TIRANA, Oct.15 – The duration and scale of the energy crisis has exceeded all expectations and the government has received a new request from KESH to provide $80 million to buy energy for the final four months of the year. The initial calculations of KESH were to buy a total of 1,800 million kWh, through the end of 2007. However, this amount was already consumed by the end of August. For the remaining months, the administration has approved a plan to import an additional 934 million kWh. In order to make this purchase, KESH needs a debt of $80 million for a sales price of 9 lek/kWh. The request for additional imports has been backed by the Economy Minster Genc Ruli who, after explaining the dire energy situation in the country, has asked for the approval of the imports. According to Ruli, the very low amount of rainfall is the main cause of low domestic production. The excessive imports will add up 7.2 billion leks to the negative balance sheet of KESH. The corporation can raise the funds in two different ways. One way is for the government to provide a total subsidy of $80 million in order to buy the necessary energy for these four months. The second way is to seek a commercial loan using the government to guarantee repayment. This would be a very attractive bid for any bank, given the lucrative sum.
Ruli and Bode at loggerheads
The reaction from the Finance Ministry and its head, Ridvan Bode, has been strongly against providing KESH with this money. Bode said that KESH should first improve its management standards and financial performance. Bode warned that severe financial implications are involved in the large amounts that KESH is borrowing. The Economy Ministry, on the other hand, has declared that KESH has in fact improved its performance but is operating under the dire situation caused by the low rainfall. The corporation has announced that less energy will be produced form the Drini cascade in order to save the site from total breakdown. The total energy production for 2007 is going to be 3,061 million kWh, down from the predicted 3,698 million kWh .
Ruli has presented a memo urging the government to pay for the additional energy imports. The government cannot be indifferent to KESH, Ruli explained, given the strategic importance of energy, especially with the coming of the cold seasons. He said that he is hopeful for a change in meteorological conditions, but any improvement in water levels would take one month before providing some relief.
Calculating KESH needs to import around 60-70 percent of the needed energy, Ruli said that the government has to understand that the corporation needs significant financial help to realize this.
Bojaxhi says imports are crucial to avoid 20 hours of rationing
Head of KESH, Gjergj Bojaxhi, said that this amount of imports is absolutely necessary to avoid extreme rationing. The corporation has to buy energy for these four months with funds that it will raise either from the government or from commercial banks. Bojaxhi has not ruled out the possibility of a change in the import scheme if the situation of domestic production allows it. According to an agreement reached with the IMF, the total amount of imports that KESH could buy during this year was 1, 800 million kWh. After the situation of the hydro power plants which produce at restricted capacities due to lack of rainfall, the government has reconsidered this amount. Bojaxhi said that during September talks were held with the IMF to increase this amount to 2,734 million. KESH experts have calculated this amount in order not to change the power rationing scheme. Referring to its management problems, KESH has taken a range of technical measures agreed upon in the talks with IMF. During the first part of the year, KESH was financially backed by the government with a fund of 2.5 billion leks. This amount, though, is not enough to cover the deficit created by imports. KESH has not paid any VAT taxes since it operates at a loss.
