, which looks like a recurrence of 2017 when the whole sector was struggling because of the high imports. At that time, to cover energy purchases a portion of the World Bank loan from the Recovery project was also used. The likelihood is that if the conditions do not change, the company will be in a similar situation. The amount of energy that OSHEE is buying today in the unregulated market is significantly higher than the average of the previous years, at least for May. This means that even the costs are significantly higher. " “Usually, the month of May was covered by the Albanian Power Corporation, so there was a better hydro situation, which has helped us as well. This year, KESH is in a difficult hydro situation, what is also transmitted to us,” said OSHEE sources. OSHEE purchases from KESH at a price of 1.45 lekë/kwh and sells it to the end customer with 9.5 lekë, while for some business categories, even 14 lekë/kwh. The price that OSHEE purchases from KESH is significantly lower than that of OSHEE from the unregulated market. The recent rainfall appears to have had no apparent effect on domestic production. Energy-intensive manufacturers have a modest output, which does not make a big difference according to OSHEE, while KESH itself is trying to create a hydro reserve. Under these conditions, it seems to both distribution operation and the Corporation, the eyes are drawn from the sky and the hope for more rainfall.   Procedures to ensure funding KESH has been implementing optimization practice for years, trying to improve the economic portfolio. Even during this year, KESH is involved in this kind of process, which means it sells a certain amount of energy in peak time, providing a good price and buys during night hours at a cheaper price. The latest optimization case was in March when KESH sold 3360 MWh of energy at a weighted price of 57.34 euros, while buying 3332 Mwh at a weighted price of 45.02 euros/MWh. Only by this procedure KESH managed to emerge with a positive balance of about 43 thousand euros. The same practice KESH attempted to develop in April for the period 13-22 April 2019. The schedules selected for this procedure were in peak hours, while KESH's buying would focus on 11 p.m. to 12 a.m.. However, the April procedure did not prove successful, which made KESH announce its suspension. “After reviewing the bids submitted by the participants in the notified optimization procedure for the period 13-22 April 2019, the Contracting Authority decided to cancel the procedure for abnormally high purchase and low sale prices, not justifying thus the purpose of announcing the procedure,” notified KESH in its company's website.   OSHEE suspends investments without deadline Under conditions where energy imports reached about 100 million euros, excluding Value Added Tax, the Energy Distribution Operator had to make the decision to suspend the investments in order to ensure the necessary financial means. Their priority is to provide energy supply and the situation has not been at all favorable. There are at least 30 million euros of frozen investment contracts, while the overall suspension for investments has no deadline. So it is unknown when the situation will rest, and it will depend very much on the performance that will have the hydraulic aspect in the country. The company has planned a total of 8.5 billion leks (68.9 million euros) as an investment plan for 2019, while during the 2015-2018 period approximately 33 billion euros have been invested in the distribution network. A good part of these investments are backed by the company's own revenue, which has been steadily increasing due to shares against illegal connections and the procedure for arrears. Another part of these investments were financed by a loan with the World Bank, which in 2015 committed 150 million dollars to recover the energy sector and include some components.   OSHEE needs to liquidate bills soon The distribution company announced at the beginning of March that it was in an emergency situation with liquidity difficulties, due to considerable energy-saving costs. At that time, the company demanded that the repayment term be 180 days out of previously 90 days. The Energy Regulatory Entity (ERE) however, dismissed the first request as unsubstantiated. OSHEE submitted to ERE a second request for the same demand which also received the support of the Ministry of Infrastructure and Energy. The second request submitted by OSHEE stated that the company made electricity purchases during October, November, and December 2018, and then January, February and March 2019, the Free Market providing most of it due to the significant production absence by the company KESH sh.a. (sh.a. for joint stock company). OSHEE didn’t only find it challenging to recover the losses caused by the 2017 extraordinary drought, which increased the cost of purchasing electricity, but faced an additional cost of purchasing electricity as a result of the lack of electricity supply from KESH sh.a. in the second half of the year, as well as from increased production of Independent Power Generators in the first part of 2018. “Lack of liquidity, as a result of the above factors, forced OSHEE sh.a. to slow down the 2018 network investment program, which is about 2 billion lek (16.2 million euros) lower than the one envisaged in the approved Financial Program,” underlined the request. Further, the company argued that in January-February 2019, electricity purchase costs were 3.7 billion leks, or 29.6 million euros higher than planned, and according to expectations this may continue in the first half of 2019, which affects its solvency. OSHEE sh.a. analyzed very carefully the emergency situation and according to these analyzes it was foreseen that during February, March, and April 2019, faced financial impossibility of payment to Free Market Purchase Invoices as a result of the collision of these payments with current HEC bills and KESH sh.a. during January, February, March 2019, with a 30-day payment term, which during these months they expect a significant increase in their production. OSHEE estimated in the report to ERE that the risks and damages that would be caused by this impossibility of liquidity related to the penalties that would be applied by the energy companies, the risk of the inability to purchase electricity during February, March, etc. 2019 , as a result of the debts created, would lead to the deterioration of the reputation of the distributing company as a result of non-compliance with the contracts on energy business companies. And seeing this submission, as well as the support provided by the Ministry of Infrastructure and Energy, the Energy Regulatory Authority approved the postponement of the deadline for OSHEE bill payments to third parties from 90 days to 180 days.   Improved indicators The public power distribution company has managed to provide positive indicators in the first three months of the year, but in spite of this it seems that the financial difficulty has been impossible to overcome. OSHEE reported a general loss reduction and increase in receipts for the period January to March, but the biggest challenge remains the fact that 26.2 percent of the electricity fed to the grid is lost. OSHEE reported that the total revenues have increased by 4.6 percent compared to the previous year, while the number of new subscribers has increased by 2.3 percent. In the first quarter, revenue from receipts was 18.3 billion lek (148.4 million euros), an improvement of 816 million lek (6.6 million euros) compared to the previous year. An important element in the company's finances is the performance of bad debt collection for overdue bills. According to official OSHEE data, the bad principal debt for 2007-2014 bills was 44.3 billion lek (359.4 million euros) at the end of March 2019, from 67.8 billion lek (550 million euros) at the end of 2014. This indicates a 1.1 percent reduction by the end of 2018 and a 34.7 percent by the end of 2014. OSHEE said that this indicator has been improved due to debtors' follow-up through ongoing processes, as well as reactivating the deals. The operator also said that in the first three months of this year there has been a decrease in the number of billing complaints by 19.8 percent compared to the previous year, which is evidenced by the increase in quality of service and billing. The average monthly complaints in relation to the total number of bills issued is at the level of less than 0.6 percent.  [post_title] => Energy sector faces difficulties due to energy imports [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => energy-sector-faces-difficulties-due-to-energy-imports [to_ping] => [pinged] => [post_modified] => 2019-05-14 14:15:47 [post_modified_gmt] => 2019-05-14 12:15:47 [post_content_filtered] => [post_parent] => 0 [guid] => http://www.tiranatimes.com/?p=141738 [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) [9] => WP_Post Object ( [ID] => 141732 [post_author] => 338 [post_date] => 2019-05-13 17:07:54 [post_date_gmt] => 2019-05-13 15:07:54 [post_content] => TIRANA, May 13- The Municipality of Tirana has collected 44 million euros in revenues from the infrastructure tax, which amount to 40 percent of overall taxes and tariffs the City Hall imposes. This tax is affected by the construction boom around the Albanian capital, and local finance experts assert that the dependence on this tax signals structural weaknesses in local fiscal autonomy, as the income is higher than foreseen. The Municipality of Tirana has secured approximately 21.6 billion lek in revenues, or 173 million euros in 2018, from its own funds, and the conditional and unconditional transfers, reaching a record level. This information comes in accordance to data published by the Co-Plan project  at financatvendore.al. Compared to the previous year, total municipal revenues have increased by 30 percent, and compared to 2015 have more than doubled, being 130 percent higher. From the revenues from taxes and fees, the Municipality collected 13.1 billion lek or 106 million euros, an increase of 32 percent compared to 2017. This amount accounted for 60.6 percent of the total income the municipality had available during 2018, where 41 percent came from taxes and 19 percent from tariffs, in relation to total budget. The remainder is provided by conditional and unconditional transfers from the central government budget as well as by separate taxes, which come from vehicle registration, rent of mines, and the transfer of ownership rights. In comparison with 2015, the revenues that the Municipality has collected from taxes and fees almost tripled. The main effect on this significant increase in revenues has been the infrastructure impact tax during the last three years (2016-2018). This tax has become the key for the Municipality of Tirana for two reasons, first by the increase in the tax from 4 percent of the cost to 8 percent of the sales price, and secondly by the increase of construction permits in Tirana. As mentioned the revenues from infrastructure impact tax in 2018 were about 44 million euros, marking a record level. The municipality has received 60 percent more income than  initially planned from the construction permits given, as it was planned to collect only around 3.4 billion lek (27.5 million euros) from the infrastructure impact tax. According to Albanian Institute of Statistics (INSTAT) data, 388 construction permits were issued during 2018 in Tirana, from 231 in the previous year. The number of permits is much higher than a few years ago and marks the record, at least since 2005. An earlier record was in 2010 with 254 permits in total. Stronger growth has been the area provided for construction permits in the capital. Permits with a total area of 940 thousand square meters have been granted for the whole year, from 521 thousand in the previous year, with an increase of 80 percent. Only in the fourth quarter on 2018 were granted permissions for a construction area of 456 thousand square meters, or 70 percent of the total land area given in the country for construction permits for this period. Local finance experts point out that the unstable nature of income from this tax based on seasonality and concentration of developmental pressure on a limited number of municipalities, or being the subject of development policies, and also collecting more than 75 percent of its revenues in three municipalities, signals structural weaknesses in local fiscal autonomy. The second item is expected to bring more revenue to this year's budget at about 17 percent of the total, is the ‘cleaning fee,’ out of which nearly 2 billion lek (16 million euros) have been collected. The ‘real estate property tax,’ from which about 1.8 billion lek (14.5 million euros) were collected. This invoice also has the highest performance of the plan for only 76 percent, because it was not possible to start collecting the tax based on the new formula on the value of the property. This method is expected to begin to be applied this year and the tax rate will be expressed in percentages, as for buildings used for housing at 0.05 percent, and for buildings used for economic activity, too, at 0.2 percent. Recently, the Municipality of Tirana has appointed as a real estate tax collector the Tirana Water Supply and Sewerage Agency. All citizens must go to make self-declaration of the areas they own or use within four months, information that will then be verified by the Agency. As a consequence the Municipality expects to collect 2.4 billion lek (19.4 million euros) from this tax, with a 35 percent increase from last year, where the biggest addition will be to the family members who will pay more than double in 2019 and four times more by 2021 (from 220 million lek in 2018 to 900 million lek in 2021). This revenue growth has enabled the municipality to carry out more expenses, which amounted to 20 billion lek (162 million lek) in 2018, with an annual growth of 29 percent. Current expenditures account for 67 percent of the total, namely 13.2 billion lek (106.9 million euros), and only 6.7 billion lek (54 million euros) went to capital expenditures, of which 2 billion lek (16 million euros) per infrastructure, nearly 3.2 billion lek (25.9 million euros) for public services and 1.2 billion lek (9.7 million euros) for education. Compared to the previous year, although there was 30 percent more available income, capital spending increased by only 7 percent, while administrative expenditures by almost 30 percent. This has caused the share of capital expenditure to drop to 34 percent, from 38 percent the previous year. Compared to 2015, staff costs doubled to 4.8 billion lek (38.9 million euros), accounting for 24 percent of the total. In value, staff expenses were as much as 71 percent of those in 2018. [post_title] => Tirana Municipality collects high revenues from infrastructure tax [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => tirana-municipality-collects-high-revenues-from-infrastructure-tax [to_ping] => [pinged] => [post_modified] => 2019-05-13 17:08:22 [post_modified_gmt] => 2019-05-13 15:08:22 [post_content_filtered] => [post_parent] => 0 [guid] => http://www.tiranatimes.com/?p=141732 [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) ) [post] => WP_Post Object ( [ID] => 141786 [post_author] => 338 [post_date] => 2019-05-22 14:41:23 [post_date_gmt] => 2019-05-22 12:41:23 [post_content] => TIRANA, May 16- A group of scientists from the University of Natural Resources in Vienna and the Polytechnic University of Tirana presented on Tuesday in Tirana the results of a two-year study on the river Vjosa. According to experts engaged in the study of the river Vjosa sediment and the impact of two hydropower plants along it in Pocem and Kalivac, the plants would adversely affect the natural course of sediment. Dr. Christoph Hauer from the Water Management, Hydrology and Hydraulic Engineering Institute in Vienna estimated that because of the high rates of transport of Vjosa sediments, the samples show an annual loss of the reservoir of about 2 percent in the case of Kalivac and more than 2 percent in the case of Pocem. “This is more than twice the global average of accumulated annual losses, which significantly reduces energy production starting from the first year of operation,” Hauer said. Experts estimated that this is expected to have very high economic costs for sediment management and treatment if it is intended to avoid technical problems. Researchers also estimated that the lack of sediment transport will lead to fragmentation of the river bed in the downstream, affecting groundwater levels and will cause coastal erosion and biodiversity loss. For the leader of the environmental organization EcoAlbania focused on biodiversity protection of Vjosa, Olsi Nika, the results of the study prove that the Albanian government will not meet the energy expectations it has in Vjosa. “On the contrary, these projects will only bring a threefold loss situation - in economic, environmental and social terms,” ​​Nika said. Present at the presentation of the study was also Theresa Schiller who is coordinator of the campaign “Save the Blue Heart of Europe” by EuroNatur, which promotes the protection of the rivers in Europe, drew attention to the importance of Vjosa's defense. She said Vjosa is a rare river in Europe and should be preserved as part of our natural heritage. Hydropower projects will completely and irreversibly destroy this unique river ecosystem. Experts warned the government that the plants will have adverse effects on the tourism and agriculture sector in the watershed of Vjosa, which is one of the last wild rivers in Europe. In 2017, an international team of scientists recorded during a short expedition hundreds of new living species in the River Vjosa, two of which were previously unknown to science, adding rumors of its basin protection from hydropower plant construction projects. Hydropower plans have been incessantly criticized by environmental activists, residents of the area, and the European Parliament in recent years. They are seen as a shortcut taken by the government for the exploitation of rivers at the expense of the severe environmental consequences, residents and the future of the country. Meanwhile CleanTechnica, which calls itself the “#1 cleantech-focused news & analysis website in the US & the world, focusing primarily on electric cars, solar energy, wind energy, & energy storage,” praised the building of the new floating solar panels in Banje of Elbasan. We recall that Statkraft Albania signed a contract with Norwegian company Ocean Sun AS on March 2019 for cultivating solar panels with a maximal capacity of 2 MW at the hydropower tank of Banje. The project will consist of four floating units with 0.5 MW capacity each, and the overall investment amounts to 2.3 million euros. CleanTechnica used this example to further write an article on the beneficence of solar panels for electricity production. They made an interview with Christian Rynning-Tønnesen who is CEO of Norway’s Statkraft, about his insights on renewable energy in general and floating solar in particular. Rynning-Tønnesen described a scenario in which 50 percent to 66 percent of electricity production globally will come from renewables within the next 20 years. Statkraft foresees solar taking the biggest share, followed by wind and hydropower in that order. According to that scenario hydropower comes in last, but floating solar gives hydro-centric companies like Statkraft a hand in the first place position as well. “Solar by day and hydro by night can all be done in one plant, at a large scale,” Rynning-Tønnesen explained. Floating solar panels can get a conversion efficiency boost, thanks to the cooling effect of the water upon which they rest. There are some technological challenges, but on the other hand there isn’t much need to invest in site prep when there is no ground to prep. Rynning-Tønnesen pointed out several other benefits at play in the Albania project, such as having no conflict with land area, since they will be using the surface of the reservoir. “It is quite convenient to use the same power lines and some of the electrical equipment, and we already have people on the site,” Rynning-Tønnesen said One criticism of floating solar is the cost compared to conventional ground or roof-mounted installations. According to Rynning-Tønnesen, the cost of the Albania project is about double the typical market rate. However, he noted that the project is a first generation, first of its kind thing. He pointed to the downward spiral in conventional solar costs as an indication that floating solar can become competitive, without subsidies, within a few years. CleanTechnica said that an interesting thing about Albania is that it is almost entirely dependent on hydropower for electricity. The news site wrote that hydropower is subject to management issues as the impacts of climate change build up. The addition of floating solar panels to hydro plants could provide for more 24/7 stability, as Rynning-Tønnesen noted. In that context, consider that the Banja plant is practically brand new, having opened in 2016 as a project of Statkraft’s Albanian wing, Devoll Hydropower. It is the first of a series of hydropower stations under the umbrella of the Devoll River. When Banja’s sister plant, Moglicë, opens later this year the two facilities will have a total capacity of 256 megawatts. They will also increase Albania’s total energy production by an impressive 17 percent to 20 percent. That’s not including new clean megawatts from the floating solar project, which developer Ocean Sun puts at 2 megawatts. This is a sort of demo project however, as our country is only putting its legs on the renewable energy choice, and if all goes well, Albania’s hydro reservoirs could be blooming with solar panels. CleanTechnica also added that a third hydropower plant could also be in the works on the Devoll River, depending on how it goes with the first two. All this is by way of saying that Albania does not appears to be on track for building its long-coveted nuclear power plant. According to the news site, Albania has been eyeballing nuclear power since at least 2007, though neighboring Montenegro is not so keen on the idea of locating it at Durres on the Adriatic Sea. That’s in line with Statkraft’s forecast. Rynning-Tønnesen told CleanTechnica that globally “we will see a massive change from coal and natural gas to renewables and natural gas,” which does not leave much wiggle room for nuclear energy. 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