TIRANA, April 2 –With the Trans Adriatic Pipeline and its Albania section is in its final construction stage, an Austrian company has unveiled plans to build a big natural gas-fired power plant in Korà§a, southeastern Albania, that will produce both electricity and heating using Caspian gas expected to flow from the major TAP pipeline starting 2020.
Assisted by the IFC, the World Bank’s private sector lending arm, Austria-based Ivicom GmbH has proposed the Albanian government to build a 500MW gas-fired thermal power plant that is expected to trigger investment of about €500 million.
A traditional partner of Albania, Austria is the sixth largest investor in Albania with a total investment stock of €424 million, including a 50MW hydropower plant, a €200 million investment operational since 2013.
If materialized the major proposed investment, which the Albanian energy ministry says will be an entirely private initiative with no implications for the state budget, will mark the first important step to diversify Albania’s current wholly hydro-dependent domestic electricity generation which faces significant trouble and financial problems in cases of prolonged periods of droughts such as last year when Albania was forced to make costly electricity imports of about €200 million, about 2 percent of the country’s GDP.
The investment would also serve as a perfect replacement for TAP and the Devoll HPP, the two major energy-related projects that complete their investment stage by the end of this year, leaving an annual €200 million FDI gap for the next few years.
The pipeline is projected to be built in the outskirts of Korà§a, Albania’s largest southeastern region of some 220,000 residents where TAP enters Albanian territory from Greece before it is linked to southern Italy through a 37-km offshore section across the Adriatic.
“Korà§a was selected as the proposed site where the gas-fired plant can be built because the flow of natural gas in Albania through TAP paves the way for a safe and efficient source of electricity generation, independent of uncertain hydro conditions and that is the reason it boosts energy security,” says Albania’s energy ministry.
“In addition to giving a boost to local economy from the construction of greenhouses, this investment can provide efficient and clean heating for Korà§a residents through a central heating system,” adds the ministry.
A study commissioned by the Austrian company has shown the investment will be a combined cycle power plant that is expected to produce 500 MW of electricity, including 80 MW for central heating for Korà§a region residents.
The majority of households in region of Korca use firewood as their main source of heating and cooking, being one of the main sources of pollution in the city, nicknamed as the ‘Little Paris of Albania.’
The company says the plant is expected to operate for 25 years once it is built, but it is not clear yet whether it will be a concession or public private partnership or an entirely private investment as the government claims.
In late 2017, the Albanian government offered incentives for liquid gas-fired thermal power plants worth more than €100 million as TAP nears completion in a bid to diversify domestic electricity generation.
The accelerated procedures are intended to reduce the current long procedures taking more than two years to finalize PPP contracts and attract strategic foreign investment targeting to diversify the country’s domestic electricity generation.
The largest ever foreign direct investment in Albania worth more than €1 billion, TAP has already completed three-quarters of its onshore Albania section and is on track to start its offshore section across the Adriatic to Italy by this year.
Albania currently has only one thermal power plant, which due to high costs of operating on fuel and problems in its cooling system, has not been made available for use yet.
An outdated communist era thermal power plant in Fier, southwestern Albania, was closed down a decade ago due to high pollution.
TAP and cheap costs of operating on liquid gas is the only hope for the costly Vlora thermal power plant, a new World Bank-funded 97 MW $112 million low-sulphur distillate oil fuelled power plant, available for use since 2010, but which has not been put to use because of high fuel costs and a legal dispute with the Italian company that built it over the plant’s cooling system.
In its 2020-2040 natural gas master plan, the Albanian government has envisaged the construction of two gas-fired thermal power plants in Korà§a and Kuà§ova, southeast and south of the country, in the long-run.
Authorities plan to first build the gas infrastructure in southern Albania where the Vlora thermal power plant and the Fier and Ballsh oil refineries are situated before shifting to other major industrial consumers in central Albania and extend gas pipes to household consumers, who already massively use gas as a cheaper alternative to electricity for cooking and heating but in often dangerous gas cylinders.
