By ardit bejko
news@tiranatimes.com
TIRANA, July 29 – The Albanian electricity sector remains the rotten apple in the country’s economic barrel, according to the Executive Board of the International Monetary Fund (IMF). Although the general situation of the economy is positive, a cautious approach to reforms is needed, said Murilo Portugal, Deputy Managing Director and Acting Chair of the Board.
“Despite progress made this year, electricity sector reforms remain unfinished, at considerable economic cost,” said Portugal. The main issue troubling the sector is unpaid electricity usage, according to the IMF. The levels of collection of electricity bills remain low compared to those in neighboring countries. Only half of the amount of electricity used is paid for in Albania, while the regional average of effective collection is 75 percent, said Portugal.
The IMF is urging the government for immediate reforms and progress in the electricity sector. “Without progress in this area, the electricity utility will continue to lose cash and risks to the budget will grow,” Portugal added. If the government and KESH do not take actions “electricity supply to the economy will remain unreliable,” he added.
The IMF’s report and recommendations come at a decisive moment for the electricity sector, as the Power Distribution Operator (OSSH) has begun its privatization process. The lack of progress and improvement in the sector might jeopardize the privatization process of OSSH, said Portugal. The agency, previously part of the Albanian Power Corporation (KESH), was made into a separate institution last June.
The Ministry of Economy, Trade, and Energy (METE) has qualified four companies interested in buying OSSH. Czech CEZ, Italian Enel, Austrian EVN and Energie Steiermark will compete for a stake ranging from 51 to 76 percent of the distribution utility.
Steady Growth
The IMF report on Albania’s economic developments and policies sees the country’s performance as “strong, despite less benign external conditions.” Growth continues increasing, having reached six percent last year. Inflation floated around the three to four percent target range, and currently “remains among the lowest in the region in spite of global food and commodity price shocks,” Portugal said.
In addition to the macroeconomic indicators, positive growth has been seen in exports. Goods and services exported in the last year have increased, raising the share of exports in the GDP. “Albania continues to attract investment in its traditional exports, textiles, and footwear,” Portugal said.
Nevertheless, the displays of positive growth might face danger coming from rising global commodity prices. The increase in prices, “particularly food, may put pressure on domestic prices in the short term,” Portugal said.
The IMF recommends improvements in the business climate, “particularly in the areas of governance, judiciary, and land titling,” said Portugal. “Over the medium term, investment-driven productivity increases will be needed to maintain the pace of growth and expand the export base.”
