Consultations launched on energy reform

TIRANA, Oct. 1 – Albania’s Energy Ministry says it has launched consultations with interest groups to finalize a reform in the electricity sector which is estimated to cost the state budget around $200 million in annual losses.
“The electricity sector should operate in full compliance with the principles of a free and fair, liberal market economy, able to be efficient and become a source of revenue for the state budget,” said Energy Minister Gjiknuri.
The draft law expected to be approved by the end of this year targets establishing the legal framework for the efficient and competitive operation of the electricity market which would enable sustainable and safe electricity supply.
With the distribution operator back under full state ownership after a deal with the Czechs, the Albanian government says it is drafting a new energy law which targets liberalizing 30 percent of the market by lifting regulated prices for businesses linked to the mid-voltage grid.
“At the gist of this reform stands the target to liberalize the market, which means starting next year, customers linked to the 35kW grid will no longer be offered regulated tariffs from the state run distribution operator. We will continue with other commercial and industrial customers connected to the 20 kW and 10 kW in order to have 30 percent of them operating at market tariffs in the next two years,” Gjiknuri has earlier said.
Energy Ministry officials say the new changes will considerably improve the situation of state-run KESH power corporation and the distribution operator as businesses linked to the high and mid-voltage grid account for around a quarter of domestic electricity consumption.
The liberalization of the energy market will also ease KESH power corporation from its obligation to buy electricity from private hydropower plants at regulated prices by allowing them to sign contracts with private businesses.
“Years of neglecting the energy sector left the Albanian energy sector in a very bad shape, with an unsustainably high share of electricity not paid for, the state-owned companies in serious financial difficulties, and investor confidence alarmingly low, says the Vienna-based Energy Community Secretariat which mediated the deal with CEZ Group which will be paid back Euro 95 million for 76 percent of the shares it bought in 2009 for Euro 102 million.