EBRD looking for new investments in Albania

LONDON, Dec. 3 – The European Bank for Reconstruction and Development said it was looking for new investment in Albania’s infrastructure, energy and private sector, the bank said.
In an interview to an Albanian newspaper Claudio Viezzoli, EBRD, head of Western Balkans department, said the bank had already investmentd some 400 million euro in 40 projects in the country.
EBRD started its operations in Albania in March 1992 and since then the Bank has invested over 400 million Euro in more than 40 projects in many sectors including telecoms, power and energy, municipal infrastructure, manufacturing, agribusiness, distribution, financial institutions and the insurance sector, said Viezzoli to Albanian Daily News.
The total cumulative invested amount in the bank’s projects exceeds 1.4 billion.
He said Albania was growing fast and had been able to withstand over the years difficult financial and political crises in the best possible way.
Moreover, Albanian people have shown an outstanding capacity to open up to the world and capture business opportunities. Private business, especially in Tirana and the main cities, is flourishing and the role of micro and small companies is increasingly important in supporting the economy as a whole, according to him.
Viezzoli also said that the country should immediately react to the energy crisis, adding that his bank had invested so far about 100 million euros in the energy sector, mostly in power generation and distribution.
“There is no doubt that energy is the single most important potential limit to growth for the future of the Albanian economy. Albania needs energy for its industries, and reliability and proper pricing is also a key pre-condition to attract foreign investors.” Problems in the energy sector are of a different nature: from heavy dependency on hydro generation, to higher than the norm losses in the distribution system and lack of sufficient high voltage regional integration.
He stressed that the Albanian energy system had to be seen as an integral part of the East European Energy Community and more generally of the European energy market and, in this context, projects can be identified and prioritised.
He said they were coordinating efforts with the Albanian government and many other players to provide not only financing means to support investments but also the right advice on where to invest and which projects to prioritize, like on energy generation diversification.
He urged Albania to aim at increasing its generation capacity in the medium term and to integrate more in the regional system to take advantage of a developing regional market, like the implementation of the Macedonia-Albania-Italy transmission line, which would make electricity produced in Bulgaria available to the Albania national system.
Infrastructure is key for economic development, especially considering Albania’s location in the Balkans and its proximity to Europe, said Viezzoli.
Albania should become a key entry and transit route to the region. To do that, its ports and road network need to be upgraded and custom procedures streamlined, he said, acknolwldging the country’s limited budget and borrowing capability.
Albania, however, has already proven that it can move towards more innovative financing mechanisms, such as public-private partnerships (PPPs), which deliver better infrastructures while not putting additional weight on the state budget.
“We are now moving toward a second expanded phase of this project. The same model could be implemented for at least another regional airport as well as for Albanian ports. Privatisations are also a key step to involve the private sector and we hope that energy distribution could soon be tendered out to international groups,” he said.
The bank would heavily invest in infrastructure, power and energy, municipal and private sector projects in the country, he said.
In 2008 it planned over 120 million euros and next year they were planning to invest in private sector deals in construction material sector, in bank and non-bank financial institutions, telecoms, energy, gas and oil terminals, as well as to continue our work to support the strengthening of local infrastructure: main road corridors, Durr쳠and Vlora ports, expand Tirana airport, and municipal infrastructure with the expansion of Tirana ring road.
Investments in infrastructure and energy will be key to attract additional foreign investors, he said, urging the local banking system to engage more in the financing of the real economy.
I believe the country faces two main challenges, Viezzoli said.
First, Albania needs to invest more in paving the way for EU accession: it is a long and difficult road ahead but well worth taking. This will require focusing the reform agenda and the energies of public administration on meeting conditions over the next years. This will require a long-term common understanding among all actors in the country on the final objective and on the critical milestones to achieve it.
Second, Albania and especially Albanian entrepreneurs need to start a virtuous process of transformation of local enterprises from traders into producers. This is an essential requirement for a country which, today, is using remittances to finance mostly imported consumer goods rather than long-term capital investments. As remittances are bound, sooner or later, to decrease, this is the time to launch courageous industrial policies to stimulate such process of transformation thus also helping, over time, trade balances. The process has already started in some sectors, such as cement, where Albania has the chance to become in a few years a net exporter. Many other sectors should however be captured within by this process. The EBRD is willing to assume a role by providing local enterprises with risk capital for their expansion. Only this year we signed two equity deals in Albanian-owned companies in building materials and agribusiness. It is just the beginning of what we hope a long and successful deal flow with our Albanian partners.