TIRANA, Nov.11- Albanians will face a difficult situation with energy supplies this winter and the administration is considering three alternatives to deal with this problem. Gjergj Bojaxhi, head of KESH, during a press conference reviewed current situation and the prices of energy purchase, just before the bids are open to purchase and import energy form abroad. Bojaxhi warned that the selling companies would offer very high prices, given past examples in Kosovo and Montenegro last month. This will increase the total cost that the Albanian electric corporation faces and, when asked if KESH can afford higher prices, Bojaxhi admitted that KESH is in very deep financial trouble, given the very high amount of energy it had to import this year, the lack of rainfall and the increasing price of energy in the entire region due to increased demand. According to Bojaxhi, these high prices and the lack of domestic production have prevented the corporation in its drive for fiscal efficiency.
Three alternatives
Speaking of available solutions, Bojaxhi mentioned there different considerations. “The first thing is for the corporation to ask for loans from commercial banks in order to finance the high costs of operations, but these loans will definitely decrease the value of the corporation at the same time it is trying to privatize,” Bojaxhi explained. The second option is for the government to allocate emergency funds in order to buy energy. The final option is the least desirable one and consists of decreasing imports and increasing rationing. Considering the undesirability of the final option, Bojaxhi suggested that state financing should be tied to concrete investments. “The parliament should allocate emergency funds even if not for buying energy for improving transmission lines,” Bojaxhi said. He added that there has been successful cooperation between the Ministry of the Economy and Energy and the International Finance Corporation, which offers consultancy in the process of KESH privatization and that the process has moved forward. Up until now, all necessary information has been carefully collected and assembled in information packets to be made available to potential investors. All assets of the corporation are being registered so that the legal ownership of the corporation is transparent for the new owner.
Potential price rise
The crisis has brought back the debate about rising the price of electricity for the consumer in order to improve the financial situation of KESH. This time the government under the continuous pressure of the IMF and KESH seems that will give in and not oppose the price spike. Such a proposal was already submitted at the start of the crisis to the National Energy Regulation Entity but was refused by the Prime Minister, despite the support of Finance Minister Bode. The entity will reexamine the request after two weeks and it is expected that KESH will want a system of double pricing that weights more on those who consume more than 400 kilowatt per day. The opposition has vehemently opposed this measure with SMI’s MP, Dritan Prfiti arguing that even in the conditions of such imports the cost of energy is at 5 lek and the corporation is selling it at 7, which means that it is making profits. This according to profit means that price spikes penalize only customers that already pay and increase the incentives to steal from the system. Economy Minister, Genc Ruli has asked that KESH improves the indicators of its performance calling its management still a challenge for the executive branch.
