Turkish-Chinese copper concessionaire gets 15-year contract extension

Turkish-Chinese copper concessionaire gets 15-year contract extension

TIRANA, April 20 – The Albanian government has extended the term of a concession contract to a Turkish-Chinese company operating in the country’s mining industry for another 15 years until the end of 2043. The contract extension comes as the

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Dutch companies mull over Albania textile opportunities

Dutch companies mull over Albania textile opportunities

TIRANA, April 19 – Having emerged as the country second largest foreign investor, but with trade exchanges remaining at quite modest levels, the Netherlands is looking to explore new opportunities that would boost ties between the two countries, especially in

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Lack of competition, discriminatory criteria mar public procurement, reports show

Lack of competition, discriminatory criteria mar public procurement, reports show

TIRANA, April 18 – One of the main doing business barriers for local and foreign investors in Albania, public procurement continues to face issues related to limited competition and discriminatory criteria although the country has been offering e-procurement procedures since

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Dubai-based company plans to build $250 mln high-rise in Tirana

Dubai-based company plans to build $250 mln high-rise in Tirana

TIRANA, April 18 – Albania’s ruling Socialist Party-led majority has paved the way for contract negotiations with a Dubai-based company which has offered to invest $250 million on a 350-meter high tower in Tirana in return for a 25,000 m2

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Rising cannabis cultivation blamed for massive bee losses

Rising cannabis cultivation blamed for massive bee losses

TIRANA, April 17 – The massive nationwide cannabis cultivation even after the mid-2015 crackdown on the notorious internationally renowned marijuana-growing village of Lazarat, southern Albania, is having detrimental effects on the key agriculture sector, driving farmers away from cultivating traditional

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Albanian company gets bonus for offering to complete Arbri Road for €245 mln

Albanian company gets bonus for offering to complete Arbri Road for €245 mln

By Ervin Lisaku TIRANA, April 13 – Two months ahead of the upcoming general elections, the ruling Socialist Party-led government has made a new effort to reactivate a major highway project linking Tirana to the undeveloped Dibra region and neighboring

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German businesses become more optimistic about Albanian economy, investments

German businesses become more optimistic about Albanian economy, investments

TIRANA, April 13 – German investors in Albania have become more optimistic about the country’s business and investment climate with more than half of respondents describing the current economic situation as good and satisfactory, a considerable improvement to last year,

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New investors, price recovery to stabilize Albanian oil industry, Fitch unit says

New investors, price recovery to stabilize Albanian oil industry, Fitch unit says

TIRANA, April 13 – New investors and an improved price environment will see Albania’s oil and gas production stabilize by mid-2017 after a downward trend since mid-2014 following a slump in international oil prices severely affecting the country’s oil and

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Austrian investors pessimistic about Albania business climate, investments

Austrian investors pessimistic about Albania business climate, investments

TIRANA, April 11 – More than half of Austrian businesses operating in the country consider Albania as an unattractive investment destination with corruption, lack of rule of law and bureaucracy as the top concerns, according to a survey conducted by

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Cut in hotel accommodation VAT rate to have a negative effect of €8 mln

Cut in hotel accommodation VAT rate to have a negative effect of €8 mln

TIRANA, April 12 – The cut in the value added tax from a standard 20 percent to a differentiated 6 percent for the tourism accommodation sector will have a negative effect of only 1.1 billion lek (€8 million) to public

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                    [post_content] => TIRANA, April 20 - The Albanian government has extended the term of a concession contract to a Turkish-Chinese company operating in the country's mining industry for another 15 years until the end of 2043.

The contract extension comes as the Beralb concessionaire has been operating in the country for 15 years and exceeded its investment targets by investment a total of $70 million, more than double compared to its original contract expiring in 2031. The government say the company has also met production targets of more than 200,000 metric tons a year and reached processing capacity of 600,000 metric tons a year already halfway the initial 30-year concession.

The contract extension also comes at a time when commodity prices have been suffering since mid-2014, with a negative impact on the country's key mineral and oil exports, employment and government revenue.

"The involvement of serious and stable investors under conditions of unfavorable situation in the mining and raw material market and pessimistic international expectations in the mid-term is vital for the further development of the mining sector in the country,” says the government in its report to the draft law on the contract extension.

Back in 2015, the Turkish-Chinese consortium operating a copper plant in the northern Albanian district of Puka suspended its operations for several months due to sharp cut in international base metal prices, leaving hundreds of workers jobless.

The concessionaire has been involved in copper extraction and enrichment in northern Albania where it operates state-owned assets since 2001.

The concessionaire was fully Turkish-owned until 2014, when a consortium led by China’s biggest copper producer, Jiangxi Copper Corporation, bought a 50 percent stake in Turkey’s Nesko Metal Sanayi ve Ticaret’s Albanian mining operations for $65 million. Nesko, owned by Turkish metal trading firm Ekin Maden, runs copper mining businesses in Albania through its Beralb subsidiary which has a capacity of 600,000 tonnes of copper ore a year.

The contract extension also envisages the concessionaire will continue to benefit from incentives such as a reduced mining royalty of 3 percent and corporate income and dividend tax of 10 percent, compared to a current 6 percent royalty and 15 percent tax rate.

Albania’s copper reserves in fifty existing mines and deposits are estimated at around 32 million tonnes.

Back in 2016, the Albanian government also extended Albanian-owned Balfin Group’s Bulqiza mine concession by another 10 years until 2040. The country’s biggest mine of Bulqiza was acquired by Balfin, one of the country's biggest companies, in 2013 from Austria-based DCM Decometal.

The slump in commodity prices since mid-2014 has severely affected Albania’s oil and mining industry, producing the country’s second largest exports, paralyzing investment and cutting staff with a negative impact on the country’s economy.

The 2017 oil and mining prospects seem more optimistic as commodity prices are picking up.
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                    [post_content] => [caption id="attachment_132045" align="alignright" width="199"]Opening of this month's Dutch Study & Trade Mission on Sustainable Textile and Fashion. Photo: Netherlands Embassy in Tirana Opening of this month's Dutch Study & Trade Mission on Sustainable Textile and Fashion. Photo: Netherlands Embassy in Tirana[/caption]

TIRANA, April 19 - Having emerged as the country second largest foreign investor, but with trade exchanges remaining at quite modest levels, the Netherlands is looking to explore new opportunities that would boost ties between the two countries, especially in the textile sector, one of Albania's most developed industry producing the country's top exports along with the footwear segment.

The first trade mission of Dutch textile and fashion businesses came to Albania this month, exploring opportunities to cooperate with Albanian companies, who are active across all garment value chain.

The visit came two years after Dutch experts of CSR Netherlands, the Center of Excellence for Dutch companies striving towards corporate social responsibility, identified the fashion sector as one of Albania's most promising, together with the ICT and agritourism.

"I am delighted we have moved to another stage where both Dutch and Albanian companies will seriously and concretely explore match making and partnership opportunities," Dutch ambassador to Albania Dewi van de Weerd told a dozen representatives of Dutch companies while on a study tour on sustainable textile and fashion in Albania.

"I strongly believe that both countries have something to offer to each- other in the fashion sector: Albanian companies can offer their competitive production costs, short lead times and eagerness to open up to the world and move up the value chain ladder towards full cycle production. On the other side, Dutch companies offer a dynamic and innovative market, an experienced entrepreneurship attitude and commonly reliable partnership when it comes to orders’ payments," she added.

A 2016 roadmap published with the support of the Dutch embassy in Tirana has recommended Albania as an interesting textile and leather production country for Dutch brands and buyers.

Typical for Albania is the high quality, fast lead times and small, flexible orders, says the roadmap for companies that want to source sustainable and responsible garments and shoes.

“The quality of work is high: the majority of garment and footwear factories are producing for Italian quality brands. Add the short distance to the EU, and the ability to source small quantities and you have a sourcing country that offers good options – with CSR – for small and large Dutch fashion brands,” says the publication, adding that Albania’s strategic geographical location allows an easy and rapid reach to the Netherlands.

Albania’s garment and footwear sector, producing the country’s top exports and employing about 100,000 people, mainly relies on cheap labor costs with the overwhelming majority of exports destined to neighboring Italy. The sector’s annual turnover is estimated at €500 million, accounting for 40 percent of the country’s total exports.

The 500 companies operating in the country are mostly involved in CM and CMT production (cut-make-trim) although leading companies in the Albanian garment sector are striving to create their own in-house brands. This means that raw materials, designs and patterns are imported. Limited value is added in these types of production, which makes the sector vulnerable for competition in the Far East.

In terms of labelling, the current CMT business keeps Albanian garment manufacturers from being recognized with a ‘Made in Albania’ label. Experts say most garments are finished in Italy and will be sold as ‘Made in Italy’ due to the non-preferential rules of origin. These rules state that the country in which the last substantial transformation of a product took place, is relevant for providing the country of origin.

However, Albania offers interesting opportunities for re-shoring trends and several front running companies have upgraded their production processes to full cycle production, experts say. The biggest shoe producing company in Albania, DoniAnna, also exporting to the Netherlands, has its own brand that is running alone a total turnover of €40 million.

Albania’s apparel and footwear labour force is dominated by female employees accounting for 90 percent of total workforce, most of whom get minimum wages of 22,000 lek (€158) a month.

The Netherlands has emerged as the second largest foreign direct investor in Albania in the past couple of years and is on track to further increase its presence in the Balkan country thanks to increased investment in the oil industry and most recently retail trade by the Royal Dutch Shell and Spar International retailer.

Dutch companies in Albania also operate in the banking, mail delivery and agriculture taking their stock of FDI to €843 million at the end of 2016, according to the central bank.

However, trade exchanges between the two countries remain modest at only about €43 million.
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                    [post_content] => TIRANA, April 18 – One of the main doing business barriers for local and foreign investors in Albania, public procurement continues to face issues related to limited competition and discriminatory criteria although the country has been offering e-procurement procedures since eight years in a bid to reduce corruption and increase transparency.

Reports by the Public Procurement Agency and the Procurement Commission appeals body show state-run institutions continue abusing public tender procedures awarding contracts with no race and placing discriminatory criteria apparently to select pre-determined winners.

An annual report by the Public Procurement Agency has shown state-run institutions carried out some 2,186 procedures with negotiation without prior notice of the contract, worth about 8.1 billion lek (€59 mln), down only 7 percent compared to last year when an extra 520 such negotiations were held. The procedures represent about 10 percent of the total public procurement budget.

About two-thirds of such procedures were carried out in the first quarter of the year, mainly in extensions to existing contracts by up to 20 percent value.

As a rule, negotiations without prior notice of the contract are carried out to meet year start needs at an amount of 20 percent of the previous contract, in case contracting authorities have not had their budgets disbursed yet or due to prolonged procurement procedures because of appeals with the Public Procurement Commission.

“In most cases contracting authorities use this procedure claiming they are under emergency procurement conditions, but do not justify the envisaged circumstances leading them to inability to plan their needs in time and meet these needs under competitive procedures under legal provisions,” says the Public Procurement Agency.

“Being held in a written form and limited to a few economic operators invited by the contracting authority, the use of negotiation without prior notice of the contract leads to lack of competition and discrimination of candidates,” adds the agency monitoring public procurement.

The e-procurement system in Albania is mandatory, including for low-value procurement. A central public procurement portal is in place and all tender documents are available in e-form.

Some 4,000 public procurement contracts worth 87.3 billion lek (€636 mln) were signed in 2016, up 35 percent compared to 2015, representing about 5 percent of the country’s GDP.

The Public Procurement Commission, examining complaints by economic operators, also noted irregularities in tender procedures, mainly related to the discriminatory criteria.

“The drafting of tender documents, mainly the drafting of qualifying criteria and technical specifications not complying with legislation in force or the scope of the contract continue to remain issues for the Public Procurement Commission. The determination of discriminatory or technical specifications has a direct or indirect impact on the creation of conditions for avoiding competition or favoring specific operators, this way violating the fundamental principles of public procurement law,” said the watchdog whose decisions are corrective and can be challenged in the Administrative Court.

The complaints filed with the public procurement watchdog also unveiled cases of exaggerated economic requirements by contracting authorities, openly discriminating against small or newly established businesses.

About 1,400 complaints were filed with the Public Procurement Commission in 2016, up 20 percent compared to 2015, mainly related to procurement procedures in private physical security and cash transportation.

The Procurement Commission says it accepted half of the complaints, ordering cancellation of procedures, reassessment of procedures and modification of criteria.

In one case, the Public Procurement Commission also ruled the change of the winning bidder on a 30-year concession contract to upgrade and manage a 114-km highway segment linking Albania to Kosovo, making it the country’s first toll road.

Last September, the watchdog ruled the transport ministry’s bid evaluation commission must invalidate the bid by a Turkish consortium led by Vendeka Bilgi Teknolojileri Ltd and announce a United Arab Emirates-consortium led by Catalyst Viva Das General Contracting LLC which also included several Albanian partners as winner.

Meanwhile, public tenders with a sole bidder continue getting a considerable number of contracts and huge amounts of money from Albania’s local government units even more than a year after a territorial reform merged a previous 373 communes and municipalities into 61 municipalities.

Data obtained by Open Data research center shows municipalities held a total 207 public tenders with a sole bidder for a total amount of 1.9 billion lek (€13.7 million) over a one-year period from July 2015 when new mayors took office following the June 2015 local elections to September 2016.

 
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                    [post_content] => [caption id="attachment_132025" align="alignright" width="200"]Tirana's New Boulevard under construction, Photo: Municipality of Tirana Tirana's New Boulevard under construction, Photo: Municipality of Tirana[/caption]

TIRANA, April 18 - Albania's ruling Socialist Party-led majority has paved the way for contract negotiations with a Dubai-based company which has offered to invest $250 million on a 350-meter high tower in Tirana in return for a 25,000 m2 construction site and being stripped of taxes for 15 years from the start of its operations.

The proposal on the "Iconic Tower" investment, which would be the country's tallest, has been made by Dubai-based Al Habtoor Investment LLC, the international investment arm of the Al habtoor Group, which already manages 14 hotels in Dubai and in the U.S., U.K., Austria, Hungary and Lebanon. The 25,000 m2 construction site is planned to be awarded free of charge at the extension of Tirana's boulevard near the former train station, already under construction. The company plans to use the skyscraper as a commercial, entertainment, hotel and residential center.

Under the law approved by the ruling majority, Albania would benefit investment at about a quarter of its annual FDI of $1 billion and about 3,000 m2 of facilities that will serve as the new seat of the Tirana Municipality. If contract negotiations successfully conclude, the United Arab Emirates-based company will be stripped of customs duties, corporate income tax and every other capital gains tax for 15 years from the start of its commercial operations.

The project is part of incentives Albania offers to attract foreign direct investment.

In mid-2015, a UK-based company also offered to invest a staggering $5 billion on the construction of a new port, a regasification terminal and a thermal power plant in a special economic zone in central Albania, but contract negotiations failed to materialize.

The project proposed by UK-based Star Bridge Port Developments Limited in Karpen village of Kavaja, some 17 km from the country’s biggest port of Durres, was at about half of Albania's GDP and was supposed to create 6,200 jobs.
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                    [post_content] => [caption id="attachment_132022" align="alignright" width="300"]morava Some of the country's biggest beekeeping farms have also turned to agritourism to boost their income, also attracting tourists such as the Morava farm in Korça, southeastern Albania.[/caption]

TIRANA, April 17 - The massive nationwide cannabis cultivation even after the mid-2015 crackdown on the notorious internationally renowned marijuana-growing village of Lazarat, southern Albania, is having detrimental effects on the key agriculture sector, driving farmers away from cultivating traditional crops and making them take the risk of much more profitable illegal cannabis growing.

The thriving cannabis industry has most recently been blamed as one of the key factors with an impact on huge losses incurred by the developing Albanian bee industry, causing dozens of millions of euros in damage to beekeepers.

The Albanian Association of Beekeepers estimates that 40 percent of the bee population in the country has disappeared in the course of one year, mainly due to severe weather conditions as the country faced its harshest winters in three decades with snowfall and freezing temperatures even in coastal area, but without excluding the effects of rising cannabis cultivation distracting and even killing bees while pasturing.

Nationwide losses from the destruction of 144,000 beehives, about 40 percent of the total, are estimated at Euro 60 million, a considerable amount for Albania's underdeveloped agriculture sector, employing about half of the country's population but producing only about a fifth of the GDP.

Beekeepers interviewed by Monitor magazine claim it is exactly the growing cannabis cultivation and its pastures which are killing bees.

Beekeepers in Permet, Kukes and Librazhd regions where large areas of cannabis were reportedly cultivated last year say new varieties of cannabis plants are destroying the local bee populations.

One farmer outside Tirana who lost 171 beehives claims tests carried out in Turkey showed the bees had been killed by pasturing in cannabis plantations, according to Monitor magazine.

Albanian economy expects have earlier warned the growing cultivation of cannabis and its potential mass increase could have detrimental economic and social impacts, including the shift of attention from the key agriculture sector, distorting the labour market and strengthening the criminal economy.

Anecdotal evidence suggests that farmers have shifted to more lucrative cannabis production which seems to have flourished nationwide after police cracked down on the notorious Lazarat village in mid-2015 when they destroyed 102 tons of marijuana and 530,000 marijuana plants with an estimated market value at the time of some 6 billion euros, which is more than half of the country’s annual gross domestic product.

Albanian police say they destroyed 2.4 million of cannabis plants in the first three quarters of 2016 spread over a 213 hectare area nationwide, a 3-fold increase compared to the whole of 2015.

Albania's agriculture sector grew at below 1 percent in the past couple of years, registering one of its lowest growth rates, according to state statistical institute, INSTAT.

Agriculture is a key sector in the Albanian economy, employing about half of the country’s GDP but producing only about 20 percent of the GDP, unveiling its low productivity which is hampered by fragmentation of farm land into small plots and poor financing and technology employed.

 

Emerging bee industry

The Beekeepers’ Association is however more careful when analyzing the causes for one of the biggest losses in bees, attributing it mainly to severe weather conditions taking beekeepers by surprise and parasitic diseases.

“Last year's losses demoralized bee keepers a lot. Because of the harsh winter we faced devastating losses, maybe the biggest on record at about 40 percent of bees in Albania. The reasons for this are quite different, there's the harsh winter and lack of precautionary measures by beekeepers to handle this situation. There was also lack of timely treatment and inefficient medication,” Lejla Shehu, the head of the Albanian Beekeepers Association, earlier told Scan TV in an interview.

The Varroa destructor mite, a widespread parasite of European honey bees, also caused a lot of damage.

Albania's annual honey production is more than 3,200 metric tons a year, with a kilo or organic honey at about €10. However, production leaves a lot to be desired due to lack of disciplining and underdeveloped agriculture sector which directly influences on the performance of beekeeping.

Agriculture university professors say domestically produced honey has more than doubled in the past decade with imports covering only about a tenth of the country's needs.

Most production is sold in the domestic market while exports are relatively small due to not meeting EU requirements and tough competitiveness from regional countries offering lower prices.

The majority of honey is produced in the southern Vlora and Korça and Saranda regions. The northeastern region of Tropoja is also famous for its chestnut honey which has good potential to succeed in the international market.

“Poisoning from pesticides used in the agriculture sector also affected honey production and quality. Beekeepers are not informed on frequent sprays of up to 15 times a year of certain products such as apples,” the head of the beekeeping association has said.

Although still taught as a subject at Albania's sole public Agriculture University of Tirana, the collapse of the country's communist regime and its planned economy, has left the bee industry without proper training and state supervision.

“It is not easy breeding bees, you need to follow and get to know them which is one of the most important issues facing beekeepers. We nowadays lack a beekeeping institution, there are no real experts in state institutions which considering the nationwide development of beekeeping, the agriculture ministry should at least have a bee specialist and a specialized bee testing lab,” says Shehu.

Insect pollination is one of the main contributions of bees to agriculture crops.

“There is fresh evidence by scientists that one out of three mouthfuls is a direct contribution of bees due to their pollination of most agricultural plants. In different species such as apples and cherries, not only does it have an impact on increasing production and yield but also improves quality, bringing more profits to the agriculture sectors rather than beekeepers,” adds the Albanian bee expert.

Some of the country's biggest beekeeping farms have also turned to agritourism to boost their income, also attracting tourists such as the Morava farm in Korça, southeastern Albania.

Albanian organic honey and its royal jelly also known as ‘bee milk’ is known for its effects on balancing between low and high blood pressure, all kinds of anemia and the Alzheimer’s disease.

Speaking about the future of this sector, Shehu says beekeeping is a promising sector in for Albania considering its favourable climate and geographical conditions.

"Albania has very favourable conditions but we need to preserve these conditions. The fact is that this part of the Mediterranean we belong to has a Mediterranean, coastal and continental climate producing all kinds of good quality honey from light brown to dark brown and even black honey. But Albania has damaged pastures which means lots of woods have been cut down affecting food resources. However, this has been compensated by spontaneous wild plants and herbs which give Albanian honey special flavor,” she adds.
                    [post_title] => Rising cannabis cultivation blamed for massive bee losses
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                    [post_date] => 2017-04-13 15:05:38
                    [post_date_gmt] => 2017-04-13 13:05:38
                    [post_content] => By Ervin Lisaku

TIRANA, April 13 - Two months ahead of the upcoming general elections, the ruling Socialist Party-led government has made a new effort to reactivate a major highway project linking Tirana to the undeveloped Dibra region and neighboring Macedonia after the failure of concession negotiations with a Chinese company.

Gjoka Konstruksion, an Albanian-owned company has been awarded a 10 percent bonus for an unsolicited bid, placing it at an advantage when an international tender is held, likely later this year after the June 18 general elections whose run-up has been accompanied by a political deadlock with the main opposition Democratic Party threatening to boycott unless a caretaker government is installed to guarantee free and fair elections.

One of the country's biggest construction companies, already engaged in the construction of some Arbri road segments financed by the Albanian government, Gjoka Konstruksion has offered to complete the highway's remaining 40 km for 33.6 billion lek (€245 million) in about four years.

Under the proposal made by the Albanian company, the 69 km project will be partly funded with Euro 60 million by the Albanian government in the first four years of construction.

Socialist Party Prime Minister Edi Rama, who is seeking a second consecutive term as Albania's Prime Minister says the Arbri Road will be the first project as part of an ambitious recently announced public private partnership program that is expected to inject about Euro 1 billion in key road, education and health projects.

"The first project of the Euro 1 billion national reconstruction program has entered its final stage. After 25 years of unkept promises and disappointments after every voting process, 2017 will be the year of the start of works for this road axis making Dibra a closer neighbor of Tirana and giving an economic, social and tourist impetus to a whole region of extraordinary natural beauties and resources left in oblivion for about a quarter of a century," Prime Minister Edi Rama wrote after this week's government decision.

The Albanian company which has proposed a 69 km highway with a tunnel and a bypass is planning to fund part of the highway investment by introducing €4 tolls. Meanwhile, the Albanian government is expected to pay back the company for its proposed €190 million investment in annual instalments for the next 10 to 15 years.

If materialized, the project will be vital for the underdeveloped northeastern region of Dibra, mainly relying on agriculture and mining.

The project is also expected to boost trade exchanges with landlocked Macedonia and make access to Durres Port easier. In addition, the tourism sector is also expected to get boost as tourists from Macedonia, where more than a quarter of the population is ethnic Albanian, are the second top foreign visitors to Albania.

However, securing financing will be a key risk for the Albanian company while the Albanian government risks incurring hidden costs affecting its program to reduce public debt from a current 71 percent of the GDP to a more affordable 60 percent of the GDP for the current stage of Albania’s economic development.

Back in 2015, the Albanian government approved a special law offering China State Construction Engineering Corporation to complete the Arbri Road under a concession deal but contract negotiations failed.

Public-private partnerships have become a hot topic in Albanian politics after some risky concessions and warnings by international financial institutions that some 55 public-private partnerships the Albanian governments have signed during the past decade, have created commitments with a present value of about 7 percent of the GDP or €700 million in which the government will either pay the cost of the investment in installments or guarantee the revenue of concessionaires.

The completion of the Arbri Road would be the second major road project in Albania in the past decade after the country completed the Highway of Nation linking it to neighboring Kosovo in 2010.
                    [post_title] => Albanian company gets bonus for offering to complete Arbri Road for €245 mln
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                    [post_date] => 2017-04-13 14:43:56
                    [post_date_gmt] => 2017-04-13 12:43:56
                    [post_content] => TIRANA, April 13 - German investors in Albania have become more optimistic about the country's business and investment climate with more than half of respondents describing the current economic situation as good and satisfactory, a considerable improvement to last year, according to an annual survey conducted by DIHA, the German Association of Industry and Trade in Albania.

German companies in Albania positively rate cheap labor costs, worker productivity, motivation and qualification as well as the availability and quality of local suppliers. Indicators such as academic education, work flexibility, vocational training education and the research and development infrastructure were perceived as slightly deteriorating in 2017.

Only one out of ten respondents said the Albanian education system trains workers well to match labor market needs, with three quarters of companies considering offering training in their own enterprise facilities.

When it comes to their willingness to hire extra staff, only about a third of German companies said they were planning on increasing employment numbers.

About three quarters of current German investors in Albania said they would invest again if they were given the opportunity.

Some 45 DIHA members in Albania, about half of the total members, took part in the survey carried out in the first quarter of this year as part of bigger survey with German Chambers of Commerce in Central and South East Europe.

Back in 2016, the same DIHA survey showed Albania continues remaining one of least attractive destinations for German investors among 16 Central and South East European countries with corruption and crime, lack of transparency in public procurement, legal insecurity and unpredictability of economic policies as the main concerns.

German companies in Albania are engaged in important sectors such as construction, production, retail sales and logistics.

German investments in Albania at the end of 2016 were estimated at Euro 147 million, ranking among the top 10 foreign investors in the country, according to the central bank.

Back in mid-2015 when German Chancellor Angela Merkel visited Albania, one of the country largest foreign direct investments in recent years, the Tirana Business Park, a Euro 100 million investment by Germany’s Lindner Group, opened its doors near the Tirana International Airport just outside the capital city, in a bid to serve as prime location for office spaces.

Meanwhile, trade exchanges between the two countries, dominated by Albanian imports of machinery and equipment, rose to a record high of 63.2 billion lek (€461 million) in 2016, accounting for about 8 percent of Albania's trade volume, says INSTAT, the state statistical institute.

Since the late 1980s just before the collapse of Albania’s communist regime, Europe’s largest economy Germany has invested about €810 million in development projects in Albania, mainly energy, water supply and sewerage, becoming the country’s main donor.
                    [post_title] => German businesses become more optimistic about Albanian economy, investments
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                    [post_date] => 2017-04-13 14:14:37
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                    [post_content] => TIRANA, April 13 - New investors and an improved price environment will see Albania's oil and gas production stabilize by mid-2017 after a downward trend since mid-2014 following a slump in international oil prices severely affecting the country’s oil and mining industry and poorly diversified exports, according to a report published by U.K.-based BMI Research, a unit of Fitch, one of the global leaders in financial information services.

"A swathe of mergers and acquisitions activity in the Albanian oil sector will create more stability in production from 2017. Stronger oil prices and the results of Shell's Shpirag-3 well will be key to encouraging new investment into exploration and production," says the BMI report.

Last year, Canada-based Bankers Petroleum, the country's biggest oil producer, was fully acquired by a Chinese consortium led by China Everbright Limited producer for C$575 million (€392 mln) after more than a decade of operations in Albania.

Earlier in 2016, U.S.-based TransAtlantic Petroleum announced the sale of its loss-making Albanian unit to a company named GBC Oil, but retained its interest in the southern Albania Devlina gas project.

The acquisitions came after a sharp drop in international oil prices putting new drilling to a halt and tax and environmental disputes with the Albanian government.

The Fitch unit expects the drop in production of crude and natural gas and other liquids to slow down to 17,600 barrels of oil per day (bopd) in 2017, down from 18,100 bopd in 2016 and a record high of 27,500 bopd in 2014 when oil prices were at their peak levels.

BMI Research expects Albania’s oil production in the next five years until 2021 to remain stable at about 17,700 bopd, depending on the results of new drilling by Shell oil giant in southern Albania.

In mid-2016, the Albanian unit of British-Dutch oil giant Royal Dutch Shell spud the Shpirag-3 well, which due to geological complexity will take around one year with results expected in mid-2017.

Shell Upstream Albania, a wholly-owned subsidiary of the giant Royal Dutch Shell, bought a 25 percent stake from Canada-based Petromans Energy for US$45 million in 2016, becoming the sole shareholder in the Albanian oil exploration and production operations that the joint venture had been engaged since 2012.

The Fitch Unit expects international oil prices to considerably recover to $57 a barrel in 2017, up from a record low of $45 a barrel in 2016, but yet almost half of the peak level of more than $110 in mid-2014 just before the slump that took them to a 12-year low in early 2016, halting new investments and significantly affecting Albania’s poorly diversified exports and underperforming government revenue. Mid-term prospects are not very optimistic as Brent oil prices are expected to fluctuate between $60 to $70 a barrel until 2021.

Gas production depends on a joint venture U.S.-based TransAtlantic made in late 2016 to resume production and develop the Delvina gas field in southern Albania.

Albania is expected is expected to turn into a major hub by 2020 when first gas sales are expected from the Trans Adriatic Pipeline bringing Caspian gas to Europe through Albania.

Greek/Italian risks 

In its country risk report on Albania, BMI research identifies a possible shock to either the Greek or Italian economy, Albania's main trading partners, investors and sources of remittances, as one of the key risks facing the Albanian economy. The two neighbouring countries, host to about 1 million Albanian migrants, have been struggling with protracted recession since the outbreak of the global financial crisis in 2009.

"A shock to either the Greek or Italian economy in 2017, would lead the lek [national currency] to sell off more aggressively than we currently anticipate given the remittance and export revenues from each country. This would lead to higher inflation and raise the risks to private consumption," says the Fitch unit report.

BMI Research expects Albania's growth to remain at 3.3 percent for 2017 and 2018, 0.5 to 0.8 percent lower compared to the Albanian government's more optimistic forecasts.
                    [post_title] => New investors, price recovery to stabilize Albanian oil industry, Fitch unit says
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                    [post_date] => 2017-04-12 18:19:43
                    [post_date_gmt] => 2017-04-12 16:19:43
                    [post_content] => TIRANA, April 11 - More than half of Austrian businesses operating in the country consider Albania as an unattractive investment destination with corruption, lack of rule of law and bureaucracy as the top concerns, according to a survey conducted by the Albanian unit of Advantage Austria, the official trade promotion organization of Austria.

Austrian officials say it is exactly corruption and the inefficient judiciary which have been holding back Austrian investments in the past few years, making Albania lag behind regional countries.

"The changes in the past few years are minimal. On the one hand, if you look at the trade volume you can see that it has been dropping while investment has almost remained unchanged,” Peter Hasslacher, the head of Advantage Austria for Albania, Kosovo and Slovenia told reporters on Wednesday.

“Compared to Austrian investments in other regional countries, Albania is a lot behind. There are still old issues such as corruption, the inefficient judiciary and poor public administration services," he said.

Austrian business are also pessimistic about the country's economic situation with about half of them saying it deteriorated in 2016 and about three-quarters expecting the situation to remain unchanged for 2017.

The Albanian economy recovered to 3.4 percent in 2016, mainly thanks to some major energy-related investments, a boost in tourism and a pickup in domestic consumption, according to state statistical institute, INSTAT.

The implementation of long-awaited justice reform is perceived as key to restoring investor confident and boost Austrian FDI in the country.

Some fifty Austrian companies operate in Albania employing about 2,800 people with leading investments in the banking, insurance and hydro-electricity sectors.

The stock of Austrian foreign direct investment in Albania has almost remained unchanged in the past few of years, climbing to €424 mln in 2016, up from €380 mln in 2014 and a peak level of about €432 million in 2013, with Austria dropping from the fourth to the sixth largest investor in the country, according to the central bank.

Albania attracted a record high of about Euro 1 billion in foreign direct investment in 2016 but that was mainly to some old major energy-related projects such as the Trans Adriatic Pipeline and the Devoll hydropower plant by Norway's Statkraft.

With international oil and mineral prices, only slightly picking up, delaying scheduled investment and strongly affecting the country’s poorly diversified exports, Albania’s FDI is expected to continue relying on the major TAP project until 2020 when first gas flows are expected. Experts have warned the country could suffer headwinds over the medium term unless it offers new incentives in other key sectors and makes the economy more competitive regionally in terms of reducing its high tax burden, guaranteeing clear property rights and putting in place an independent judiciary following a long-awaited justice reform approved in consensus in mid-2016.

Trade exchanges between the Albania and Austria remain low and are dominated by Albanian imports of "food and beverages" as well as “machinery, equipment and spare parts.”

The 2016 volume of trade exchanges dropped by a sharp 25 percent to 7.6 billion lek (€55.5 mln), accounting for only about 1 percent of the country's trade exchanges, according to INSTAT.

Austria has been one of Albania’s main supporters of Albania’s since the country’s independence in the early 20th century to present day Euro-Atlantic integration efforts, also providing key development support.

 

 
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                    [post_date] => 2017-04-12 17:53:45
                    [post_date_gmt] => 2017-04-12 15:53:45
                    [post_content] => TIRANA, April 12 - The cut in the value added tax from a standard 20 percent to a differentiated 6 percent for the tourism accommodation sector will have a negative effect of only 1.1 billion lek (€8 million) to public finances, which the government hopes to compensate through fighting widespread informality in the sector.

Last week's government decision came as a surprise ahead of the general elections, meeting a perennial request by tourism operators who say the move is expected to increase the country’s competitiveness compared to other regional countries already applying VAT rates of below 10 percent and trigger new investments. The cut applies only to accommodation services, excluding bar/restaurant and entertainment services in tourist accommodation establishments, dominated by hotels, but also motels and guesthouses in the emerging mountain tourism.

"In order to provide incentives to this sector, the cut in the tax burden only for the accommodation service in accommodation units will bring positive effects in improving service quality, triggering tourist growth and new jobs," says the Albanian government in its report accompanying the draft law on some changes to the VAT law.

The cut also comes as some of Albania's biggest companies previously engaged in the now ailing construction industry have turned to tourism, building resorts as the country's emerging travel and tourism industry rapidly grows and is set to become one of the key drivers of the Albanian economy.

Niko Lera, the tax policy head at the finance ministry, says some 4,000 accommodation units with a capacity of 50,000 beds are expected to benefit from the tax cut, starting this summer when the legal changes are expected to become effective.

"This measure targets the further formalization of the sector. There will be an awareness campaign and the principle is that when the tax burden drops, in this case a 2/3 decrease, the number of accommodation units paying VAT will increase," he says.

Albania is the only regional country to apply a standard VAT rate of 20 percent on almost all goods and services, including basic food, except for medicines which are VAT free.

All regional Western Balkans countries, including EU member Croatia apply differentiated VAT rates ranging between 5 to 13 percent on basic food, medicines and hotel accommodation.

Neighboring Macedonia and Montenegro apply differentiated VAT rates of 5 to 7 percent on basic food and accommodation services, compared to Kosovo's 8 percent, Serbia's 10 percent and Croatia, the region's most developed tourism destination at 13 percent.

 
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            [post_date] => 2017-04-20 13:03:06
            [post_date_gmt] => 2017-04-20 11:03:06
            [post_content] => TIRANA, April 20 - The Albanian government has extended the term of a concession contract to a Turkish-Chinese company operating in the country's mining industry for another 15 years until the end of 2043.

The contract extension comes as the Beralb concessionaire has been operating in the country for 15 years and exceeded its investment targets by investment a total of $70 million, more than double compared to its original contract expiring in 2031. The government say the company has also met production targets of more than 200,000 metric tons a year and reached processing capacity of 600,000 metric tons a year already halfway the initial 30-year concession.

The contract extension also comes at a time when commodity prices have been suffering since mid-2014, with a negative impact on the country's key mineral and oil exports, employment and government revenue.

"The involvement of serious and stable investors under conditions of unfavorable situation in the mining and raw material market and pessimistic international expectations in the mid-term is vital for the further development of the mining sector in the country,” says the government in its report to the draft law on the contract extension.

Back in 2015, the Turkish-Chinese consortium operating a copper plant in the northern Albanian district of Puka suspended its operations for several months due to sharp cut in international base metal prices, leaving hundreds of workers jobless.

The concessionaire has been involved in copper extraction and enrichment in northern Albania where it operates state-owned assets since 2001.

The concessionaire was fully Turkish-owned until 2014, when a consortium led by China’s biggest copper producer, Jiangxi Copper Corporation, bought a 50 percent stake in Turkey’s Nesko Metal Sanayi ve Ticaret’s Albanian mining operations for $65 million. Nesko, owned by Turkish metal trading firm Ekin Maden, runs copper mining businesses in Albania through its Beralb subsidiary which has a capacity of 600,000 tonnes of copper ore a year.

The contract extension also envisages the concessionaire will continue to benefit from incentives such as a reduced mining royalty of 3 percent and corporate income and dividend tax of 10 percent, compared to a current 6 percent royalty and 15 percent tax rate.

Albania’s copper reserves in fifty existing mines and deposits are estimated at around 32 million tonnes.

Back in 2016, the Albanian government also extended Albanian-owned Balfin Group’s Bulqiza mine concession by another 10 years until 2040. The country’s biggest mine of Bulqiza was acquired by Balfin, one of the country's biggest companies, in 2013 from Austria-based DCM Decometal.

The slump in commodity prices since mid-2014 has severely affected Albania’s oil and mining industry, producing the country’s second largest exports, paralyzing investment and cutting staff with a negative impact on the country’s economy.

The 2017 oil and mining prospects seem more optimistic as commodity prices are picking up.
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