TIRANA, Aug. 20 – Silence is being seriously challenged by Albanians suffering through a serious power crisis that has engulfed the country this summer.
Local businessmen remain are disgruntled as street lights, as well as their shop and office lights, go out again. They immediately switch on their diesel generators to keep their business running, though their profits continue to be reduced.
Those restaurants and shops with higher levels of customers use big generators that could cost 5,000-6,000 leks per day to operate.
Daily power outages range from six hours in the capital to 20 hours in rural areas.
Following a drought last winter, generation is projected to fall by 30 per cent this year.
The power crisis not only causes one of Europe’s poorest countries to attract less foreign investment than its Balkan neighbors, but also that will disrupt everyone’s hope of having a six percent GDP growth this year.
Also, the IMF has expressed worries that the energy crisis that has swept Albania will have adverse effects on economic growth. It has noted that the energy crisis presents a great danger for Albania as it affects all medium-term economic indexes and could create a deficit in this year’s budget. The drought that has engulfed the Balkans this summer has lowered Albanian reservoirs, reducing the ability of hydroelectric plants to generate electricity.
Albania’s GDP growth is projected to reach 6 per cent this year. During the last fiscal year the economy grew by 5 per cent. However, experts worry that while the first two quarters seemed to match projection in terms of growth, during the second part of the year the economy will feel the impact of the energy crisis. Albania’s power generation system hasn’t seen major investment since the early 1980s, when the cash-strapped former communist regime stopped investing in new hydropower dams. After the fall of communism, the demand for energy grew rapidly. The power grid is estimated to need $1.6 billion in investments to eliminate power failures.
The government acknowledges the crisis and that the country is in an emergency situation.
Ironically, Prime Minister Sali Berisha speaks with great bravado trying to divert the public’s attention from the gloom. He speaks of billions of euros of investment awaiting to enter the country, and that Albania will turn into the main source of energy supply for the region, and other programs which seem like ‘dreams’ to many Albanian.
Berisha says Albania has reached “the turning point” thanks to investor-friendly measures such as a ten percent corporate tax rate and legislation to promote public-private partnerships.
Projects worth about 3 billion euros would be financed mainly by the private sector, with 25-year concessions offered to international investors to build and run about 1,000MW of new hydro capacity.
Last month, Albania signed a 42 million Euro deal with Montenegro, its northern neighbor, to build a new 400kV transmission line to enable imports to be increased and relieve pressure on the current 400kV line from Greece.
The greater demand for water has also made it impossible for the Albanian Power Corporation, KESH, to import large quantities of electricity. Added to that has been heavier than usual use of air conditioners due to record temperatures.
Albanians have recently had to deal with massive power cuts, sometimes lasting up to 20 hours a day. The Albanian Central bank has expressed similar worries to the IMF, warning that continued power failures will curb economic growth by raising the cost of production for goods and services.
Albania produces some 5 million kWh and imports more than 8 million kWh per day at a time when energy prices have increased more than 100 percent, compared to about a year ago.
Bulgaria, the region’s main energy exporter, has cut exports by two-thirds this year after shutting two units at the Kozloduy nuclear plant as a condition of European Union accession.
Albania, an electricity exporter under communism, suffers from chronic shortages caused by steadily rising demand.
Moreover a gloomier winter threatens Albanians.
The government’s critics say a lack of administrative capacity and pervasive corruption have slowed the launch of large-scale power projects that could be financed by international institutions and large European operators.
The Albanian Electro-Energy Corporation, or KESH, plans to install six giant generators, each with capacity of up to 80MW, to supply Tirana and other cities beginning next summer.
But small generators sitting along the sidewalks on each Tirana street show they are in power and that the fight with electricity has been lost. The government and all Albanians are now praying for rain in the north to fill the reservoirs of the hydroelectric stations at the Drini River.
Albania produces more than 95 percent of electricity from hydropower sources, which have been scarce this year.
Construction of a new World Bank-funded thermal power plant is expected to start in Vlora in southern Albania at the end of this year. KESH, which has a monopoly in the providing electricity, is preparing a request to the national regulator for a price rise, citing the heavy cost of electric imports.
