TIRANA, Jan. 22 – The electricity distribution operator will invest $50 million in 2015 to upgrade the dilapidated grid, the overwhelming majority of which dates back to the 1970s during the country’s communist regime, according to a decision by energy regulator ERE.
The investments include power meters and the upgrade of distribution grid, electricity substation, and cabins.
The distribution operator, OSHEE, says 154 substations out of a total of 171 were set up 38 years ago, and 41,000 km out of 45,000 km of the distribution grid is 35 to 40 years old. Some 20,000 out of 25,000 transformers have been in use for 34 years while 20,000 out of 24,600 cabins were built 35 years ago.
The nationwide operation to curb electricity thefts and cut off power to debtor customers in October 2014 helped the distribution operator collect an extra $100 million and reduce grid losses by 16 percent to 33 percent.
With electricity having turned into a hot topic due to a massive nationwide campaign to cut illegal connections and a price hike approved for 2015, the Albanian government says some 1 billion dollars is needed in investments to bring back to normality the distribution sector, where massive losses because of thefts and the dilapidated grid cause annual losses of around 200 million dollars.
The World Bank has already offered a soft loan of $150 million on Albania’s power sector reforms, particularly to improve the reliability of the electricity supply and the financial viability of the sector.
Deputy Energy Minister Ilir Bejtja has described the World Bank power sector recovery project as strategically very important for the distribution grid considering lack of investments in the past few years and decades.
“This is not enough as nearly 1 billion dollars is needed to bring the distribution system back to normality. We should not forget that when the Czechs took over the Albanian distribution system in 2009, the company’s newest asset was 36 years old at a time when the total physical depreciation of these assets is 40 years. In this respect, there is huge need for investments but possibilities remain modest,” said Bejtja, hinting no investments had been made since the early 1970s when Albania had close ties with China under communism.
The distribution system operator currently has a negative value of its shares at around 72 billion lek (Euro 504 million) compared to 15.6 billion lek three years ago when it was privatized, says the energy ministry in figures which prove the mismanagement by the Czechs who stripped of their licence in Albania in early 2013.
