TIRANA, June 4 – More than a decade after cancelling a contract with U.S. giant General Electric, Albania is planning to revitalize its dilapidated rail transport by reconstructing the key Tirana-Durres segment and linking it to the country’s sole international airport.
London-based European Bank for Reconstruction and Development has pledged a Euro 34.5 million loan to partly fund the reconstruction of the 35 km Tirana-Durres segment and built a new 7.4 km section linking Tirana to the airport just outside the capital in Rinas. The project’s total cost is estimated at Euro 86.4 million.
Transport Minister Edmond Haxhinasto says the Albanian government is planning to fund the remaining Euro 52 million through the state budget or another soft loan from international financial institutions.
“The Albanian railway will go through a process of a substantial reform. It will be reorganized under a new railway code which has already been compiled and will soon be approved by the government and parliament. The reorganization will make the Albanian railways more open and flexible to manage requests for new market operators,” says Haxhinasto.
State-run Albanian Railways is currently the only operator in Albania’s rail system, which has seen a sharp decline both in both passenger and freight transport in the past two decades due to lack of investments and mismanagement.
EBRD says the Albanian Railways project will support the country’s national economic development and contribute to the the country’s integration by improving connectivity of its main cities to the Port of Durres and the Tirana airport.
The country’s dilapidated and little used rail transport has been paralyzed several times this year with the loss-making state-run company unable to afford buying fuel on its own.
Once the main means of transport under communism, Albania’s rail transport has been constantly losing ground since the early 1990s due to lack of investment.
The number of passengers who traveled by train in 2015 slightly recovered to 189,000 after hitting a historic low of 187,000 in 2014 when Tirana became one of the few capital cities without a train station following its demolition to build a new boulevard. A new train station outside Tirana opened only in mid-2015. However, located in the suburb of Kashar, some 10 kilometers away from the city center, it remains unappealing to downtown dwellers.
Freight transport also sharply declined to 198,000 tonnes in 2015, one of the lowest levels in the past two decades. Albania’s international railway freight transport is carried out only through Montenegro.
Albania’s railway system posted record losses of 644 million lek (€4.6 million) in 2014, according to the National Registration Centre. The Albanian government provides annual subsidies worth about €4 million to the railway system.
Albania would have already had a modern railway network in Tirana and Durres had it not unilaterally cancelled a contract with U.S. giant General Electric back in 2005.
In March 2010, the Albanian government was fined USD 20 million by an arbitration court over the unilateral annulment of a 2003 contract, worth Euro 74 million with General Electric. The project cancelled in 2005 was aimed at modernizing the Tirana-Durres railway segment, known also as the electric train, which would have been linked with the Mother Theresa International Airport.
