TIRANA, Nov. 28 – State-run OSHEE electricity operator contracted electricity worth about €33.4 million for December 2017 in costly imports for the seventh month in a row as the country continues to face one of its worst electricity crises triggered by a prolonged drought almost paralyzing the country’s hydro-dependent domestic electricity generation.
With demand for electricity at a peak due to almost freezing temperatures, regional power prices soared to about €75/MWh, up from an average of about €70/MWh in the previous months.
The December purchases take the total bill Albanian state-run electricity operators have footed on costly electricity imports to about €200 million since mid-2017.
The situation has plunged state-run OSHEE distribution operator and KESH power utility in severe financial straits, with the central government revising the budget to financially assist with the imports and a World Bank emergency loan on power imports already used.
The costly imports, compared to cheap domestic hydropower production by KESH utility, has also severely affected investment plans to upgrade the country’s distribution grid where about a fifth of electricity is still wasted due to poor-condition grid and thefts.
The OSHEE state-run electricity distribution operator emerged as Albania’s largest enterprise in 2016 in terms of turnover and profits, leaving behind major oil producing and trading companies.
OSHEE turned profitable in 2015 thanks to an aggressive nationwide campaign to curb electricity thefts and collect hundreds of millions of euros in accumulated unpaid bills following a short-term failed privatization by Czech Republic’s CEZ that ended in early 2013.
Rainfall in the past few weeks have only slightly improved the situation in the country’s big state-run hydropower plants in the northern Drin Cascade due to water levels having dropped to historic lows following one of worst droughts in decades, exposing the vulnerability of Albania’s hydro-dependent electricity sector and the need for its diversification.
Albania’s three state-run HPPs on the Drin Cascade currently produce only about a third of the country’s electricity needs and the situation is not expected to considerably improve unless heavy rainfall fill up reservoirs nearly at stoppage point.
The situation remains critical also for more than a hundred small and medium-sized private and concession HPPs, producing about a quarter of the country’s domestic electricity.
In its 2018 budget, the Albanian government singles out the rainfall-dependent domestic electricity generation which this year suffered a major setback after one of the worst droughts in decades as the major threat for next year, with potential costly imports affecting scheduled investments in key sectors.
“The vulnerability of the electricity sector to the meteorological situation in the country is the main risk factor. In case of considerable negative situation, the effective vulnerability has a domino effect on all sector operators, with a considerable impact on the financial condition of each of the companies, calling into question the progress of measures taken as part of the energy recovery reform,” says the Albanian government in its explanatory report on the 2018 budget.
