Albania mulls turning key Tirana-Durres highway into toll road

Albania mulls turning key Tirana-Durres highway into toll road

By Ervin Lisaku TIRANA, Nov. 1 – The Albanian government is mulling turning the country’s key highway linking the two main cities of Tirana and Durres into a toll road through a concession which apparently does not affect public finances,

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‘Turkey has no hidden agenda in Albania, region,’ Ambassador says

‘Turkey has no hidden agenda in Albania, region,’ Ambassador says

By Murat Ahmet Yörük* I would like to extend my gratitude to all of you for being with us tonight as we celebrate the 95th anniversary of the proclamation of the Republic of Turkey. I welcome you all with sincere

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AIIS study unveils costs, benefits of Albania’s slowly progressing judiciary reform

AIIS study unveils costs, benefits of Albania’s slowly progressing judiciary reform

TIRANA, Oct. 30 – More than two years after Albanian MPs approved in last-minute consensus constitutional changes to a long-awaited justice reform, results have been mixed due to delays in the establishment of key new bodies although a vetting process

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Albania sets optimistic growth targets, offers incentives ahead of 2019 local elections

Albania sets optimistic growth targets, offers incentives ahead of 2019 local elections

TIRANA, Oct. 29 – The Albanian government expects higher GDP growth and lower public debt for next year in an ongoing fiscal consolidation budget that will also see a series of tax and welfare incentives ahead of the upcoming mid-2019

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Albania selects audit firm to probe airport’s alleged abuse of monopoly position

Albania selects audit firm to probe airport’s alleged abuse of monopoly position

TIRANA, Oct. 29 – The Albanian government has selected an audit firm to conduct what it calls an ‘independent economic review’ of the concession contract it has with the Tirana International Airport, the country’s sole airport with a de facto

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Editorial: Public diplomacy cannot be done in the dark

Editorial: Public diplomacy cannot be done in the dark

TIRANA TIMES EDITORIAL The news that the Greek Ministry of Foreign Affairs had used an undisclosed fund to pay several news outlets, media actors and online portals in Albania and in Macedonia rattled the public opinion this week and generated

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Albania makes it to Lonely Planet’s top 10 affordable adventure destinations

Albania makes it to Lonely Planet’s top 10 affordable adventure destinations

TIRANA, Oct. 25 – Albania has made it to Lonely Planet’s top 10 affordable adventure destinations for 2019 as one of Europe’s final frontiers that offers hiking amid beautiful mountain scenery, superb beaches and a unique history. Albania ranks eighth

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Sole Albanian bidder gets €161 mln PPP for 18-km highway

Sole Albanian bidder gets €161 mln PPP for 18-km highway

TIRANA, Oct. 22 – Albania has announced an unsolicited proposal by a local company to build a highway north of the country in a new costly public private partnership project, defying warnings by international financial institutions of giving up such

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Albania mulls cryptocurrency regulation in bid to become regional hub

Albania mulls cryptocurrency regulation in bid to become regional hub

TIRANA, Oct. 22 – The Albanian government says it is mulling a regulatory framework on cryptocurrencies in a bid to diversify investment opportunities in the country in an innovative sector that creates well-paid jobs and apparently become a hub for

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Editorial: Against slander, libel and defamation: why truth needs to be rescued even if by means of justice

Editorial: Against slander, libel and defamation: why truth needs to be rescued even if by means of justice

TIRANA TIMES EDITORIAL A hurricane of false statements, fake news and irresponsible accusations can do much more damage to the truth that any other form. Currently there are two elements in Albania that need to be addressed for the sake

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                    [post_content] => By Ervin Lisaku

TIRANA, Nov. 1 – The Albanian government is mulling turning the country’s key highway linking the two main cities of Tirana and Durres into a toll road through a concession which apparently does not affect public finances, but sharply increases travel costs for the country’s residents, already facing one of Europe’s highest fuel prices.

The ruling Socialist Party majority says it has received an unsolicited proposal on the upgrade of the current 30-km highway linking Tirana to Durres and the construction of a new 44-km highway from Kashar, just outside Tirana, to Rrogozhina, a hub to southern Albania.

The infrastructure ministry says the unsolicited proposal will be a build-operate-transfer public private partnership which unlike some of the current PPP road projects under way receiving government financial support, will be funded by the concessionaire itself in return for introducing tolls to get back investment and make a profit for a period that could be up to 35 years.

Several key road segments, including a highway linking Albania to Macedonia are being built as part of a €1 billion PPP program under which concessionaires complete the projects using their own funds and financing and the government pays them back in annual instalments for investment and maintenance costs for up to ten years.

The infrastructure ministry says the proposed project envisages extending the current Tirana-Durres highway to a three-lane dual carriageway, turning it into the country's second toll road after the Albania-Kosovo highway where average tolls of €5 are being charged since mid-September 2018 following protests leading to toll revision for local northeastern Albania residents and discounts for frequent users.

In return, the concessionaire will have to rehabilitate access roads for businesses along the highway and reconstruct the old Tirana-Durres road through Ndoq village, which will both serve as free of charge alternatives to the toll road.

The proposed project also envisages the construction of a Kashar-Rrogozhine highway through a new track in the post-2025 period.

"Under the proposed scheme, all construction costs will be handled by the private concessionaire who will introduce tolls to guarantee the return of investment and make a reasonable profit without affecting the state budget. Citizens will also have the opportunity to use alternative free of charge roads," says the infrastructure ministry.

The authorities’ reaction came after local media alleged the government will fund the road projects through taxpayer money, the same as it is doing with some controversial PPPs in the public health, road infrastructure and waste management sectors.

In its proposed 2019 budget, the government says the expected investment on the rehabilitation and extension of the Tirana-Durres highway could be up 49 billion lek (€391 mln), while the new Kashar-Rrogozhine highway could cost double, at around 85 billion lek (€675 mln), with total cost for both highway projects at €1 billion, about 7 percent of Albania’s GDP.

The finance ministry says it is still examining the unsolicited proposal by a company which it does not specify and has no decision-making yet on the build-operate-transfer concession that could be awarded for 30 to 35 years.

In case of receiving an initial okay, the concessionaire would receive a bonus for its unsolicited proposal and become an apparent winner, the same as has happened with similar PPPs where favorite companies face little competition at eventual tenders.

However, such a concession contract could also have indirect costs for the Albanian government such as traffic guarantees to secure the company’s return of investment.

According to the IMF, PPPs entail construction, financial, demand, political, force majeure and renegotiation risks and the Albanian government’s legislative threshold of annual payments to concessionaires not exceeding 5 percent of the previous year fiscal revenues is not reliable, reflecting a mix of mandatory and expected payments and worst-case estimates if pre-determined minimum revenue guarantees are triggered such as in the case of toll roads not meeting minimum traffic.

International financial institutions have asked the Albanian government to give up the unsolicited proposal as a procedure that places bidders at unequal position and leads to controversial PPPs with no thorough cost-benefit analysis that could create new arrears undermining the public debt reduction agenda.

Albania’s public debt is already at around 70 percent of the GDP, a high level for the country’s stage of development that places at risk macro-economic stability and much-needed public investment due to high debt servicing costs.

 

A key corridor

The Tirana-Durres toll road would significantly increase travel costs for all Albanians through a main corridor that is home to about half of the country’s 2.8 million resident population and produces half of the country’s national output.

Due to the huge tax burden levied on oil, Albanians already face one of Europe’s highest fuel prices while struggling with one of the region’s poorest income.

Plans to make the key Tirana-Durres highway a toll road come after the key segment got a facelift through a €600,000 emergency intervention only in late June after having turned into a nightmare for drivers and a cause of road accidents for the previous couple of years.

The World Bank-supported emergency intervention that only repaired damaged layers of asphalt is only considered a temporary solution to Albania’s main 30-km highway which needs deeper intervention to bring to standards.

The main economic corridor of Albania, the 30-km highway dual carriageway connects Tirana and northern Albania to the Durres port, the country's largest, and is a hub to southern Albania.

Some of the most important businesses and shopping centers operate along it and half of the country GDP is produced there. The highway's daily traffic flow is estimated at 45,000 vehicles.

Built in the early 2000s, the Tirana-Durres highway was the country’s first major infrastructure work following the early 1990s collapse of the communist regime when private car ownership was banned.

However, high traffic and poor quality construction works at that time and lack of proper maintenance have taken it to bad condition, leading authorities to consider a toll road concession for its upgrade and maintenance.

Albania has one of Europe’s highest death tolls from road accidents with an estimated 15 fatalities per 100,000 inhabitants with poor road condition and careless driving being the main reasons behind such high death toll. About 2,000 road accidents took place last year in Albania, with a death toll of 222, the lowest level for the past six years when data is available.
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                    [post_content] => By Murat Ahmet Yörük*

I would like to extend my gratitude to all of you for being with us tonight as we celebrate the 95th anniversary of the proclamation of the Republic of Turkey. I welcome you all with sincere regards and deep respect.

The Republic of Turkey is the legendary achievement of a nation that prefer to die instead of losing its independence. Proclamation of the Republic signifies the rebirth of a nation from the ashes of an Empire following a national struggle for liberation.

Under the leadership of Ghazi Mustafa Kemal Atatürk and his comrades-in-arms, our nation has shown a great courage, strong will, wisdom and determination in this struggle, which defined our character. This character is still very much alive today.

We respectfully bow in front of the dear memories of the founder of our Republic and the victorious commander of the War of Liberation Ghazi Mustafa Kemal Atatürk, his comrades-in-arms and all our veterans.

We commemorate once again with gratefulness our citizens, our daughters and sons who made the ultimate sacrifice to make the lands of our Republic our motherland, during public service, while fighting against terror groups and resisting the treacherous coup attempt of 15 July.

Since its foundation, the Republic of Turkey is rising prosperously by further developing its democracy, the principle of rule of law and individual rights and freedoms of its citizens.

The Republic of Turkey is a respected member of the international community. With its young and dynamic population of 81 million, it is the 6th biggest economy in Europe and 17th biggest economy in the world.

Turkey has been transforming its economy while strengthening its physical infrastructure. Today, we have focused on a transformation to technology-intensive and innovative economy. Subsequently, we have made achievements in recent years especially in the defence industry sector.

Turkey has reached to the point of producing drones and tanks with local and national capabilities. In addition to this, we have progressed on projects to build aeroplanes and electric cars with national capabilities

A stronger Turkey means more investments, more employment and more cooperation. A stronger Turkey means more prosperous, more stable and a safer environment in the Balkans and an increased leading power for Europe.

 

‘Peace at home, peace in the world’

Turkey conducts its foreign policy guided by the principle of “Peace at Home, Peace in the World” as set out by Ghazi Mustafa Kemal Atatürk.

Under the visionary and experienced political leadership of H.E. Recep Tayyip Erdoğan, President of the Republic of Turkey, and because of the requirements of our age, we pursue an enterprising and humanitarian foreign policy.

We take concrete initiatives to promote security, stability, sustainable development and prosperity in the Balkans region and beyond.

Because of the humanitarian aspect of our foreign policy, we take principled, responsible and conscientious positions regarding the issues on our agenda.

Turkey stands together with all the oppressed countries and nations in the world from Palestine to Myanmar, from Somalia to Bosnia-Hercegovina. As a result of the humanitarian crisis in Syria, Turkey is hosting the largest number of refugees worldwide for the fourth year in row.

Thus, Turkey became the biggest contributor in international humanitarian assistance in 2017.

On the other hand, Turkey plays a crucial role in the fight against terrorism within NATO and international coalitions. Turkey has immensely suffered and lived great losses by the terror attacks of DAESH, Al-Qaeda, PKK, PYD and FETO. We will continue our fight against terror with resolution.

Since 2002, Turkey has ever-increased democratic rights, freedoms, and implemented big scale reforms for the administration of the country. Turkey has been strengthening its financial structure and economy while implementing big-scale infrastructure investments.

In this regard, we have a distinct pride, honour and pleasure to inaugurate the Istanbul New Airport on this day as we celebrate our Republic Day. When completed in 2021 it will be the largest of its kind in the world with a capacity of 200 million passengers per year.

The visit of H.E. Ilir Meta, President of the Republic of Albania and H.E. Damian Gjiknuri to Turkey for the opening ceremony of the Istanbul New Airport upon the invitation of our President H.E. Recep Tayyip Erdoğan, has a special importance for our relations with Albania.

 

‘Friendly and fraternal relations with Albania’

We have a deep-rooted history of friendly and fraternal relations with Albania.

Although we do not share geographical borders, Albania is one of the countries, which has always been close to our hearts. We consider Albania as a neighbour by heart. Millions of Turkish citizens of Albanian origin are concrete examples of these bonds. It is an undeniable fact that our nations are inseparably connected with family bonds.

The words of Ghazi Mustafa Kemal Atatürk, the founder of our Republic and a natural born of this geography summarizes clearly how we should conduct our relations: “We love the Albanian nation, we consider them as brothers and sisters, and do not see them apart from ourselves. We seriously and definitely wish the strengthening of Albania as a country and as a nation and reach to its deserved level in the Balkans.”

Our President H.E. Recep Tayyip Erdoğan also has a well-known affection for Albania and for our Albanian brothers and sisters as embodied in the important support he has given to the development of Albania especially in the fields of civil aviation, health, education, tourism, energy, infrastructure and agriculture complemented with other strategic investments,

One of the first treaties of friendship we signed in 1923 after the proclamation of the Republic of Turkey was with Albania. The title of this treaty “Treaty of Eternal Friendship and Cooperation” defines the relation between our countries and our nations in the simplest form.

Therefore, in 2023 we will not only be celebrating the 100th Anniversary of our Republic, but also the 100th Anniversary of the establishment our diplomatic relations with Albania.

Turkey aims the strengthening of peace, prosperity and cooperation in the Balkans. In this vein, we attach a special importance to our relations with Albania. Our bilateral relations are based on the principles of respect to the independence, sovereignty, territorial integrity and non-interference in the domestic policies.

We are cognizant of the key role that Albania has with respect to peace and stability in the Balkans. We support the integration process of Albania with all Euro-Atlantic institutions. We believe that economically and politically stronger Albania as a member of the EU, is in the interest of Turkey, the Balkans and Europe.

We shape our policies towards this end and with our sincere support for Albania. We do not have a hidden agenda towards Albania nor towards other countries in the region. It should not be thought otherwise.

We are pleased to be one of the biggest trading partners of Albania with a total of 480 Million Dollars of trade volume. Our investments in various sectors such as energy, finance, infrastructure, industry, civil aviation, education and telecommunication have reached to almost 3 billion Dollars. Turkish companies employ almost 15 thousand of our Albanian brothers and sisters which roughly corresponds to proving income to 60 thousand people in total.

We aim to further increase our trade and investments. This is a reflection of our trust in the bright future of Albania.

Our relations have clinched with the initialling of the “Joint Political Declaration For Establishing A High Level Cooperation Council” by the Foreign Ministers of our two countries during the visit of H.E. Minister of Foreign Affairs Mevlüt Çavuşoğlu two weeks ago. This document will raise our relations to a level of strategic partnership.

As the Ambassador of Turkey, I wholeheartedly believe in the bright future of relations between Turkey and Albania.

Turkey aims for new political, economic and commercial achievements on its 100th anniversary in 2023. I sincerely hope to celebrate these achievements in joint prosperity together with our friend and ally Albania on the 100th Anniversary of our “Treaty of Eternal Friendship and Cooperation.”

Eternal affection and friendship between Turkish and Albanian nations constitute a strong and unbreakable bridge between us.

*Speech of Turkey's Ambassador to Albania, Murat Ahmet Yörük, at the 29 October Republic Day of Turkey at a reception held in Tirana

 

 
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                    [post_content] => TIRANA, Oct. 30 - More than two years after Albanian MPs approved in last-minute consensus constitutional changes to a long-awaited justice reform, results have been mixed due to delays in the establishment of key new bodies although a vetting process has seen the first victims of a system largely perceived as corrupt and a key barrier to Albania’s rule of law, EU integration and investment climate.

A study introduced this week by the Albanian Institute for International Studies, AIIS, one of the country's top think tanks, shows that the reform’s expected benefits far outweigh current costs such as delays in establishing key judiciary bodies and the blockage of several key institutions including the country’s Constitutional Court.

Artan Hajdari, a renowned lawyer who was also one of the experts involved in the drafting of the justice reform, says the constitutional changes were adopted to increase the recruitment standards for current judges and lawyers undergoing vetting and remove political interference in their appointment which had led to a highly perceived corrupt judiciary despite Albania already having Western standards legislation in place.

“The final beneficiary is the public and the justice system itself labeled as corrupt. Our analysis showed that it was not laws that were problematic but their enforcement by the judges, prosecutors and the High Council of Justice,” said Hajdari, who also chairs the AIIS Board of Directors, introducing the study supported by the Open Society Foundation for Albania.

“The constitutional changes were made to bring people with integrity and boost recruitment standards by keeping politics away from the selection process,” he added.

 

Delays spark concern

The initiation of a vetting process scanning judges over their wealth, moral integrity and professionalism has led to several dismissals that have paralyzed several key institutions in the absence of failure to establish new bodies over lack of political consensus.

The High Judicial Council and High Prosecutorial Council, two key bodies replacing the current inefficient High Council of Justice, have yet to be established and pave the way for new appointments in key courts and prosecutor’s offices.

"The prolongation of this situation of chaos and lack of services and indefinite delays in the process is in fact the biggest flaw and cost of the reform. Even reform supporters now have the perception that its predictability has been poor," says the AIIS report.

"A country that is governed without functioning judicial bodies at every instance faces permanent danger for its stability and democracy. When this situation is a result of several years of a rotten judiciary, the danger is even bigger as there is continued lack of efficiency in the system and public interest remains at risk," it adds.

Due to political stalemates preventing the establishment of new bodies to fill vacancies and the launch of a vetting process punishing several judges over failing to justify their wealth, Albania's Constitutional Court, the Supreme Court, and the School of Magistrates training upcoming judges and prosecutors have been paralyzed this year, giving a severe blow to the justice system in the country and undermining public trust in the reform.

Eight judges and prosecutors out of the first sixteen to undergo vetting through a final say have so far failed to pass the vetting process over failing to justify their wealth in a process that began in early 2018 but is slowly progressing and could take years considering more than 750 judges and prosecutors in the country.

Another ten judges and prosecutors, including senior ones, resigned ahead of the vetting process, apparently escaping the strict scanning of wealth under the vetting law.

 

‘Deeply-rooted corruption’

The AIIS report shows Albania's justice system has long been suffering the consequences of deeply-rooted corruption leading to failure to render justice, but also an alarming hike in lack of skills and professionalism which were both reflected on a sharp decline in citizens' social and economic welfare.

The report says Albania’s judiciary has also suffered poor legacy from communism, under which the justice system was under full government control and served as an instrument of violence, terror and persecution for more than four decades until the early 1990s before continuing to serve as a tool for incumbent governments during the past quarter of a century of transition to democracy and a market economy.

“There are few concrete benefits in the short-run, but meaningful and hopeful in the mid and longer run,” shows the report.

Surveys by AIIS and other think tanks have shown a majority of Albanians perceive the justice system as highly corrupt and that offering bribes and political connections are considered key to success in legal battles.

“The reform has set a very important standard that not everybody can serve in the justice system, but only the ones with high moral and social integrity, responsible with every decision they make and everything related to personal wealth and who will be under constant monitoring,” shows the AIIS study.

If properly implemented, the reform is also expected to give a boost to Albania’s business climate by offering security to investors who rate corruption and lack of an efficient judiciary among the top concerns for investing in Albania and often put costly clauses of international arbitration in settling disputes with the government in their Albania investment contracts.

The implementation of the justice reform is also one of the key conditions that Albania has to meet as it hopes to launch EU accession talks next year.
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                    [post_content] => TIRANA, Oct. 29 – The Albanian government expects higher GDP growth and lower public debt for next year in an ongoing fiscal consolidation budget that will also see a series of tax and welfare incentives ahead of the upcoming mid-2019 local elections.

The ruling Socialist Party majority expects the country's economic growth to recover to 4.3 percent and public debt to drop to 65 percent of the GDP for 2018, in forecasts that are significantly much more optimistic compared to what international financial institutions such as the World Bank and the IMF predict for the Albanian economy in 2019 when contribution by two major energy-related projects that drove FDI growth over the past four years considerably wanes.

The World Bank has recently upgraded its 2018 growth forecast on Albania to 4 percent supported by weather-related spike in hydroelectric power production and a strong tourism season but expects medium-term growth to slow down to 3.5 percent with risks to the outlook involving the situation in emerging markets, growth in the EU, and the success of the fiscal consolidation and tax reform.

Meanwhile, the IMF has also revised upward its 2018 economic outlook on Albania to 4 percent, but expects the country’s growth to linger around 3.7 percent to 4 percent over 2019-2023.

The Albanian economy grew by an average of 4.4 percent in the first half of 2018, in a decade-high growth fuelled by heavy rainfall lifting the state-run electricity sector out of crisis, but yet not producing any significant hike in consumption or investment which experts estimate can receive a boost only in case the Albanian economy manages to grow by 6 percent annually, a growth rate it enjoyed for about a decade until the 2008-09 global financial crisis.

Lingering at 70 percent of the GDP for the past four years, a high level for Albania’s stage of development, Albania’s public debt is the highest among EU aspirant Western Balkan countries and considered to pose a significant threat to the country’s macro-economic stability unless it drops to more affordable levels of below 60 percent of the GDP.

Albania's public debt officially dropped to a 5-year low of 65.2 percent in the first half of this year, but the national currency having gained about 10 percent against the euro had a key impact on its fall. The euro’s free fall against the Albanian lek this year has had a series of negative effects on Albania’s highly euroized economy, primarily hitting Eurozone-destined exports, but also sizeable euro-denominated savings and remittances, although government’s external debt servicing and repayment of loans in Europe’s single currency has become much cheaper.

In its 2019 draft budget, the Albanian government says it expects the budget deficit to drop to a historic low of 1.9 percent of the GDP as the government targets for the fourth year in a row a primary budget surplus, calculated by excluding debt-servicing costs, and slightly increase public investment to 5 percent of the GDP.

Incumbent Albanian governments during the past quarter of a century of transition have a track record of drafting rather overoptimistic budgets in electoral years which often triggers post-election budget cuts due to higher than planned spending ahead of elections in a bid to gain an electoral advantage.

Last September, the Albanian government was also forced to slightly revise down its 2018 budget, citing euro’s free fall that makes imports much cheaper for the underperforming income.  

 

Incentive-driven budget

The optimistic 2019 budget forecasts are also accompanied by a series of tax incentives, salary and pension hikes and even a sharp increase in baby bonuses aimed at encouraging couples to have more children to fight the current sharp decline in birth rates, negatively affected by drastic changes in lifestyle and massive migration following the collapse of the hardline communist regime in the early 1990s.

The much more optimistic, tax friendly and welfare oriented budget comes as the ruling Socialists, already in their second consecutive term of office and with a clear mandate to rule on their own, head to the upcoming mid-2019 local elections in a bid to continue running the country’s largest municipalities, in what will be a key test even for the united opposition ahead of the 2021 general elections.

The major change in the upcoming fiscal package includes a reduction in the dividend tax to 8 percent, down from a current 15 percent and a slight reduction in the tax burden for high income earners, in incentives that the government says benefit dozens of thousands of investors and employees.

The year-end fiscal package follows a mid-2018 package when the ruling majority approved lower corporate income tax for mid-sized businesses and incentives on agribusinesses.

The 2019 incentives also come after a series of tax hikes and several rather aggressive campaigns on fighting tax evasion and collecting accumulated unpaid electricity and tap water debts that the ruling Socialists undertook over the past four years, often criticized for worsening the business climate by making Albania’s tax burden one of the region’s highest and targeting the poorest households, often taking to applying for ungrounded asylum in wealthy EU members, mainly Germany and France.

The incentives also come at a time when the number of businesses closing down has seen a sharp double-digit increase this year amid a hike in the tax burden on small businesses, already facing tougher competition from shopping chains and supermarkets as well as a decline in the purchasing power.

Data published by Albania’s tax administration shows the number of businesses shifting to passive status in the first nine months of this year rose to about 11,200, a 60 percent hike compared to the same period last year.

The government has also approved legal changes banning gambling from residential areas starting next January in a bid to put an end to what had become a booming businesses with a series of negative effects on Albanian households, officially spending more than €130 million a year, but €700 million, about 5 percent of Albania’s GDP, if the larger informal sector is taken into account.

Finance Minister Arben Ahmetaj says he is optimistic over the 2019 targets and ongoing fiscal consolidation.

“The 2019 budget and the fiscal package accompanying it reflects the government's full attention to households, either in continuing the fiscal consolidation, i.e. public debt inherited over years, increasing revenue, boosting growth and above all prioritizing public investment in favor of economic growth,” says Finance Minister Ahmetaj.

The main opposition Democratic Party and their allies have been boycotting Parliament since last September over the government’s alleged links to crime and gangs alleged to have captured the economy through corruptive PPPs and tailor-made public tenders. The opposition has proposed legal changes to cancel what it calls corruptive PPPs and scan politicians over their wealth, just like the vetting process that is being implemented on judges and prosecutors as part of a judiciary reform.

 

Taxpayer support to PPPs

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. The three new PPPs include an under construction road project linking Albania to Macedonia, the operation and maintenance of country’s first toll road linking Albania to Kosovo and a medical lab PPP, in addition to a series of PPPs in the health and waste management sectors already receiving taxpayer support.

International financial institutions have already warned that local PPPs, most of which given the okay following controversial unsolicited proposals and without thorough cost-benefit analysis, could pose a threat to the public debt reduction agenda because of the risk of creating new arrears which if included in the public debt stock could increase it by 7 percent of the GDP considering an ambitious €1 billion PPP program.

According to the IMF, PPPs entail construction, financial, demand, political, force majeure and renegotiation risks and the Albanian government’s legislative threshold of annual payments to concessionaires not exceeding 5 percent of the previous year fiscal revenues is not reliable, reflecting a mix of mandatory and expected payments and worst-case estimates if pre-determined minimum revenue guarantees are triggered such as in the case of toll roads not meeting minimum traffic.
                    [post_title] => Albania sets optimistic growth targets, offers incentives ahead of 2019 local elections
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                    [post_content] => TIRANA, Oct. 29 - The Albanian government has selected an audit firm to conduct what it calls an ‘independent economic review’ of the concession contract it has with the Tirana International Airport, the country’s sole airport with a de facto monopoly on international flights and whose high charges on carriers are often blamed for Albania having one of the region’s highest ticket prices.

State-run Civil Aviation Authority says it selected BDO Albania, a member firm of BDO International, the fifth largest accounting network worldwide, to conduct an independent review of the airport concessionaire's economic position in a report that will be prepared in 40 working days for 27.4 million lek (€219,000).

The economic review, the first of its kind since 2005 when the 20-year concession kicked off, comes following frequent concerns that the country’s competition watchdog has expressed in the past four years over the concessionaire’s alleged abuse of its monopoly position in charging high fees that make the operation of low-cost carriers difficult and lead to high costs for Albanian passengers who often choose to fly from neighboring countries offering cheaper flights.

The build-own-operate-transfer concession contract that the Albanian Parliament ratified in late 2004 allows the Albanian government to request an independent review of the concessionaire's economic position to check whether any disequilibrium has arisen and hire a qualified independent financial advisor to provide recommendations on restoring the equilibrium.

As a rule, the independent assessment takes into account the fulfillment of contract terms, trends in passengers and freight traffic and economic growth in Albania and the countries where most Albanians fly to, mainly Italy, the destination of more than half of flights from TIA.

The concessionaire's economic position will be assessed by examining its income, spending, and return rate under a baseline scenario agreed in 2004.

Albania’s Air Transport Code allows the Civil Aviation Authority to intervene in preventing discriminatory tariffs and practices, abusive high prices as a result of dominant position.

Operated by a German-led concessionaire for 13 years until mid-2016 when it was taken over by a Chinese consortium, the Tirana International Airports is one of the most profitable companies in Albania with profit rates of up to 38 percent.

The Chinese-led concessionaire saw its net profit climb to about 2.3 billion lek (€18 million) in 2017, up 25 percent compared to the previous year, according to reports filed with the National Business Center.

Albania’s Competition Authority has earlier unveiled the airport’s landing and take-off, base ground handling, parking and lighting fees are much higher compared to regional airports which have more than one airport, including Kosovo, making it a key barrier for the operation of low-cost carriers.

TIA officials have earlier denied claims saying that their charges to airlines are moderate and constitute only a maximum of 15 percent of carriers’ total costs, attributing current ticket prices to other factors such as companies’ internal airfare policy, destination airport charges, fuelling, aircraft maintenance charges, crew and staff and marketing.

Albania is preparing to launch its second international airport in Kukes, northeast Albania, having already awarded a bonus to one of the country's largest companies for its unsolicited proposal that makes it advantaged and an apparent winner in the upcoming Dec. 10 tender.

A United Arab Emirates investment in north-east Albania near the Kosovo border, the Kukes airport has been ready for use since 2007, but only became available in mid-2016 after the country’s sole airport had its exclusive rights on international flights lifted in return for extending its concession term for 2 years until 2027.

However, its location in Kukes, a two-hour drive from Tirana along a toll road, will make the airport competitive only in case of significantly lower prices compared to the Tirana airport, which often forces passengers to fly from neighboring countries offering more low-cost alternatives.

Albania has also announced plans to build a new airport in Vlora, south of Albania, under a concession deal with a Turkish consortium, but contract negotiations have so far failed to materialize.

The government also plans a smaller airport in Saranda, southernmost Albania, in a bid to give a boost to the emerging tourism industry along the Albanian Riviera.

The Tirana airport handles more than 2 million passengers a year, being one of the country’s main hubs.
                    [post_title] => Albania selects audit firm to probe airport’s alleged abuse of monopoly position
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                    [post_content] => TIRANA TIMES EDITORIAL 

The news that the Greek Ministry of Foreign Affairs had used an undisclosed fund to pay several news outlets, media actors and online portals in Albania and in Macedonia rattled the public opinion this week and generated many reactions and questions. The gravity of this issue was enough to unseat the Greek Minister of Foreign Affairs and the debris of the situation are not going away even days after.

These funds seem to have been used in a secret and unaccounted for way to finance various ambiguous objectives among which swinging the public opinion through use of selected media.

First of all this model of operating in secrecy and darkness seems like some obscure feature of the Byzantine world. It has nothing to do with the models of public diplomacy used by western democracies all over the world. Paying in dubious ways dubious actors for purposes which remain unclear is not a model that reflect the culture of values of the European Union or of the democratic western countries, a group that Greece has joined long ago. It would not be surprising coming from authoritarian and illiberal places. It is disappointing that it is part of Greek diplomacy.

Acquiring and exerting soft power is legitimate and frequent in diplomacy. It dates far back to the diplomatic means of the Roman Empire. It is best done by transparent funds, competitive processes and creative forms of open modern activities which encourage communication, exchange, cultural and linguistic knowledge as well as direct visits.

Hence it is a pity that the Greek taxpayers money are thrown to completely inefficient channels of mediation, to actors and platforms of so called media which are either ghost names or completely irrelevant and third rate names. This has the feeling of a corruptive scheme and should be cleared for the public interest of the neighboring country. We don’t have any reason to believe the lists published already but it is nevertheless obvious that the money has not gone to serious national media or well-known media actors.  The influential reporters, opinion writers and media channels in Albania are not many and their clout over the public opinion is very clear. Giving away money to nonexistent papers littering the sidewalks smells of fraud and abuse.

The allegation that these funds were to be sued to provide the supposed draft agreement between the two countries for the resolution of their bilateral disputes is even more ridiculous. Popular support for sensitive long standing issues of contention needs absolutely legitimate and credible information. Here transparency is key. Lack of it is sure to backfire and gives rise to all sort of conspiracies. In this case the damage was done and the crazy theories around this news are already hurting the negotiations.

Finally and most crucially, Albanian-Greek relations are key bilateral relations for the welfare, stability and European integration of Albania. The relations suffer a lot from misperceptions, stereotypes and mistakes that the media has perpetuated and even accentuated over the years. There is a serious need for intervention to raise the capacities of reporters, opinion writers and online media content generators, to put them in touch with organizations and think tanks that can provide them with well-researched materials and introduce them to the positive stories of collaboration. Furthermore there is a need to build up civil society communication and partnerships. If the Greek diplomacy has aside some funds for the bilateral relations the ideas to do so in transparent, efficient and constructive way are endless.

In order to mend the situation the first necessary step for both governments, which are NATO members and have a strategic relation, is to clarify the situation and issue official reactions. This will at least put aside a lot of frantic reactions that have been based on hearsay as well as give the right reassurances that this relation stands on solid institutional ground.

Some last words are necessary to address the conspiracy frenzy that was unleashed in Albania and the ease with which most of the public gobbled up made-up lists. Using this information for name-calling and mud-throwing reveals deep irresponsibility and even worse the lack of capacity to reflect and draw the right lesson. Albania needs also to invest its limited resources of public diplomacy in the right way. In that sense there is some serious soul searching to do.
                    [post_title] => Editorial: Public diplomacy cannot be done in the dark
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                    [post_content] => [caption id="attachment_138978" align="alignright" width="300"]Head to Albania for crowd-free sights and superb beaches © Landscape Nature Photo / Shutterstock Head to Albania for crowd-free sights and superb beaches © Landscape Nature Photo / Shutterstock[/caption]

TIRANA, Oct. 25 – Albania has made it to Lonely Planet’s top 10 affordable adventure destinations for 2019 as one of Europe’s final frontiers that offers hiking amid beautiful mountain scenery, superb beaches and a unique history.

Albania ranks eighth on a top 10 list led by Egypt and Poland, but which also includes Maldives, two US destinations, Argentina, Bangladesh, Ecuador and Slovenia, being the sole Western Balkan country to make it to the list.

The rating is made by Lonely Planet, the world-renowned travel guidebook publisher that has long been a standard for backpackers, budget travelers, and people seeking off-the-beaten-path destinations.

“Albania has been Europe’s final frontier for a while. Here’s a pocket of great value hiding in plain sight, with some superb beaches, a unique history and none of the crowds of Montenegro to the north or Greece to the south. The country’s exciting food scene celebrates the fruits of its unique local flavours and offers seriously distinctive dining,” says the 2019 ‘Best in Travel’ guidebook, Lonely Planet's annual search to find top countries, regions and cities to visit in the next twelve months.

“Although its archaeological sights, such as Apollonia and Butrint, and its one-of-a-kind blend of Balkan, Mediterranean and Italian influences are no secrets, Albania remains a destination where you can hike amid beautiful mountain scenery, stay in tiny and timeless villages and explore the buzzy capital Tirana for far less than pretty much anywhere else in Europe,” adds the guidebook.

Earlier this year, Lonely Planet also rated Albania's capital city, Tirana, as one of the top ten European hotspots for 2018, describing it as a vigorous metropolis that has undergone transformation and offers much to visitors.

Albania has regularly made it to Lonely Planet's top 10 destinations since 2011 when the popular travel guide ranked long-isolated Albania under communism as the number one global destination to visit as the Balkan country was branding its emerging tourism industry as ‘Europe’s last secret’ and a “New Mediterranean love.”

Taking an adventure trip to Albania has also been rated as one of the top tours on travelers’ to-do-list for 2018 by National Geographic France which suggests discovering the UNESCO World Heritage sites of Berat and Gjirokastra, the Greco-Roman amphitheaters, the Adriatic and Ionian beaches and above all the country’s unexplored landscapes such as alpine summits, green valleys, wetlands and rich fauna.

Several outdoor tour operators in the country offer hiking, rafting, biking, horse riding and birds watching adventures in the country, while cross-border tourism is gaining an upper hand with the opening of several mountain hiking trails.

The communist past is also what fascinates tourists about Albania, which was cut off from the rest of the world under a hardline Stalinist dictatorship.
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                    [post_content] => TIRANA, Oct. 22 – Albania has announced an unsolicited proposal by a local company to build a highway north of the country in a new costly public private partnership project, defying warnings by international financial institutions of giving up such practices that place companies proposing them at an unfair advantage by obtaining bonuses that make them eventual winners in tenders with little or no competition at all.

The government says it has selected Albanian-owned “A.N.K.” company to build an 18-km Milot-Balldren highway that improves access to the northern region of Lezha and neighboring Montenegro as part of the Adriatic–Ionian motorway, also known as the Blue Corridor, a future motorway that will stretch along the entire eastern shore of the Adriatic and Ionian seas, spanning the western coast of the Balkan peninsula. “A.N.K” is a company that has been operating in the Albanian construction sector for about two decades, but with a sole shareholder and a capital of around 247 million lek (€2 million), according to local media.

Its announcement as a winner came after the company had already been awarded a bonus by the government in late June for its unsolicited proposal on the highway segment and was the sole bidder in a tender held later this year. Construction is set to begin by next year once contract negotiations conclude.

The infrastructure ministry says the Albanian-owned company offered €161.5 million for the 18-km highway on a completely new track in construction and maintenance costs for the next 13 years.  The Milot-Balldren project is a 6-lane highway that also includes 9.5 km of secondary roads, new bridges on the Drin and Mat rivers and an 850 meter long tunnel that cuts travel time to Lezha and Shkodra, the main northern Albania tourist destinations.

Similarly to other infrastructure projects as part of the government’s ambitious €1 billion PPP program, the company will build the highway using its own funds and loans that are easily accessible due to the government serving as a guarantor, in return for annual government instalments covering construction and maintenance costs for the next 10 years.

The new PPP comes amid criticism by international financial institutions that the country’s public debt reduction agenda is being put at risk and that the €1 billion PPP program is being carried out under controversial unsolicited proposals and without a clear cost-benefit analysis.

The Albanian government has earlier awarded PPP contracts for the construction of a 40-km segment part the Arbri Road linking Albania to neighboring Macedonia for 33.6 billion lek (€265 million) and the construction of a 21-km highway linking Tirana’s industrial area to the airport and the Albania-Kosovo highway for €226 million.

The €1 billion PPP program that the Albanian government intends to implement for the next four years also includes several other major road projects in central and southern Albania, the construction of a regional hospital in Fier, the country’s second largest district, and several new schools in Tirana.

Interest by foreign companies to participate in the €1 billion PPP projects has been vague amid allegations of pre-determined winners in tenders where major Albanian companies submitting unsolicited proposals have been advantaged through pre-tender bonuses.

The International Monetary Fund has earlier warned Albania’s €1 billion PPP project will not only fail to bring public debt down to 60 percent by 2021, but could create hidden costs which if included in the debt stock could take it to 71 percent of the GDP, a high burden for Albania’s current stage of development.

According to the IMF, PPPs entail construction, financial, demand, political, force majeure and renegotiation risks and the Albanian government’s legislative threshold of annual payments to concessionaires not exceeding 5 percent of the previous year fiscal revenues is not reliable, reflecting a mix of mandatory and expected payments and worst-case estimates if pre-determined minimum revenue guarantees are triggered such as in the case of toll roads not meeting minimum traffic.

 

 

Kukes airport

Albania has also launched a call for a new airport north of the country that would break the current de facto monopoly that the Tirana International Airport has on international flights and apparently lead to lower ticket prices.

Having earlier awarded a bonus for its unsolicited proposal to a joint venture led by Albania's second largest company in terms of turnover and profits, the infrastructure ministry says it now invites bids on the Kukes airport until December 10.

The airport will apparently be reactivated by Kastrati, one of Albania’s top two companies which is now seeking to diversify its investment in the air transport. Kastrati which has teamed up to form a joint venture with T.M.D Systems LTD”, an aviation consultancy with operations in the UK and Israel, was offered an 8 percentage point bonus last July for its unsolicited bid, putting it at an advantage and apparently making it a winner when the tender is held later this year.

A United Arab Emirates investment in north-east Albania near the Kosovo border, the Kukes airport has been ready for use since 2007, but only became available in mid-2016 after the country’s sole airport had its exclusive rights on international flights lifted in return for extending its concession term for 2 years until 2027.

However, its location in Kukes, northeast of Albania, a two-hour drive from Tirana along a toll road, will make the airport competitive only in case of significantly lower prices compared to the Tirana airport, which often forces passengers to fly from neighboring countries offering more low-cost alternatives.

Albania has also announced plans to build a new airport in Vlora, south of Albania, under a concession deal with a Turkish consortium, but contract negotiations have so far failed to materialize.

The government also plans a smaller airport in Saranda, southernmost Albania, in a bid to give a boost to the emerging tourism industry along the Albanian Riviera.
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                    [post_content] => TIRANA, Oct. 22 - The Albanian government says it is mulling a regulatory framework on cryptocurrencies in a bid to diversify investment opportunities in the country in an innovative sector that creates well-paid jobs and apparently become a hub for such investment in a Western Balkan region that still remains skeptical to digital currency.

Prime Minister Edi Rama says cryptocurrency, also known as virtual or digital money, can create a lot of opportunities even in a developing economy such as Albania which he says can become a hub for potential investors targeting to get involved in this revolution of global finances.

The legal initiative comes at a time when the country’s key financial watchdogs, Albania's central bank and the financial supervisory authority, have been repeatedly warning potential investors over the past couple of years of a series of risks related to investing in digital currency, the same as most regional countries.

Bitcoin, the primary cryptocurrency, is now trading at around $6,500 after surging to $20,000 in late December 2017, in a 20-fold hike for the year, leading to bankers, mainstream media and pundits to call Bitcoin a bubble.

"As part of our effort to open up new markets and create new opportunities for well-paid jobs and qualified people... we are exploring the possibility of setting up a regulatory framework on cryptocurrency which is a shocking novelty nowadays and where the opportunity to be innovative and set up a center of gravity for innovative financial markets is open for every country despite their level of development," says Prime Minister Edi Rama.

"For the moment, we are assessing and working on the drafting of a regulatory framework after having conducted a thorough analysis and study. If the results are satisfactory, then we will promote even outside Albania, the country's willingness to become a hub for numerous potential investors that target getting involved in this revolution of global finances,” Rama said last weekend, speaking at a ceremony on the launch of the Albania-Italy offshore section of the major Trans Adriatic Pipeline bringing Caspian gas to Europe.

Bitcoin and other virtual currency is already legal in several countries around the world, with the U.S., Canada, Germany, Denmark, Japan and South Korea rated among the top Bitcoin-friendly countries

Back in July 2017, when bitcoin rose $2,400, from almost zero in 2009 when it was launched, Albania's central bank warned that while electronic money is a legally regulated and supervised activity even in Albania, the virtual currency is an activity completely out of the authorities’ watch and control.

The Bank of Albania says the activity of virtual currency operators is characterized by a considerable level of risk and insecurity, with no full guarantees on the customers’ protection from investment losses and involvement in any operation remains an action of individual responsibility.

The Albanian Financial Supervisory Authority has also informed investors that Albania has licensed no company to issue virtual currency.

"Of course there might be individuals or businesses in Albania investing online using the internet in companies which are issuing these initial coin offerings outside of Albania, but they should be aware that they carry all the risks and are responsible for their own choices when making such an investment,” Ervin Koçi, the head of Albania’s Financial Supervisory Authority told Tirana Times in an interview earlier this year.

The European Banking Authority has earlier warned that risks associated with buying, holding or trading virtual currencies include losing the money on unregulated exchange platforms which may go out of business, fail or be hacked by third parties. Virtual currency users are also unprotected when using it as a means of payment and its value can change quickly and even drop to zero.

The cryptocurrency initiative also comes as more and more Albanians have been studying information technology in the past few years despite the country still ranking poor on innovation capability and ability to retain talent.

New projects focused on digital literacy are also under way. Tirana’s iconic pyramid building, one of the communism era landmarks in the capital city, is soon set to become a youth multifunctional center focused on digital literacy.

 

Vibrant future vs. scam

In a report examining the framework for the regulation of cryptocurrencies, Washington-based Coin Center research and advocacy center, says that tokens, including cryptocurrencies like Bitcoin, will likely have a profound effect on the future of the internet, financial technology, and governance systems in general.

“Perhaps the most exciting aspect of the technology is that it is entirely open for experimentation—there’s no patent or copyright to license, no university or corporation from which to seek a job, no exclusive membership fee to pay. Anyone with a computer and an Internet connection can develop and share their own currency, their own vision of the future,” says the report.

“The openness of this system makes it vibrant but it also can make it hazardous. Some new uses of the technology will be nothing more than scams garnished with the sort of techno-babble that inspires, confuses, and beleaguers the caution of naive investors who want to believe. The framework will hopefully enable regulators to more easily delineate between these inevitable scams and the legitimate innovations that will improve our lives, ensuring that a few bad oranges do not spoil the grove,” it adds.

 

Covert call centers acting as brokerage firms

While legal changes on cryptocurrencies are under way, Albania has already had troubled experience with covert call centers operating as brokerage firms, allegedly cheating investors in Albania and abroad.

Several unlicenced brokerage firms have disappeared without trace after defrauding investors or had their operations closed down after warnings by supervisory authorities in the past couple of years.

Last July, Albania launched a probe into dozens of call centers allegedly operating as covert unlicensed brokerage firms involved in fraud operations by offering potential investors attractive return rates for high-risk financial products at a time when interest rate from traditional investment instruments such as bank deposits are close to zero.

The investigation came after an investigative media article identified at least 80 unlicensed brokerage companies operating in Albania, allegedly involved in defrauding foreign investors, tax evasion and exposing young adults to serious legal repercussions.

Albania’s Financial Supervisory said it asked for support by intelligence and money laundering prevention officers to investigate into the suspected companies which could turn into a national issue and mar the country’s image.

Financial authorities have issued several warnings about unlicensed operators involved in online forex or ‘binary option’ trading platform where the payoff is often either some fixed monetary amount or nothing at all. In some cases, local investors often not aware of the risk that such investments bear, are reported to have lost considerable amounts after being lured through aggressive marketing and high return rates.

While no statistics are available yet for the past couple of years, Albanians invested about $1 million in online trading in international stock exchanges in 2015 when several unlicensed operators emerged, triggering concern by the country’s highest financial authorities.

 
                    [post_title] => Albania mulls cryptocurrency regulation in bid to become regional hub
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                    [post_content] => TIRANA TIMES EDITORIAL

A hurricane of false statements, fake news and irresponsible accusations can do much more damage to the truth that any other form. Currently there are two elements in Albania that need to be addressed for the sake of safeguarding as much as possible truthful and responsible protection of a sane narrative:

First of all defamation by media is not a crime. Given the unregulated environment ripe with thousands of forms of media, anybody can make all sorts of statements hurting or promoting all kinds of causes and most importantly whomever they decide to make subject of their interest. That can be everyone else. Albania has much more traditional and online media that the market warranties. It is public knowledge that these media are financed by either politicians or business that are keen to promote their own agendas. The remaining few are owned by reckless lunatics who want to shock the public if they can.

The idea of regulating the online media scene by law requiring as a first step the registration of portals has been received with skepticism and cries of silencing free speech. However, the fact is that this scene is a daily and hourly generator of misinformation, fake news and shady political agendas. It is not serving free speech, it is serving irresponsible media actors who want to be in the spotlight or even worse political infighting. The public is not helped by it on the contrary. It is disoriented and pushed and pulled into a million directions, never offered hard facts to make up his mind.

Second, politicians are used to being able to say whatever they want without taking any responsibility about it. The deluge of accusations, offenses and claims that one side makes about the other, even providing details of alleged crimes, alleged collaboration with mafia gangs, etc. More often than not these are proved to be thin air. This has created a dangerous climate when any statement is not credible. Any accusation is seen as the product of polarization and not facts. There is simply no accountability. So much chaos is only weaving darkness and not transparency.

The other related proposal of the executive is to take to court every accusation made that they believe it is defamation. If done properly and judged by a responsible justice system this will set an important model of paying attention to the truth and really increasing accountability of elected officials. By clearing up the ocean of lies, all political actors will be forced to think twice and back up their words with evidence. If this happens then the courts can come up with the much sought after indictments of corruption and abuse of power much quicker than predicted by the actors of the justice reform.

The devil in the details for this issue is the seriousness with which they are proposed. A former analysis of libel cases in the past undertaken by the High Court reveals that the winning side is always the majority. The same people that are accused and punished when they are a minority turn into accusers and winners immediately once they come into power. That is why the success of the justice reform is decisive in this area as well. No matter what modification the laws undergo, if there is no independent professional juridical body to make the final decision they will always be seen as a one sided witch hunt.

This paper deplores the idea that in today’s Albania everyone in front of a screen, or writing for a third rate paper can become an instant slanderer and destroy someone’s life, career or public service and get away with it. This has nothing to do with freedom of speech. Truthful, accountable political declaration alongside accurate fact-checked information and reporting are the best allies of truth and freedom of speech.
                    [post_title] => Editorial: Against slander, libel and defamation: why truth needs to be rescued even if by means of justice 
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            [post_date] => 2018-11-01 10:46:20
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            [post_content] => By Ervin Lisaku

TIRANA, Nov. 1 – The Albanian government is mulling turning the country’s key highway linking the two main cities of Tirana and Durres into a toll road through a concession which apparently does not affect public finances, but sharply increases travel costs for the country’s residents, already facing one of Europe’s highest fuel prices.

The ruling Socialist Party majority says it has received an unsolicited proposal on the upgrade of the current 30-km highway linking Tirana to Durres and the construction of a new 44-km highway from Kashar, just outside Tirana, to Rrogozhina, a hub to southern Albania.

The infrastructure ministry says the unsolicited proposal will be a build-operate-transfer public private partnership which unlike some of the current PPP road projects under way receiving government financial support, will be funded by the concessionaire itself in return for introducing tolls to get back investment and make a profit for a period that could be up to 35 years.

Several key road segments, including a highway linking Albania to Macedonia are being built as part of a €1 billion PPP program under which concessionaires complete the projects using their own funds and financing and the government pays them back in annual instalments for investment and maintenance costs for up to ten years.

The infrastructure ministry says the proposed project envisages extending the current Tirana-Durres highway to a three-lane dual carriageway, turning it into the country's second toll road after the Albania-Kosovo highway where average tolls of €5 are being charged since mid-September 2018 following protests leading to toll revision for local northeastern Albania residents and discounts for frequent users.

In return, the concessionaire will have to rehabilitate access roads for businesses along the highway and reconstruct the old Tirana-Durres road through Ndoq village, which will both serve as free of charge alternatives to the toll road.

The proposed project also envisages the construction of a Kashar-Rrogozhine highway through a new track in the post-2025 period.

"Under the proposed scheme, all construction costs will be handled by the private concessionaire who will introduce tolls to guarantee the return of investment and make a reasonable profit without affecting the state budget. Citizens will also have the opportunity to use alternative free of charge roads," says the infrastructure ministry.

The authorities’ reaction came after local media alleged the government will fund the road projects through taxpayer money, the same as it is doing with some controversial PPPs in the public health, road infrastructure and waste management sectors.

In its proposed 2019 budget, the government says the expected investment on the rehabilitation and extension of the Tirana-Durres highway could be up 49 billion lek (€391 mln), while the new Kashar-Rrogozhine highway could cost double, at around 85 billion lek (€675 mln), with total cost for both highway projects at €1 billion, about 7 percent of Albania’s GDP.

The finance ministry says it is still examining the unsolicited proposal by a company which it does not specify and has no decision-making yet on the build-operate-transfer concession that could be awarded for 30 to 35 years.

In case of receiving an initial okay, the concessionaire would receive a bonus for its unsolicited proposal and become an apparent winner, the same as has happened with similar PPPs where favorite companies face little competition at eventual tenders.

However, such a concession contract could also have indirect costs for the Albanian government such as traffic guarantees to secure the company’s return of investment.

According to the IMF, PPPs entail construction, financial, demand, political, force majeure and renegotiation risks and the Albanian government’s legislative threshold of annual payments to concessionaires not exceeding 5 percent of the previous year fiscal revenues is not reliable, reflecting a mix of mandatory and expected payments and worst-case estimates if pre-determined minimum revenue guarantees are triggered such as in the case of toll roads not meeting minimum traffic.

International financial institutions have asked the Albanian government to give up the unsolicited proposal as a procedure that places bidders at unequal position and leads to controversial PPPs with no thorough cost-benefit analysis that could create new arrears undermining the public debt reduction agenda.

Albania’s public debt is already at around 70 percent of the GDP, a high level for the country’s stage of development that places at risk macro-economic stability and much-needed public investment due to high debt servicing costs.

 

A key corridor

The Tirana-Durres toll road would significantly increase travel costs for all Albanians through a main corridor that is home to about half of the country’s 2.8 million resident population and produces half of the country’s national output.

Due to the huge tax burden levied on oil, Albanians already face one of Europe’s highest fuel prices while struggling with one of the region’s poorest income.

Plans to make the key Tirana-Durres highway a toll road come after the key segment got a facelift through a €600,000 emergency intervention only in late June after having turned into a nightmare for drivers and a cause of road accidents for the previous couple of years.

The World Bank-supported emergency intervention that only repaired damaged layers of asphalt is only considered a temporary solution to Albania’s main 30-km highway which needs deeper intervention to bring to standards.

The main economic corridor of Albania, the 30-km highway dual carriageway connects Tirana and northern Albania to the Durres port, the country's largest, and is a hub to southern Albania.

Some of the most important businesses and shopping centers operate along it and half of the country GDP is produced there. The highway's daily traffic flow is estimated at 45,000 vehicles.

Built in the early 2000s, the Tirana-Durres highway was the country’s first major infrastructure work following the early 1990s collapse of the communist regime when private car ownership was banned.

However, high traffic and poor quality construction works at that time and lack of proper maintenance have taken it to bad condition, leading authorities to consider a toll road concession for its upgrade and maintenance.

Albania has one of Europe’s highest death tolls from road accidents with an estimated 15 fatalities per 100,000 inhabitants with poor road condition and careless driving being the main reasons behind such high death toll. About 2,000 road accidents took place last year in Albania, with a death toll of 222, the lowest level for the past six years when data is available.
            [post_title] => Albania mulls turning key Tirana-Durres highway into toll road 
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