TIRANA, June 23 – The Albanian government says it has reached a deal with London-based European Bank for Reconstruction and Development over a €218 million loan to refinance the state-run power corporation’s short-term costly loans to local banks that will save Albanians about €7.6 million a year.
Energy Minister Damian Gjiknuri says the EBRD loan will restructure KESH power corporation loans and reduce the burden they pose to the public finances.
“In case we continued paying the same interest rates over a 15-year period, we would pay about Euro 150 million only in interest rates. This loan saves us Euro 7.6 million a year,” Gjiknuri told a local TV.
“The debts are related to the failed economic operations, the many experiments carried out with KESH, high debts to private hydropower plants and other elements of mismanagement. The loans were taken out at high interest rates and directly affected the state budget,” he added.
The EBRD loan will allow the country’s biggest electricity producer to replace short-term debts to local banks at an average interest rate of 4.5 percent with a new 15-year loan at a 2 percent rate.
KESH has accumulated about €250 million in loans and debts to private electricity producers since 2007 due to electricity imports and mismanagement of the electricity distribution operator where grid losses still remain high at about 30 percent.
The EBRD investment is expected to support a program of reform which aims to include KESH’s corporate governance, market practices and regional trade. “The refinancing of the balance sheet to lengthen tenors will give KESH greater control over its financial situation, relieving it of continuing urgent liquidity concerns,” says the EBRD.
KESH supplies almost 70 percent of Albania’s electricity demand through its own hydro-dependent generation mainly from the northern Drin Cascade where the country’s largest hydropower plants are situated.
