Ruling Socialists cancel €244 mln PPP to Albanian ‘oligarch’ over alleged links to offshore scandal

Ruling Socialists cancel €244 mln PPP to Albanian ‘oligarch’ over alleged links to offshore scandal

By Ervin Lisaku TIRANA, Jan. 21 – Faced with mounting pressure over a recent public private partnership scandal and student protests over changes and higher financing in Albania’s public higher education system, the Albanian government has cancelled a costly highway

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‘Escobar of the Balkans’  and the destructive legacy of narco-influence in politics

‘Escobar of the Balkans’ and the destructive legacy of narco-influence in politics

It is often said that although art is supposed to be ‘life in extrems’, real life very frequently surpasses art in its exotic extremes. One of these times happened this week for Albanians who watched Klement Balili turn himself in

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Editorial: A caretaker government of one

Editorial: A caretaker government of one

TIRANA TIMES EDITORIAL Seeing that the President of the Republic, Ilir Meta, did not bulge from his decision to reject the proposed name of Gent Cakaj as a Foreign Minister, Prime Minister Rama designated himself as an acting Foreign Minister.

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Hit by slump in oil prices, euro’s free fall, Albania’s exports receive first blow

Hit by slump in oil prices, euro’s free fall, Albania’s exports receive first blow

By Ervin Lisaku TIRANA, Jan. 17 – Albania’s exports preserved their double-digit growth for the second year in a row, but the December performance hints the country’s poorly diversified exports will find it difficult to preserve their growth rates for

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Bulgarian tycoon buys Telekom Albania for €50 mln

Bulgarian tycoon buys Telekom Albania for €50 mln

TIRANA, Jan. 17 – Greek-German-owned Telekom Albania has been sold to a Bulgarian investor who controls Bulgaria’s largest telecoms operator, putting an end to months of negotiations over the sale of Albania’s second largest mobile operator. Greece-based OTE Group, where

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Doctors’ exodus makes Albania’s healthcare system more vulnerable

Doctors’ exodus makes Albania’s healthcare system more vulnerable

By Ervin Lisaku TIRANA, Jan. 15 – Albania has been facing an exodus of doctors in the past few years, making the country’s healthcare system, already facing one of world’s lowest number of doctors, even more vulnerable. More than 500

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Evidence points to heavy clientelism in Rama’s public administration

Evidence points to heavy clientelism in Rama’s public administration

TIRANA, Jan. 15 – Serious Crimes Prosecution Office investigations on former head of Prisons Arben Cuko which were made public on Monday by the Voice of America tore down the facade of public competitions by exposing how local officials, Socialist

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Albania’s PM Edi Rama to assume role of foreign minister

Albania’s PM Edi Rama to assume role of foreign minister

TIRANA, Jan. 15 – Albania’s Prime Minister Edi Rama announced on Monday following President Ilir Meta’s rejection of 26-year-old, Kosovo national Gent Cakaj as the country’s new foreign minister, that he will be temporarily assuming the role.   “The President

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Clash between media and gov’t as state institutions deny favoring DH Albania

Clash between media and gov’t as state institutions deny favoring DH Albania

FOLLOW-UP TIRANA, Jan. 11 – After the Voice of America raised allegations that state institutions had favored DH Albania in winning the government tender for the construction of a lot from the Great Ring road project, Albanian authorities claimed the

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Shell’s new Albania oil search plans met with resistance

Shell’s new Albania oil search plans met with resistance

By Ervin Lisaku TIRANA, Jan. 11 – Exploration surveys that oil giant Shell is planning to conduct during this year in a southern Albanian region have triggered concerns among some local government officials who fear local protected areas and tourism

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                    [post_date] => 2019-01-21 16:18:34
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                    [post_content] => By Ervin Lisaku

TIRANA, Jan. 21 – Faced with mounting pressure over a recent public private partnership scandal and student protests over changes and higher financing in Albania’s public higher education system, the Albanian government has cancelled a costly highway PPP awarded to one of the country’s so-called oligarchs, arguing it wants to channel more funding to public universities.

The cancelled PPP is a €244 million 21-km highway linking Kashar, an industrial area just outside Tirana, to northern Albania Thumane village close to the entry of the Highway of Nation linking Albania to Kosovo, the country’s first toll road since Sept. 2018.

Last July, the Albanian government selected Albanian-owned Gener 2, one of the country’s leading construction companies under a 13-year PPP following an unsolicited proposal that placed the company at an advantage through a bonus in a no-surprise tender with little competition. The Albanian government had not concluded contract negotiations with Gener 2 yet, and reportedly suspended them in late December following a PPP scandal allegedly involving the winning bidder.

The PPP cancellation comes after media investigations into an offshore company that had €30 million in government-funded projects cancelled last December after falsifying links to a US-based company in what was dubbed as a major PPP scandal in Albania’s ever increasing use of concessions and PPPs to complete key road, health, education and waste management projects.

DH Albania, the phantom company that had its Albanian contracts cancelled, has been accused of alleged links with Gener 2 and its owner, Albanian businessman Bashkim Ulaj, who in late 2018 also inaugurated with much fanfare a new TV station, Tirana-based A2, which is branded as a CNN exclusive news channel affiliate.

A subsidiary of US-based Dunwell Haberman, DH Albania easily won public tenders to build a section of Tirana's outer ring road for €18 million and an electricity transmission line north of Albania worth around €12 million in the second half of 2018, in public tenders with virtually no competition at all. The Albanian unit falsely claimed it was part of a major US company with 20 years of experience allegedly registered in the state of Delaware in 1998, but later proved to have registered only in mid-2018.

The Voice of America in the local Albanian service claims the newly established company was favored by government authorities in receiving required licences and permits to run for the tenders.

 

Gov’t withdrawal

"I have decided to cancel the Thumane-Kashar public private partnership. Its budget will go to the ‘University Pact’ but to us this continues to remain an important road axis," new Infrastructure Minister Belinda Balluku said in a short press conference on Monday in her first appearance as minister after replacing former minister Damian Gjiknuri few days ago.

Most Albanian public universities have been boycotting classes since early December 2018, paralyzing university life with protests, demanding higher quality and lower tuition fees. Backed by considerable number of professors, students also want a 2015 higher education law cancelled, blaming it for the current chaotic situation in the country’s public universities.

The unstoppable student protests led to a reshuffle of more than half of the ruling Socialist Party government in late 2018 and Prime Minister Edi Rama giving in to some of the students’ demands by reducing fees for Bachelor studies, but keeping them unchanged for the more costly Master’s studies where only excellent student and those in need have been promised a cut.

Student protests in several public universities continue even after the so-called University Pact and calls for dialogue by Prime Minister Edi Rama. University professors in some faculties have also joined protests.

 

Controversial costly PPPs

The €244 million Kashar-Thumane project is part of a major €1 billion controversial PPP program that the Albanian is implementing to upgrade road, education, health infrastructure in a major project that has been criticized for lack of transparency and hidden costs that could likely affect Albania's plans to reduce public debt, currently at an unaffordable 70 percent of the GDP for the size of the Albanian economy.

The segment was part of a proposed larger 64-km Thumane-Rrogozhine highway linking south and southeastern Albania to northern Albania and Kosovo faster.

The government was planning a new 44-km Thumane-Rrogozhine PPP in another costly project worth around €670 million that would take the Kashar-Thumane-Rrogozhine cost to around €900 million, around 7 percent of Albania’s GDP, almost the same to a longer highway linking Albania to Kosovo inaugurated a decade ago.

Gener 2 was supposed to build the project in three years by securing funding on its own and receive taxpayer support for ten years for its investment and maintenance costs in a project that had been criticized for high costs of around €12 mln/km.

The Albania government was supposed to start paying the first 2.45 billion lek (€20 million) annual instalment to Gener 2 in 2020, according to the finance ministry.

The project was described as the second most important in the €1 billion PPP agenda after the Arbri Road linking Albania to Macedonia, already under construction through a 13-year €240 million PPP awarded to another Albanian company.

One of the country’s biggest companies, Gener 2 also runs two shopping centers in Tirana and is engaged in two hydropower plant constructions along the Valbona River, northeast Albania, in a project that has triggered strong protests by environmentalists and local residents relying on the emerging mountain tourism there.

International financial institutions such as the World Bank and the IMF have also voiced concerns about Albania’s PPP agenda especially the transparency related to them and unsolicited proposals favoring companies that propose them as well as possible accumulated arrears which could hamper the debt reduction agenda.

However, the ruling majority argues the PPP projects are essential to give an impetus to the country’s road, health, education and waste management infrastructure in projects which it says the government cannot fund and manage on its own. The government will repay concessionaires for about 13 years in annual instalments for the investment and management costs in return for initial private investment that is expected to complete the projects in three years, in costs that some economy experts have described much higher compared to traditional public procurement.

Taxpayer support to some controversial public private partnerships is expected to increase by around 50 percent to €100 million for 2019 as the government starts paying on three news public private partnerships, taking PPP spending to 3 percent of the previous year’s fiscal revenue, compared to 5 percent threshold that the government has set.
                    [post_title] => Ruling Socialists cancel €244 mln PPP to Albanian ‘oligarch’ over alleged links to offshore scandal 
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                    [post_content] => It is often said that although art is supposed to be ‘life in extrems’, real life very frequently surpasses art in its exotic extremes. One of these times happened this week for Albanians who watched Klement Balili turn himself in to the police after allegedly negotiating with them for quite a few weeks. Klement Balili was nicknamed by Greek media as the ‘Escobar of the Balkans’ and his latest move surely did justice to this designation as it eerily resembled the most famous televised series whose subject was the real Pablo Escobar’s life. He also turned himself in to the authorities after negotiating his way up to a personal luxury prison.

Klement Balili was the  notorious one the ‘most wanted’ list of Albanian law enforcement. The middle aged savvy drug trafficker had upset the political balances of the ruling majority since the first mandate. He was mentioned frequently by high level diplomats, most notably the former American ambassador, who lamented publicly the failure of Albanian police to bring him in so he could face justice.

Truth be told Balili’s first political connections date back to the Socialist Movement for Integration however as every successful drug lord he knew better than remain limited just to one access point to power. His beaming face figures in many photos next to Albanian politicians who were very keen to visit his splendid Saranda resort. Apart from anecdotal evidence, nothing else but political connections and corruptive links to police and justice explain his success of escaping numerous operations for his capture without ever leaving the territory of Albania. That and a strong dose of popular support in his home area of Delvina where he is rumored to be something of a charity man. Exactly like Escobar.

The attempts of the Interior Minister and State Police to call his turning in a success for police operations caused some good laughs among citizens who were quick to fill up social media with memes and jokes. Indeed how can you call a success the fact that the most wanted drug trafficker hides in plain sight for years and then negotiates his own capture with the very Director of the State Police and walks in the police offices after saluting his family? Among those that get a final greeting, the mayor of Delvina who just happens to be the next prisoner’s nephew.

It is starting to painfully resemble the movies and the series a bit more and more every day. Every detail, every move, every calculated timing and even the style of the media coverage. The most troubling legacy of narco-influence in politics is starting to be normalized, mainstreamed, televised and slowly accepted as a sad fact but a fact nevertheless. The show is now open for all those interested to see.

The international community was quick to laude this ‘achievement’. The fact that this development happened parallel to the visit of the foreign ministers of Italy and the Netherlands, two countries which rank the first as a supporter and the second as a skeptic of EU enlargement, also was very convenient. However most of the questions that surrounded Balili’s activities, connections and criminal network remain as pertinent as ever. His lawyers team has on board former attorney generals and others who are confident of the lack of incriminating evidence.

Albanian citizens-turned-spectators would not be surprised if Balili walks free. It happens so often in these kind of movies. And as we said, real life does not lag behind with these guys.
                    [post_title] => 'Escobar of the Balkans'  and the destructive legacy of narco-influence in politics
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                    [post_content] => TIRANA TIMES EDITORIAL

Seeing that the President of the Republic, Ilir Meta, did not bulge from his decision to reject the proposed name of Gent Cakaj as a Foreign Minister, Prime Minister Rama designated himself as an acting Foreign Minister. This as he says until a new Constitutional Court can strike Meta’s decision down. Rama, just like few predecessors, and most notably like the communist dictator Hoxha, now carries both tasks.

Yet Rama has the most legitimacy out of all the new cabinet members, most of whom are technical figures, half of them unknown to the public and the other half known for, let’s say, not the right reasons. A quick scan of them points out several issues that are problematic: the new Minister of Education has the same problems that derive from not being grounded genuinely in the social and political life of Albania as well as from the fact that the student protests are far from resolved. Besa Shahini from Kosovo has been giving many press conferences lately, yet no one seems to hear her. She is not fit to lead the Education Ministry, at least at this stage, and it is unfair also to her to carry the weight of the failed Law on Higher Education, a weight of a political party that she does not belong to.

The new minister who will take charge of the supernova Ministry of Infrastructure and Transportation, with its gargantuan budget and power over key contracts is on the other side a bit more grounded that necessary in the heart of unresolved political and even other issues in Albania. Having led first the communications team during Rama’s time as a mayor and then AlbControl, the national traffic agency, which manages the airspace, Belinda Balluku has been at the heart of media storm about investigations about air radars. Most recently media reported that she threw a lavish end of year party for her company at the most expensive hotel in Tirana, involving exotic dancers. That’s quite some style coming in for the Ministry. Balluku is outspoken, aggressive and loyal to Rama. She will stand in to face the remaining brunt of the scandal of the tender procedure for the Ring Road of Tirana yet she is also a nonpolitical figure which has no responsibility over the voters’ trust.

The new Minister of Culture, Elva Margariti, will be another Rama advisor formerly engaged with the project of the ‘100 touristic villages’ and known for just a few media appearances  that supported the decision to destroy the building of the National Theater. Another name of political anonymity, executive loyalty and readiness to face remnant scandals and conflicts with the right lack of political legitimacy and gravitas.

These are the members of the caretaker government that is taking over this year. Caretaker governments are in fact limited in their scope and powers by both custom and convention. However this specific one designed by Rama and serving the unique purpose of elongating his political life, now in shambles, will not fit this description. This caretaker government, especially in the context of a judicial system in disarray, is designed to have unchecked executive powers. Whereas caretaker governments are provisional, leading and preparing towards something decisive, a next stage, this particular one has one sole objective package: preserve the status quo, evade responsibility, divert attention, secure power.

This caretaker government of de-facto one person, the Prime Minister, is yet another example of a government that lingers while its system of governance has shattered.
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                    [post_date] => 2019-01-17 13:47:34
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                    [post_content] => By Ervin Lisaku

TIRANA, Jan. 17 – Albania’s exports preserved their double-digit growth for the second year in a row, but the December performance hints the country’s poorly diversified exports will find it difficult to preserve their growth rates for 2019 due to energy-related exports having received a blow and Europe’s single currency continuing to trade at a 10-year low.

Albania's exports grew by 13.7 percent in 2018, but growth was mainly fuelled by favorable weather-related conditions leading to a hike in hydro-dependent electricity exports and a pickup in commodity prices fuelling higher oil, mineral and steel sales.

However, Albania's exports in December 2018 dropped by an annual 1.7 percent and were down by 20 percent compared to last November, in the first monthly decline since 2016 when exports’ growth stagnated.

The situation reflects lack of electricity exports, lower crude oil exports following a new decline in international prices and euro’s free fall having hit traditional top exporting industries.

With the country facing a prolonged drought since mid-2018, Albania’s domestic hydro-dependent electricity generation has been paralyzed and state-run operators have been forced to switch to costly electricity imports since late 2018 in a situation that is expected to have negative effects for the country’s economy unless heavy rainfall fills the almost empty reservoirs of three state-run hydropower plants and more than a hundred small and medium-sized privately-run HPPs.

Due to heavy rainfall also causing flooding, Albania met most of its electricity needs through domestic production in 2018 and exported electricity worth around €60 million for the first half of the year, with a key impact on exports’ growth.

Meanwhile, a pickup in oil and mineral prices led to oil exports receiving a strong boost for most of the year, but a recent cut in prices could negatively affect the key oil industry, already suffering from the suspension of work at the country’s main refiner due to a conflict between the main oil producer and the company managing the refinery that employs around 1,000 people.

Crude oil prices dropped to as low as $53 a barrel in late December in a sharp decline from last October after gradually picking up since early 2016 following the mid-2014 slump.

Brent crude oil prices currently stand at $60 a barrel, having dropped from a three and a half-year high of $80 a barrel last October, with a negative impact on the country’s oil industry and new drilling plans.

Meanwhile, growth in the garment and footwear industry, Albania’s traditional top exporting industry slowed down to around 5.3 percent in 2018, down from 10 percent in 2017 and their contribution to annual exports growth dropped to the third largest compared to a key role in 2017 when exports grew by an annual 12 percent, according to INSTAT, the state-run statistical institute.

The industry that employs more than 50,000 people and relies on cheap labor costs, registered an annual 5 percent decline in exports in December 2018, hinting of tough times ahead for 2019. Garment and footwear producers have recently warned the top exporting industry is in severe difficulty due to the euro’s free fall against the Albanian lek having significantly cut profits and delays in value added tax refunds.

The euro has lost 7 percent against the Albanian lek during the past year and currently trades at around 124 lek, around 10 lek (€0.08) below its early January 2018 of around 133 lek, with a series of negative effects for Albania’s highly euroized economy, primarily affecting exporters to the Eurozone, but also sizable Euro-denominated savings and remittances.

While the Euro's free fall did not have any major impact on exports thanks to a favourable hydro-situation and a pickup in oil and mineral prices last year, the European Commission warns in a recent report that delayed negative exchange rate effects on the Albanian economy will likely appear this year when new investment decisions and contracts are made.

“The recent real appreciation of the Albanian currency weighs on price competitiveness and the export industries’ margins, but a negative effect on exports is likely to appear only in 2019 when new investment decisions and contracts will be made,” says the Commission.

Albania's trade gap slightly narrowed to 331 billion lek (€2.65 billion) in 2018, with exports covering only about half of what the country imports.

Italy was Albania's main trading partner with more than a third of total trade exchanges, some 36 percent, followed by Greece, Germany and China with each having a share of around 7 percent.

Albania’s exports contracted by 5 percent in 2015 following the mid-2014 slump in commodity prices and registered a mere 0.1 percent growth in 2016 before recovering by 12 percent in 2017 and picking up to 13.7 percent for 2018.

 

Exports to Kosovo 

Albania's exports to Kosovo registered strong growth for the second month in a row, taking advantage of a 100 percent tax that Kosovo introduced on imports from Serbia and Bosnia and Herzegovina in November 2018 in retaliation for their efforts in blocking the recognition of Kosovo’s independence and its membership in key international organizations.

Exports to neighboring ethnic-Albanian Kosovo, Albania's second most important destination for exports after Italy, rose by a strong annual 44.5 percent to 2.14 billion lek (€17.1 mln) last December, after picking up by 35 percent last November when Kosovo initially introduced a 10 percent tax on imports from Serbia, its main trading partner it declared independence from a decade ago.

Kosovo hiked the tax to a 100 percent tariff on Nov. 21 and even extending it to all international branded goods produced in Serbia and Bosnia and Herzegovina on Dec. 28.

Albania's exports to Kosovo rose by around 30 percent to 27 billion lek (€216 mln) in 2018, but imports from Kosovo registered only a modest 5 percent increase to account for only a third of what Kosovo imports from Albania.

Last November, Albania led exports to Kosovo among regional EU aspirant countries, overtaking Serbia, the traditional largest exporter to Kosovo, in a situation favored by trade tariffs paralyzing Serbian exports to its former province.

While Kosovo’s unilateral tax has received international criticism because of running against the regional free trade agreement, Kosovo authorities say it’s the only way to stop Serbian agenda against Kosovo’s independence and Euro-Atlantic integration a decade after its independence from Serbia.

Local Kosovo media say the blockade on Serbian imports is having an initial positive effect on local Kosovo producers, some of whom have increased production capacity and employment. However, import of raw material that was traditionally imported from Serbia and Bosnia remains a problem until new competitive suppliers are found.

While Albania will find it almost impossible to replace Serbian grains and flour as well as raw material for Kosovo producers, local experts say Albania can be quite competitive in replacing former Serbian steel and oil products which Albania heavily produces through Turkish and Chinese investors.

However, tariff and non-tariff barriers still in place and poor production capacities by the Albanian economy compared to other regional competitors will likely find the Albanian economy with few benefits from Kosovo’s tariff hitting more than €500 million of Serbian and Bosnian products.
                    [post_title] => Hit by slump in oil prices, euro’s free fall, Albania’s exports receive first blow
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                    [post_content] => TIRANA, Jan. 17 – Greek-German-owned Telekom Albania has been sold to a Bulgarian investor who controls Bulgaria’s largest telecoms operator, putting an end to months of negotiations over the sale of Albania’s second largest mobile operator.

Greece-based OTE Group, where Germany's Deutsche Telekom holds a 45 percent stake, says it has agreed to sell its Albania operations for €50 million to Albania Telecom Invest AD, a joint venture led by Bulgarian businessman Spas Roussev, where Albanian-Bulgarian businessman Elvin Guri also has a minority stake.

Spas Roussev is the main shareholder in Bulgaria's leading telecoms operator Vivacom, purchased in August 2016 from Russia’s VTB for €330 million.

The sale, subject to approval by competition and electronic communication watchdogs, also marks the first major Bulgarian investment in Albania, a country where the stock of Bulgarian investment is at a modest €24 million, and a small commercial bank is the major Bulgarian investment.

The sale of Telekom Albania comes after a hike in losses in 2017 and Albania’s mobile phone market having embarked on an ongoing downward trend since almost a decade, triggered by tougher competition and smartphone apps replacing traditional phone calls and text messages.

"The sale of Telekom Albania concludes the successful investment in Albania for OTE Group. It is a strategic decision in the context of OTE Group's redefined priorities and growth plans in order to create value for all shareholders and support sustainable development," OTE's chairman Michael Tsamaz said as quoted in a statement.

Former AMC Albania was initially launched as a state-run operator in late 1995 as the country’s first mobile operator before it was acquired in 2000 by Greece’s OTE Group and rebranded Telekom Albania in mid-2015.

Telekom Albania is currently the second largest mobile operator in the country with a 36 percent market share, but posted significant losses in 2017 along with leading mobile operator Vodafone Albania as the mobile phone market suffered a double-digit decline in revenue, in an ongoing downward trend since almost a decade, triggered by tougher competition and smartphone apps replacing traditional phone calls and text messages, according to the electronic communications watchdog.

 

Telekom Serbia failed negotiations 

The sale to Bulgarian investors comes after failed negotiations with Telekom Serbia as a non-preferable option in a strategic sector such as telecommunications where some experts had voiced concern the country’s national security could be put at risk by non-EU and non-NATO service providers

In a tender held last September, Telekom Serbia, where the Serbian government holds a majority stake, was reported to have submitted the highest bid of around €61 million.

Unnamed Albanian government sources had warned the involvement of Telekom Serbia in the Albanian mobile telephony market could spark reactions that would have a negative impact even for the company itself due to concerns over national security in a sensitive sector such as telecommunications and amid fears of the public not welcoming the operator’s arrival over non-positive feelings and perceptions related to tense historical political relations between the two countries.

“The Albanian government’s stance is quite simple and clear, Serbian businesses are welcome in the Republic of Albania, but in this strategic sector, it is not our preference,” said Prime Minister Edi Rama.

 

Shrinking market

The number of active mobile phone subscribers suffered a sharp double-digit drop during the first three quarters of 2018, registering the first such slump since mobile services were launched in the country in the early 2000s.

A quarterly report by Albania’s electronic communications watchdog, AKEP, shows the number of active mobile phone subscribers, defined as those who made or received at least one call or text message in the last three months, fell to 2.85 million in Sept. 2018, down by a quarter compared to the third quarter of 2017 when Albania had 3.85 million active subscribers.

The decline by around a million comes at a time when the smallest and sole Albanian-owned operator ceased its operations at the end of 2017. The slump also comes amid higher use of smartphone apps replacing traditional phone calls and text messages, making holding two mobile numbers unnecessary and too costly for subscribers at a time when mobile fees have slightly increased following a sharp decline in mobile operators’ income.

An annual report by the country’s electronic communications authority, AKEP, shows the country’s four mobile operators saw their revenue drop by an annual 12 percent to 29.7 billion lek (€236 mln) in 2017, the lowest level since 2003 when only two mobile operators were offering their services in Albania.

Albania’s electronic communications watchdog has recently voiced concern that the downward trend in income generated by mobile and other electronic communications operators in Albania will negatively affect the level of investment and the quality of service in the country.

Back at the end of 2017, Plus Communication, the sole Albanian-owned operator, ceased its operations after selling its shares to rivals Telekom Albania and Vodafone Albania, reducing the market to three operators, including Turkish-owned Albtelecom.

 
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                    [post_date] => 2019-01-15 18:33:16
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                    [post_content] => By Ervin Lisaku

TIRANA, Jan. 15 - Albania has been facing an exodus of doctors in the past few years, making the country’s healthcare system, already facing one of world’s lowest number of doctors, even more vulnerable.

More than 500 doctors are reported to have left the country in the past few years, mainly heading for Germany, Europe’s largest economy, which has eased work procedures for medical staff coming from the Western Balkans as it tries to fill the huge gaps in its healthcare system.

The current numbers represent about a tenth of total number of doctors in Albania, but what’s worse is that an overwhelming majority of medical staff working at the country’s public and private hospitals would be willing to leave the country if they were offered an opportunity, leaving the country’s vulnerable healthcare system without key experts with decades of experience.

Many hospitals outside Tirana and healthcare facilities at remote areas in Albania already face shortage of specialty and even family doctors, leaving thousands without access to basic service and emergency health problems.

Monthly bonuses of up to €2,000 a month for working outside Tirana and in remote areas suffering shortages of specialty doctors since early 2018 have not been much appealing and facilities like the Dibra regional hospital, north of the country, continue redirecting their patients to Tirana, which becomes quite difficult in winter due to heavy snowfall that often makes helicopter transportation the sole opportunity to save lives.

Albania currently has only 1.2 doctors per thousand residents, in one of the lowest coverage rates comparable only to war-torn countries.

The Balkan country has regularly lost medical staff since the early 1990s following the country’s transition to democracy and a market economy following decades of a hardline communist regime and a planned economy.

However, the brain drain has sharply picked up in the past five years following a relaxation in procedures by Germany due to its huge needs for medical staff, mainly nurses in homes for the elderly.

“Germany has relaxed the doctor-recognition procedures. They accept them from all Balkan countries, though they first have to work in a rural area and undergo training,” says Dorina, an Albanian PhD holder in medicine as quoted at a recent brain drain study commissioned by the UNDP office in Albania.

“Almost 30 percent of students that completed studies in the same year as me have gone to Germany. Each year, around 180 doctors graduate [in Albania], and in the last 3–4 years around 30 percent have emigrated to Germany. This is, regrettably, a very high percentage, because there has been a six-year investment for these doctors,” she adds.

 

Almost everybody wants to leave

Doctors and nurses are among certain groups of mostly younger-age professionals such as engineers, IT specialists, legally leaving the country and heading mainly to Germany following a wave of ungrounded asylum-seekers of mainly non-qualified Albanians that have either voluntarily come back or been repatriated after overwhelmingly having their asylum applications turned down since 2014.

The situation is especially concerning among Albania’s poorly paid medical professionals, more than three quarters of whom say they are willing to leave the country if given the opportunity, according to a recent survey by a local Albanian NGO.

A survey with 1,000 doctors nationwide, including private hospitals, showed around a quarter of surveyed staff say they would immediately leave the country. Another 54 percent said they would consider leaving if they were given an opportunity and only 19 percent said they would continue working at home.

The situation is no better at the private sector offering better wages and working conditions where two-thirds of doctors say they would consider leaving the country, according to a study conducted in mid-2018 by Tirana-based ‘Together for Life’ association with support by Germany’s Friedrich Ebert Foundation.

The situation appears more alarming in the region of Durres, the country's second largest, and in the northern Lezha and Dibra regions where only 5 percent of surveyed doctors are willing to continue working at home.

Albania’s public healthcare system is perceived as one of the most corrupt, with bribes to doctors and nurses to get faster and more careful treatment having become quite normal practice and culture that is little denounced.

 

‘Certificates of good standing’

Some 762 doctors were issued certificates of good standing from 2013 to 2017, among whom 94 specialty doctors in documents that are issued upon doctors' request when attending post-graduate studies abroad or looking for a job outside the country, according to the Order of Albanian Physicians, the authority that issues the certificates.

However, in late 2018, a deal between the health ministry and the Order of Physicians put an end to the issue of ‘certificates of good standing’ for doctors that are already under contract in a bid to stop the brain drain from Albania's healthcare system.

The average departure of doctors from the country, including experienced ones, from 2013 to 2017 was at 190 annually, a figure considerably higher to the average 150 graduates a year produced by the University of Medicine in Tirana, the sole public higher education institution offering studies for family and specialty doctors in studies that last between six and eight years.

Bigger in numbers and with wages almost half of what doctors receive, nurses are also more willing to leave the country.

German Dekra Akademie says it has been offering free German language courses and training for hundreds of nurses in Albania during the past three years, managing to take up to 1,200 nurses to Germany where they mainly work in homes for the elderly, earning around €1,300 a month.

Around a thousand other nurses are currently receiving training throughout the country.

 

Reasons for leaving

Low job income, poor working conditions, few opportunities for career development, exposure to political pressure, verbal and even physical violence are some of the reasons that drive doctors to abandon Albania’s public sector, sometime even to work for private hospitals offering much better wages and working conditions.

Albania's Order of Physicians says frequent legal action against doctors charged with carelessness and negligence also has an impact on the decision to leave, with doctors often ending up in prison, fined or having their licence revoked.

"Some 20 doctors were sentenced to prison in 2015-16 in Albania at a time when there were only three sentenced in the US where the number of doctors is 70 times higher compared to Albania. In addition, there are many doctors facing charges and a lot of others that have been fined," Fatmir Brahimaj, the president of Albania's Order of Physicians has said.

Doctors have appealed for new provisions to divide human error from negligence in treatment, the latter punished by fines or imprisonment of up to five years for negligence in treatment.

A negative perception on doctors has reduced patient confidence in the Albanian health sector, increasing pressure and insecurity among doctors, the doctors’ departure study shows.

Germany which has considerably eased procedures for medical staff from the Western Balkans is no surprise as the top destination for those wishing to work abroad with a 26 percent share.

Another 20 percent say they would prefer moving to the UK and 13 percent to Nordic countries.

Due to tight procedures for being hired in the local healthcare systems, Italy and Greece, home to around 1 million Albanian migrants, are not among the top three destinations.

Around a quarter of surveyed doctors say they constantly feel under pressure, disrespected and dissatisfied at their workplace and often face work overload.

Albania has more than 5,800 doctors, of whom more than half, some 3,347 working in the region of Tirana, home to the country's sole tertiary healthcare facility and several private hospitals.

A third to half of doctors say they are dissatisfied with the poor financing of the healthcare system, the system's weak management and bureaucracy.

Albania's healthcare system receives only around 3 percent of the GDP in government funding, some €360 million, in a budget that is insufficient for the system’s huge investment and staff needs.

Around three-quarters of doctors in the country believe they are unfairly highly criticized. Two-thirds fully or partially agreed with the statement that the "practice of not declaring their cash gifts with authorities is tough, but financially understandable."

Doctors say their wages have to increase by 30 to 100 percent in order to turn down bribes or cash gifts by patients. Current net wages that doctors receive are at around €500 a month, considerably above average wages, but almost half of what MPs, judges and prosecutors or other senior officials get.

Around half of doctors perceive their Albania future as uncertain. Women doctors are more prone to leave the country.

Doctors are also dissatisfied with the work culture in the country's healthcare facilities such as lack of respect, inefficient communication, poor team work and insufficient efforts for their professional development.

 

An inefficient system

"Albanian authorities do not assume responsibility, but simply put the people against doctors. Patients don't pay insurance, they bribe and the government accepts that doctors get bribed and not have their wages increase,” a Tirana obstetrician is quoted as saying on condition of anonymity.

“At a country where there is no rule of law, you face the population's pressure and doctors are suffering from this system. There are endless physical conflicts and doctors keep silent. In some case they receive media coverage and in other go silent. The pressure is a result of inappropriate functioning of the system," he adds.

Another doctor blames lack of transparency and ill-guided investment.

“There is lack of transparency. We really have a small budget, but even that small budget is not consulted with doctors on how it is going to be spent and there is no vision with investment and continuity with health policies," a Tirana kidney doctor is quoted as saying.

A cardiologist in Durres says departures are an issue related both to finances and dignity as the money they get is not enough to make ends meet for their households and bribes don't make them feel good.

The study suggests investment in the health infrastructure, the review of the legal framework on medical errors, more opportunities for professional and academic growth, improving the internal management at healthcare facilities, and engaging Albanian doctors working abroad more in the country's public health sector.

 

‘Quit Germany plans, earn more at home’

Prime Minster Edi Rama has downplayed exodus concerns saying the country has new doctors willing to get a job and invited doctors to work outside their residence areas to earn more through bonuses of $2,000 to $2,500, in income which he says is much better compared to Germany where most Albanian doctors and nurses are heading to.

"Everybody who contributes out of their residence areas will get paid the same as they started working in Germany. Doctors serving outside Tirana as experts will get their standard wage and a bonus of $2,000 to 2,500 a month. Taxes here are much lower than in Germany and what you have at the end of the day here is much better," Prime Minister Rama said in late December 2018, announcing the employment of 300 new specialty doctors for 2019.

Tritan Shehu, a doctor by profession who served as former health minister for the now opposition Democratic Party says “doctors find themselves out of a system that fails to guarantee them the appropriate technical and scientific level, qualifications, technology, the pharmacological ‘arsenal,’ literature, income and dignity and that the collapse that is knocking on the door requires fundamental changes in the whole system and not only facelifts.”

 

 A push for migration

Lack of proper healthcare, together with the low quality of the education system and poor income at home are the primary reason why Albanians migrate away from their native land, surveys show.

Albania has around 1.2 million migrants abroad, almost 40 percent of its 2.8 million resident population, making it one of the countries with the highest per capita migration around the world, with a series of social and economic consequences for the country’s future prospects.

Experts says Albanians are mostly leaving the country because of economic reasons, looking to escape poverty in their homes, but also to integrate into leading European economies and take advantage of better education, health and social protection infrastructure for their families.

Albania’s public health sector is perceived as one of the most corrupt and inefficient sectors, with patients often choosing to get treated at private hospitals in the country or go abroad.

Albanians are estimated to spend about €60 million annually in private hospitals and clinics whose number has significantly increased in the past decade.
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                    [post_content] => TIRANA, Jan. 15 - Serious Crimes Prosecution Office investigations on former head of Prisons Arben Cuko which were made public on Monday by the Voice of America tore down the facade of public competitions by exposing how local officials, Socialist Party MPs and, in one case, even Prime Minister Edi Rama’s own cabinet, hamper a fair employment process by encouraging clientelism.

Intercepts show how on April 30, 2018, Cuko received a phone call from Rama’s cabinet as requested by cabinet chief Vali Bizhga for one female’s employment. 

Under surveillance by the serious crimes prosecution, Cuko confirmed he had signed the female’s employment papers that same day.

“I spoke to Mrs. Bizhga half an hour ago and told her that Vitjona was working,” he is quoted having said in the transcripts. 

Voice of America evidence ensured by the prosecution’s own interceptions and exchanged messages prove that similar employment-related or employee transfer-related phone calls were a substantial part of Cuko’s work description.

Local officials, SP lawmakers and local elected officials were intercepted shifting influence dynamics and asking for employment favors or employees’ transfers within the prisons’ system based on political and personal ties, instead of meritocracy.

Interceptions also exposed how a massive recruitment competition at the Prison Police turned into an employment campaign for SP supporters or people tied to power - a widely-spread phenomenon in Albania’s public administration which the SP claimed to fight.

Cuko, ex-commander at the Guard of the Republic and a former SP MP, ended up at the top of the prisons’ system in July 2017, but only months later he was included in the prosecution’s investigations due to his phone communication with criminal group members for a convict’s transfer.

He was dismissed without making it a year in office and, in October 2018, he was arrested under corruption charges by the serious crimes. 

Cuko has denied the charges and is currently under house arrest.

The Serious Crimes Prosecution Office confirmed that the employment procedures of the prison system in Albania are under investigation, but one of the case leaders was reserved in commenting whether people under suspicion of exercising unlawful influence had been questioned. 

Bizhga herself has admitted the phone conversation during an interview with Voice of America, justifying her mediation as a favor to the Mother Teresa missionaries of charity sisters. 

Her statements were also confirmed by Sister Theresa Maria of the Tirana-based mission, who claimed to have asked Bizhga for help during a meeting at the PM’s Office, which she called privately.

The VoA writes the PM’s press office has declined requests to comment on the prisons’ recruitment process up the time the article was published.

As per common practice, Rama instead responded to the VoA article through a tweet, in which he said VoA had “fallen” to the standards of Tirana’s "garbage bin journalism" by defaming people based on “phone chats.”

“Go check the competition documents with the recruitment results, then slander away! You remembered the party appointments in the administration 30 years later and by grossly , and not professionally, attacking exactly those who are doing their best to curb the phenomenon,” Rama wrote. 

 

VoA: Clientelism in Albania runs strong 

The division of job positions in the country’s public administration based on political ties instead of meritocracy is a problem that has followed Albania’s transition closely. Public administration reform is another pre-condition for membership to the EU, whose latest progress report called for further steps in securing an efficient, depoliticized and professional administration.

Building a non-political administration is also one of Rama’s main campaign promises - during his 2017 campaign, Rama blamed then-allied Socialist Movement for Integration Party for political employments and promised changes.

However, the Cuko surveillance tapes prove these promises are deeply hampered by a system built on clientelism and exercised influence by officials of all ranks and levels.

The prosecution’s surveillance tapes uncovered other names in addition Bizhga, such as the head of the Laws Commission Ulsi Manja and SP lawmakers Klodiana Spahiu, Blerina Gjylameti and Paulin Sterkaj. Much more influence has been exercised by local officials and employees. 

Bizhga explained during her Voa interview that Mother Teresa missionaries has asked for help for 15 recent graduates coming from vulnerable families and experiencing difficulties in finding a job, adding she had felt bad during the meeting and had forwarded their CV-s to the National Employment Service.

According to VoA, the female mentioned in Cuko’s conversation - 30-year-old Vitjona Dervishaj - was also present in the meeting and insisted for a spot at the public administration as, according to Bizhga, her father was a Prison Police employee who had died on duty and whose colleagues had promised her his job position.

Bizhga insisted she had simply put in a word to enable Dervishaj access to the public competition, which is either way open to anyone who is qualified, not to ensure her a job position. Asked whether she had deservingly won the competition, Bizhga said she had not followed the process closely.

Meanwhile, Sister Teresa Maria, who was reached through phone, said she had asked for the meeting at the Prime Minister’s Office out of necessity and that only Dervishaj had been assisted - although not in the position she requested - while the rest of the graduates had “wandered from one employment office to the other.”

Concerning Manja, the interceptions showed him asking Cuko to transfer one prisons’ employee from Kruja to Tirana, and similar favors were recorded coming from Durres MP Klodiana Spahiu.

Similarly, Blerina Gjylameti is mentioned in a conversation between Çuko and a third person, for interfering in the employment of a person associated with the SP, while Paulin Sterkaj is heard complaining about the transfer of a police officer from Tropoja, from the Ali Dem area 313 prison.

Gjylameti and Manja have answered to VoA allegations by saying they cannot give comments regarding an ongoing penal investigation and prior to the comments of the competent legal bodies.

 

The competition facade 

The penitentiary system in Albania consists of 23 correction facilities and counts a considerable number of employees, both in the police and administration. For both categories, recruitment procedures are conducted through public vacancies.

However, according to VoA a mass recruitment public competition turned into an employment campaign for SP militants and people tied to power.

The public competition for positions as policemen was announced late last March and aimed to recruit more than 250 employees for 17 penitentiary institutions in Albania. The examination was conducted on April 3 and the call was answered by more than 1300 candidates.

Exposing the facade, Cuko was heard complaining by mid-April that the entire process was blocked by the PM and that the candidates belonged to SP lists.

“Everything is blocked by the prime minister and I don’t know when it’ll be unblocked,” Cuko said on April 14th. "I expect to be told tomorrow afternoon who I will take, from number one to 250.”

Further on, Cuko is heard telling the person on the other end of the line that “Lushnja has no longer vacancies, Fier has 20 and they have brought 200 people. 1358 people were tested and they all belonged to party lists. They were clear that they will just put them in the prison system.”

Intercepts also highlight cheating on the testing process, where results are manipulated to favor candidates brought from the SP. 

“We will also go over the whole procedure faking that she won and all the rest of them lost. 217 people came to me, supposedly from the famous public contest,” Cuko is documented saying.

The Cuko files are not the first in the prison system, nor in the public administration as a whole. In June 2017, shortly before the general elections, the Ministry of Justice denounced LSI officials in Shkodra for fictitious employment in the still unfinished at the time Reci prison.

Whereas in March 2018, the Commissioner for Civil Service Oversight submitted to the Albanian assembly a report according to which 1/3 of public administration employment is made by order of title and outside of the law procedures.

 
                    [post_title] => Evidence points to heavy clientelism in Rama’s public administration   
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                    [post_content] => TIRANA, Jan. 15 - Albania’s Prime Minister Edi Rama announced on Monday following President Ilir Meta’s rejection of 26-year-old, Kosovo national Gent Cakaj as the country’s new foreign minister, that he will be temporarily assuming the role.  

“The President did not decree the foreign minister’s dismissal within his constitutional deadline. In line of the many violations that the new Constitutional Court will inspect. Until that day that is soon to come, I will be in the position de jure because we don’t have time to lose searching for the president,” Rama tweeted. 

During the weekend, the clash between Rama and Meta escalated, as Meta said the country’s foreign ministry can’t be turned into a “driving school,” while Rama called Meta’s decision to reject Cakaj “a masquerade.”

Speaking through a Facebook post, Meta stated on Saturday that "today, during these important moments of our regional challenges, Albania's Ministry for Europe and Foreign Affairs can not turn into a driving school where the master seeks to teach the “genius” how to change the borders of the entire Western Balkans.”

According to the president, both the Socialist Party and the state have the capacity and right diplomats who can guide the country’s foreign policy, thus pointing again to Cakaj’s young age and lack of experience.

In turn, Rama responded by posting a tweet saying he will no longer deal with a “Constitutional kidnapper at the president’s office,” while adding that “the new Constitutional Court will put an end to this masquerade.”

The government has considered Meta’s decision not to sign current foreign minister Ditmir Bushati’s dismissal without offering any explanation unconstitutional, marking another precedent regarding the powers of the Head of State in relation to appointing and dismissing cabinet members.

Meanwhile, Bushati has so far continued to be in office and this week he is scheduled to hold two important meetings in Tirana, where he will be hosting the Italian Foreign Minister as part of the OSCE Troika along with Slovakia and Albania. Another visit is also expected by the Foreign Minister of the Netherlands.

However, on Monday, local media also reported that Bushati had canceled his own scheduled meetings abroad, which included meeting German homologue Heiko Mass and the chief of the European Union’s Foreign Policy Federica Mogherini.

Last Thursday, in a public letter directed to Rama published by Meta himself, the president addressed Albania’s upcoming OSCE presidency as part of the Trojka organization, its expectation to open accession negotiations with the EU and the need to take the normalization talks between Serbia and Kosovo further, and wrote the country doesn’t have the time to experiment with the young deputy minister’s knowledge.

Although Rama has bluntly disagreed with Meta’s decision, a number of local experts and political actors supported Meta’s decision and even dubbed it as a second chance for Rama to give the leadership of the country's diplomacy to someone with more experience. 

 
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                    [post_content] => FOLLOW-UP

TIRANA, Jan. 11 - After the Voice of America raised allegations that state institutions had favored DH Albania in winning the government tender for the construction of a lot from the Great Ring road project, Albanian authorities claimed the licenses for DH Albania were issued in compliance with legal procedures.

The information was published via a three-page letter from the Technical Secretariat of the Special License Committee, and argued DH Albania had submitted all necessary documentation in respect of all the deadlines before it was issued a license.

Meanwhile, VoA has so far defended its investigation, and on Friday it called on state authorities to prove their claims with facts, which, according to the international media organization, state authorities still haven’t done.

Since the DH Albania scandal was made public, Albanian officials have tried to justify their themselves in their reactions by claiming it is impossible to verify whether the documents submitted for tenders are forged or not. The reactions so-far lack accountability for these easily-verifiable violations,” VoA writes.

News 24 TV-show “The Unexposed,” uncovering how US offshore Dunwel Haberman had falsified its founding act and the signature of the Delaware Secretary of State to prove it had not legal issues in the US, also uncovered how DH Albania, its official branch, had won two government tenders mounting up to 30 million euros in the past year.

A number of media - including "The Unexposed" host and journalist Ylli Rakipi, who was threatened two weeks after the scandal broke out - have further alleged that behind DH Albania is not its legal executive - 28-year-old, inexperienced Avdjol Dobi - but Albanian oligarch Bashkim Ulaj. 
                    [post_title] => Clash between media and gov’t as state institutions deny favoring DH Albania
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                    [post_date] => 2019-01-11 15:52:54
                    [post_date_gmt] => 2019-01-11 14:52:54
                    [post_content] => By Ervin Lisaku

TIRANA, Jan. 11 – Exploration surveys that oil giant Shell is planning to conduct during this year in a southern Albanian region have triggered concerns among some local government officials who fear local protected areas and tourism prospects could be hampered.

In a public hearing that the global oil giant held this week in Gjirokastra, a UNESCO World Heritage site in southern Albania, Shell’s ambitious plans to search for oil and gas in the county of Gjirokastra were met with resistance by local government officials of the Libohova municipality, one of the seven Gjirokastra municipalities were Shell is going to search for oil and gas this year.

The British-Dutch multinational oil giant, already engaged in some major oil exploration projects in Albania, is planning to initiate a seismic survey in the second quarter of this year in the southern Albanian county of Gjirokastra, investigating geological structures and their potential for exploration of petroleum, natural gas and mineral deposits by using explosives or specialized trucks.

The Zagoria national park, part of the Libohova municipality in the county of Gjirokastra, is among the affected areas.

Ilia Kuro, the deputy Mayor of the Libohova Municipality, says that the seismic survey that Shell plans to carry out at the Zagoria nature park could have severe consequences for the local fauna and flora.

"There is a government decision that has designated Zagoria as a national park. We will either have tourism or oil and gas extraction. The Shell interventions will have consequences for the local flora and fauna causing damage to it," Kuro is quoted as saying by local Libohova Online portal, questioning the legality of oil exploration in a protected area.

Located about 35 km east of Gjirokastra, the Zagoria park has been a protected area since 2015 and in May 2018, the whole area was declared a nature park by the government for its unique ecosystem and rare animals such as the brown bear and the wild goat and pig that breed there.

A Zagoria administrator said the local government unit is not even allowed to use concrete for the pavement of local streets due its protected area status.

"We asked for the reconstruction of a 500-meter street with concrete this year, but were not allowed because it's a protected area and we are now talking about the use of explosives," Akile Puleshi, a local Zagoria official, is quoted as saying.

A hilly area with only few hundreds of residents, Zagoria has been recently emerging as an adventure travel destination, with tour operators offering ‘travel back in time’ horse riding tours.

 

‘Minimal impact’

Shell’s Albania representatives have assured the environmental, social and health impacts during the seismic survey that could last up to six months will be minimal.

"The residual impacts from the proposed seismic survey activities, – which are mobile and transient operations over a six months period, are mostly likely to be low and insignificant overall," says a Shell-commissioned environmental assessment conducted by AECOM, a US-based engineering and environmental consultancy.

"In the unlikely event of fire, explosion or major fuel spill, the impacts on the environment and communities may remain significant. Shell Upstream Albania’s preparedness to deliver the emergency response to respond to such unlikely events (fire, explosion, spills) will ensure that impacts are prevented and minimized," the report adds.

Shell plans to drill around 3,000 shot holes and place small (1 to 4kg) non-toxic degradable explosive charges during its seismic survey in Gjirokastra in a bid to identify possible locations of future potential drilling as part of its newly acquired onshore Block 4, southern Albania.

Shell assures buffer zones of up to 200m will be provided to protect cultural heritage monuments where no explosive or specialised truck activities will be undertaken as part of its mitigation measures and a 50m buffer zone will be adopted for natural monuments with the exception of Zagori and Zhej, both protected areas in Gjirokastra.

Shell says the project is expected to create positive effects through the employment of local residents and use of accommodation, goods and services by a staff of around 200.

“Key social and health impacts relate to the access and use of the land by project activities in areas used for cultivation or grazing, the potential development of or use of worker accommodation within villages, potential damage to buildings and disturbance from seismic survey activities, the potential for excessive use of community water sources and medical facilities, and the risk of disturbance created by project workers or traffic,” says the environmental assessment report.

 

Shell’s ambitious Albania plans

Albania expects good news from Shell’s oil exploration operations in the country and is hopeful the British-Dutch multinational oil giant will soon engage in oil production that could give a boost to Albania’s oil industry and much-needed foreign direct investment at a time when two major energy-related projects are set to complete their investment stage by the end of this year, leaving a huge gap in Albania’s FDI.

Albania is one of the few countries where Shell did not suspend its oil exploration operations following the mid-2014 slump in oil prices.

Last year, Albania concluded an oil exploration contract with Shell that will see the oil giant invest another $42.5 million over the next seven years in southern Albania, making it one of the few big Western investors with a presence in Albania. In case of oil discovery in Block 4, the development/production contract will be valid for 25 years with an option of renewal, according to the Albanian energy ministry.

The oil giant has included Albania on its map of more than a century-old key discoveries thanks to its early 2013 Shpirag 2 oil well discovery, in the southern region of Berat, in excess of 800 million of oil and flowing at rates of 800 to 1,300 barrels of oil per day.

The Albanian government says the contract with Shell is the first in the oil sector that enables the country to earn a portion from the first oil production in addition to the mining royalty.

The oil industry produces Albania’s second largest exports and employs more than 3,000 people, but what the Albanian government gets from exports is only a 10 percent royalty tax as no company currently pays the controversial 50 percent corporate income rate, which under current contracts, concessionaires start paying once they meet investment costs.

Most oil extracted in Albania is exported as crude, making it a low value added product and a portion of it goes to a local refiner which has changed hands several times following its failed 2008 privatization.

Bankers Petroleum, the country’s largest oil producer which in mid-2016 was fully acquired by China’s Geo Jade, accounts for the overwhelming majority of 90 percent of total domestic oil production.

Brent crude oil prices currently stand at $60 a barrel, having dropped from a three and a half-year high of $80 a barrel last October, with a negative impact on the country’s oil industry and new drilling plans.
                    [post_title] => Shell’s new Albania oil search plans met with resistance 
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            [post_date] => 2019-01-21 16:18:34
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            [post_content] => By Ervin Lisaku

TIRANA, Jan. 21 – Faced with mounting pressure over a recent public private partnership scandal and student protests over changes and higher financing in Albania’s public higher education system, the Albanian government has cancelled a costly highway PPP awarded to one of the country’s so-called oligarchs, arguing it wants to channel more funding to public universities.

The cancelled PPP is a €244 million 21-km highway linking Kashar, an industrial area just outside Tirana, to northern Albania Thumane village close to the entry of the Highway of Nation linking Albania to Kosovo, the country’s first toll road since Sept. 2018.

Last July, the Albanian government selected Albanian-owned Gener 2, one of the country’s leading construction companies under a 13-year PPP following an unsolicited proposal that placed the company at an advantage through a bonus in a no-surprise tender with little competition. The Albanian government had not concluded contract negotiations with Gener 2 yet, and reportedly suspended them in late December following a PPP scandal allegedly involving the winning bidder.

The PPP cancellation comes after media investigations into an offshore company that had €30 million in government-funded projects cancelled last December after falsifying links to a US-based company in what was dubbed as a major PPP scandal in Albania’s ever increasing use of concessions and PPPs to complete key road, health, education and waste management projects.

DH Albania, the phantom company that had its Albanian contracts cancelled, has been accused of alleged links with Gener 2 and its owner, Albanian businessman Bashkim Ulaj, who in late 2018 also inaugurated with much fanfare a new TV station, Tirana-based A2, which is branded as a CNN exclusive news channel affiliate.

A subsidiary of US-based Dunwell Haberman, DH Albania easily won public tenders to build a section of Tirana's outer ring road for €18 million and an electricity transmission line north of Albania worth around €12 million in the second half of 2018, in public tenders with virtually no competition at all. The Albanian unit falsely claimed it was part of a major US company with 20 years of experience allegedly registered in the state of Delaware in 1998, but later proved to have registered only in mid-2018.

The Voice of America in the local Albanian service claims the newly established company was favored by government authorities in receiving required licences and permits to run for the tenders.

 

Gov’t withdrawal

"I have decided to cancel the Thumane-Kashar public private partnership. Its budget will go to the ‘University Pact’ but to us this continues to remain an important road axis," new Infrastructure Minister Belinda Balluku said in a short press conference on Monday in her first appearance as minister after replacing former minister Damian Gjiknuri few days ago.

Most Albanian public universities have been boycotting classes since early December 2018, paralyzing university life with protests, demanding higher quality and lower tuition fees. Backed by considerable number of professors, students also want a 2015 higher education law cancelled, blaming it for the current chaotic situation in the country’s public universities.

The unstoppable student protests led to a reshuffle of more than half of the ruling Socialist Party government in late 2018 and Prime Minister Edi Rama giving in to some of the students’ demands by reducing fees for Bachelor studies, but keeping them unchanged for the more costly Master’s studies where only excellent student and those in need have been promised a cut.

Student protests in several public universities continue even after the so-called University Pact and calls for dialogue by Prime Minister Edi Rama. University professors in some faculties have also joined protests.

 

Controversial costly PPPs

The €244 million Kashar-Thumane project is part of a major €1 billion controversial PPP program that the Albanian is implementing to upgrade road, education, health infrastructure in a major project that has been criticized for lack of transparency and hidden costs that could likely affect Albania's plans to reduce public debt, currently at an unaffordable 70 percent of the GDP for the size of the Albanian economy.

The segment was part of a proposed larger 64-km Thumane-Rrogozhine highway linking south and southeastern Albania to northern Albania and Kosovo faster.

The government was planning a new 44-km Thumane-Rrogozhine PPP in another costly project worth around €670 million that would take the Kashar-Thumane-Rrogozhine cost to around €900 million, around 7 percent of Albania’s GDP, almost the same to a longer highway linking Albania to Kosovo inaugurated a decade ago.

Gener 2 was supposed to build the project in three years by securing funding on its own and receive taxpayer support for ten years for its investment and maintenance costs in a project that had been criticized for high costs of around €12 mln/km.

The Albania government was supposed to start paying the first 2.45 billion lek (€20 million) annual instalment to Gener 2 in 2020, according to the finance ministry.

The project was described as the second most important in the €1 billion PPP agenda after the Arbri Road linking Albania to Macedonia, already under construction through a 13-year €240 million PPP awarded to another Albanian company.

One of the country’s biggest companies, Gener 2 also runs two shopping centers in Tirana and is engaged in two hydropower plant constructions along the Valbona River, northeast Albania, in a project that has triggered strong protests by environmentalists and local residents relying on the emerging mountain tourism there.

International financial institutions such as the World Bank and the IMF have also voiced concerns about Albania’s PPP agenda especially the transparency related to them and unsolicited proposals favoring companies that propose them as well as possible accumulated arrears which could hamper the debt reduction agenda.

However, the ruling majority argues the PPP projects are essential to give an impetus to the country’s road, health, education and waste management infrastructure in projects which it says the government cannot fund and manage on its own. The government will repay concessionaires for about 13 years in annual instalments for the investment and management costs in return for initial private investment that is expected to complete the projects in three years, in costs that some economy experts have described much higher compared to traditional public procurement.

Taxpayer support to some controversial public private partnerships is expected to increase by around 50 percent to €100 million for 2019 as the government starts paying on three news public private partnerships, taking PPP spending to 3 percent of the previous year’s fiscal revenue, compared to 5 percent threshold that the government has set.
            [post_title] => Ruling Socialists cancel €244 mln PPP to Albanian ‘oligarch’ over alleged links to offshore scandal 
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