After the proposed sale of hydro-electric power plants, perhaps it is time to have a national debate on how far to take privatization.
By Andi Balla
In perfect free market conditions, privatization does wonders – particularly in country like Albania. It takes badly-managed, inefficient public companies, which are often not making a lot of profit, and turns them into successful private entities. It is meant to be a win-win situation.
Successive Albanian governments have applied this theory with a lot of zeal. And that is entirely understandable following the communist years when the state owned essentially every enterprise in the country.
But as the current government steps in for the first time into selling hydro-electric power plants, perhaps it is time to have a stronger national debate about where to draw the line in the privatization of public assets.
Albania gets the vast majority of it electric power from hydro-electric power plants spread across the country, but they are focused mostly on the Drin River in northern Albania. The three plants that parliament is currently discussing selling are not the major ones, but they are nonetheless a source of energy and income for the state and a source of cheap domestic electricity for Albanians. And they would be the first state-owned electricity-production facilities of their kind to be sold to a private party if the current proposal goes through.
In the past, the government has offered incentives to build new private hydro-electric power plants. Involving private funding, these would not be a burden on the state, but the question in front of parliament will be whether it is wise to sell something that is making money and something that will likely affect the wallets of Albanians in higher energy prices.
Furthermore, is this the first step into selling other, larger hydro-electric plants?
There has to be a line of net benefit that must not be crossed. It is very short-sighted if selling strategic state-owned companies is done to finance immediate needs for other infrastructure projects like road construction if the money and the benefit that come with energy production would offer far more benefits in the long run.
The other problem is the politics of the current situation. The political deadlock in Albania since 2009 has had immense effects on the country at all levels, including its economy.
The opposition, which has been boycotting parliament, again, since the local elections, has said it will not recognize the privatization of the hydro-electric plants, even if they are sold. This is very dangerous, because it sends a very negative signal to prospective foreign investors in Albania that the country’s political bickering means their investments are not safe.
The government is fulfilling its promises on privatization. Its platform has been to always privatize as much as possible. So the latest round of privatization should not come as a surprise following the sale of major public companies from telephony to electricity distribution to oil production.
But when it comes to electricity production, one of the country’s most profitable public businesses, there is a need to ask, is this where the line should be drawn? And if not here, where would such line be?
