TIRANA, Feb. 20 – A consortium of Albanian companies has been announced the winner of a public private partnership project with the municipality of Tirana to build and operate the first five pre-university schools in Tirana as part of a nationwide €1 billion PPP project for the next four years.
The Public Procurement Agency announced this week “Agi Kons,” “Met Engineering” and “Zenit & Co,” all of which Albanian-owned and Tirana-based, have been selected as a winning consortium to build the five schools after bidding 1.94 billion lek (€14.4 million) VAT-excluded. The private investors will have to build, furnish and maintain the schools until 2024 with their own funds in return for annual instalments paid by the central government and the municipality of Tirana under a 7-year PPP. The investor will also be paid an annual profit margin of 6.28 percent for the missed income from their initial investment with their own funds, making it similar to a seven-year loan.
The winning concessionaire’s bid was in line with the financial details of the municipality’s call. Three other operators were disqualified for either not submitting bids or incomplete documentation.
The country’s largest municipality will now have to negotiate a contract in two months before construction works begins.
Once the construction of schools finishes in 18 months, the municipality of Tirana will have to pay the concessionaire an average of €2 million a year for seven years before the schools are transferred to state-ownership.
The municipality of Tirana intends to build another 15 pre-university schools under the PPP project in a bid to reduce overcrowding and put an end to shift classes in the Albanian capital. In its 2018 budget, the Albanian government expects to sign contracts worth a total of 6.4 billion lek (€48.3 mln) for 2018 to build new schools in Tirana under PPPs.
The municipality has already made available a 28,000m2 construction site in its 9 and 11 administrative units in downtown Tirana suffering one of the highest overcrowding rates with classes of more than 50 students and teaching carried out in morning and afternoon shifts.
Tirana Mayor Erion Veliaj has described the public private partnership formula supported by the Albanian government as a solution to have 20 schools in a short period of time and put an end to classes in shifts in 57 Tirana schools.
The new schools are also financially supported by an education infrastructure tax the municipality of Tirana introduced in 2016 in a bid to reconstruct existing pre-school and school facilities and build new ones. The municipality collected 496 million lek (€3.6 million) in 2016 alone.
The ‘temporary’ tax which will be in force for seven years ranges from an annual 1,800 lek (€12.7) for Tirana households to 4,000 lek (€28.4) and 37,000 lek (€263) for businesses depending on their size, was strongly opposed by businesses, especially those with several units due to having to pay for each unit.
The cost of about a dozen public private partnerships the Albanian government has signed with private companies in the key health, waste-to-energy and customs sectors is expected to increase by a third to 9.4 billion lek (€69.2 mln) for 2018 and set to register sharp hikes in the next few years as the Albania proceeds with an ambitious but rather controversial €1 billion PPP project.
The ambitious government project intended to compensate major energy-related foreign direct investment already in their final stage has sparked concerns among some economists and international financial institutions who say the planned road, education and health PPP investment could create new arrears and hamper efforts to bring public debt to 60 percent of the GDP by 2021.
Earlier this month, the Albanian government also concluded contract negotiations with an Albanian company to complete a major highway linking Albania to neighboring Macedonia. The €240 million project is the most important under the Euro 1 billion PPP program of investments for the next four years.
