Vehicle inspection concession contract extended

Tirana Times
By Tirana Times September 6, 2019 08:47

Vehicle inspection concession contract extended

TIRANA, Sept. 4- After months of silence, the Ministry of Infrastructure and Energy (MIE) acknowledged on Wednesday that it has decided to extend the term of the controversial concessionary compulsory vehicle control concession contract, a concession that costs Albanians millions euros per year.

Extending the contract is expected to cost Albanian taxpayers several million euros of missing profits for the period from September 2019 to December 2020, profits that would have gone to the state budget if the government received concession assets after, such as is foreseen in the initial contract.

“Based on the legislation in force, the provisions of the Basic Concession Contract and the requirement of the SGS Automotive Albania company, MIE representatives have held several negotiation meetings with the concession company representatives regarding the extension of the contract,” said a press release published in some media (but not published on the official website of the ministry).

According to the report, the contract has been postponed until 2020 and the ministry does not provide an explanation as to why the contract was postponed and not the return of the concession under public ownership. The announcement comes a day after the initial ten-year contract signed by the previous center-right government expired. The extension of this contract highlights the willingness of the government to negotiate concessionary contracts privately and without any public transparency, which burden the citizens’ pockets.

The concession of vehicle technical control was granted in 2009 for a ten-year term. The concession agreement provides for the company’s obligation to invest 561 million lek (approximately 4.3 million euros). In exchange for this investment, the Albanian government had the right to collect the annual vehicle technical inspection fee, which until then was part of the state budget revenue.

Company balance sheet data from BIRN show that the company generated total revenue of 6.3 billion lek over the nine-year period from 2009 to 2018, operating profit of 1.3 billion lek and net after-tax profits of 842 million lek.

The parent company’s total benefits from the concession may be higher than that. For example, the company appears to have opted to invest 561 million lek which had a contractual obligation in part by borrowing from the parent company and in part through a capital injection of 190 million lek (approximately 1.3 million euros) in 2011 with financing from the parent company. Over the years, SGS Automotive Albania paid interest on the loan it received from its parent company.

During 2018, the concession company SGS Albania had a net profit of 192 million lek and a 100 percent return on the company’s share capital, which was 190 million lek. The SGS is one of many controversial concessions signed by the former government of the Democratic Party and that of the current government of Prime Minister Edi Rama, concessions that have created most monopolies costing hundreds of millions of euros a year in one of the poorest countries in Europe. 

 

Tirana Times
By Tirana Times September 6, 2019 08:47