Taking into account that power prices currently stand at 9.53 lek/kWh (9,530 lek/MW) the total grid losses are worth around 31 billion lek (Euro 217 million)
TIRANA, March 25 – Almost 40 percent of electricity fed into Albania’s grid is wasted due to massive thefts and technical losses in the dilapidated distribution network. The severe situation is confirmed in the 2012 electricity balance sheet published by the country’s state Institute of Statistics (INSTAT) which shows grid losses in 2012 rose to 3.2 million MWh, up 49 percent compared to 2011. Taking into account that power prices currently stand at 9.53 lek/kWh (9,530 lek/MW) the total grid losses are worth around 31 billion lek (Euro 217 million).
The overwhelming majority of around 95 percent of the total losses were caused in the problematic distribution network, managed by Czech operator CEZ Shperndarje. Since January 2013, the distribution network is back under state management after CEZ had its licence revoked because of deteriorating performance three and half years after taking over the system.
Distribution grid losses in 2012 rose to 38.6 percent of the total electricity available for use up from 28.9 percent in 2011, according to INSTAT data.
Total electricity available for use in 2012 rose to around 8 million MWh, up 5.8 percent compared to 2011. However, electricity consumption by both household and business consumers in 2012 dropped to 4.36 million MWh, down 13.3 percent compared to 2011. Affected by crisis and stagnating domestic production, household consumers cut electricity consumption by 16.5 percent in 2012, while business and public institutions used 10 percent less electricity compared to 2011.
Domestic hydro-electricity generation accounted for 4 million MWh or 50 percent of the country’s power needs. Private hydropower plants operating under concession contracts generated 240,811 MWh, up 75 percent compared to 2011, accounting for 5.6 percent of the total domestic hydro-generation. Hydro-electricity was the only source of power generation in 2012 with thermal generation accounting for zero MWh. No power was produced from the Vlora thermal power plant, a new investment which has proved not worthy because of its high cost of operating on fuel. The Vlora thermal power plant, a new 97 MW USD 112 millions low-sulphur distillate oil fuelled power plant, available for use since two years, has not been put to use because of high fuel costs and the only hope is the approval of TAP pipeline by Azerbaijan.
Power imports in 2012 dropped by 60 percent to 880,000 MW. Imports (including exchanges) slightly rose to 3.6 million MWH while net exports in 2012 rose by 28 percent to 298,000 MWh.
Distribution problems
Under a unanimous decision taken on January 21, the Energy Regulatory Entity (ERE) Board of Commissioners decided to revoke CEZ’s licence in Albania, arguing that the company had failed to make compulsory electricity imports, reduce grid losses, make investments, provide all consumers with power meters, pay debts to state-owned operators KESH and OST, and stop collective power cuts.
In its detailed report of 110 pages over CEZ’s violations, ERE identifies that consumers’ complaints filed with the Entity over overbilling, and economic damage climbed to 1,720 in 2012 up from 350 in 2010 and 1,019 in 2011. ERE says that grid losses at the end of 2012 climbed to around 45 percent, higher than 32.7 percent at the end of 2008 when the distribution system was under state management. Under the regulatory agreement approved by ERE, grid losses should have dropped to 24 percent at the end of 2012. CEZ’s investments during the past two years also failed to meet set targets. CEZ invested around 2 billion lek (Euro 14 million) in 2011 and 934 million lek (Euro 6.5 million) in 2012 fulfilling only 39 percent and 14 percent of the annual targets respectively.
Czech Republic-based CEZ Group, whose Albanian power supply subsidiary CEZ Shperndarje, was stripped of its licence last January, says it has officially initiated international arbitration procedures to claim compensation for the damage incurred in Albania.
CEZ says it claims 200 million euros in damages from the revoked licence while the Albanian government claims Euro 600 million.
CEZ Shperndarje, a subsidiary of Czech-Republic based CEZ Group has been operating the Albanian distribution network since 2009 when it signed a contract with the Albanian government buying the former OSSH 76 percent majority stake for 102 million Euros. The company is now being temporarily managed by a state administrator appointed by ERE.
Power prices
Albania’s Energy Regulatory Entity (ERE) has ruled power prices for the three market operators as well as household and business consumers will remain unchanged until June 2013 when Albania holds the new general elections.
ERE officials say they will continue applying the two-tier price level, under which Albanian households will pay 7.7 lek/kWh for a consumption of up to 300 kWh a month and 13.5 lek for each kWh they consume above the 300 kWh threshold (VAT excluded). Average tariffs for business consumers vary from 8.5 lek/ kWh to 10 lek kWh based on low or medium voltage power access. Meanwhile, state institutions pay 11.5 to 14 lek kWh.
Power prices during the past six years since the ruling Democratic Party came to power have increased by 63 percent climbing from an average of 5.71 kWh in 2005 to 9.53 lek kWh currently
While Albania’s purchasing power ranks the lowest in Europe, power prices, which take a considerable part of households’ monthly income, are higher than in six EU-members and aspirants, according to a report released by Eurostat, the statistical office of the European Union.
Data show that at 11.6 Euro per 100 kWh in 2011, Albania’s power prices stand higher than EU members Bulgaria, Estonia and Romania, acceding Croatia as well as Turkey and Bosnia-Herzegovina whose rates vary from 7.9 Euros to 11.5 euros.
The rather higher prices Albanians pay for electricity are also confirmed in the annual report of the Energy Regulatory Entity (ERE) measuring both household and non-household power tariffs in Central and Eastern Europe.
Data from this report show Albania’s household power prices stand at 8.06 eurocent/kWh, lower than the average of 9.37 Eurocent in the region but relative higher than in six other countries. Power prices in Ukraine, Kosovo, Russia, Bosnia-Herzegovina, Macedonia, Serbia vary from Eurocent 2.64 to 6.61/kWh. Albania’s power prices for non-household consumers stand at 8.2 Eurocent, higher than the same six countries.
