Energy Community warns power prices must increase

Electricity prices are set to increase next year as part of a reform to reduce the deficit in the energy sector but the Albanian government has assured the increase will not affect household consumers.
TIRANA, Oct. 1 – The Vienna-based Energy Community, an international organisation dealing with energy policy, has warned Albania desperately needs to reform its energy system by revising electricity prices and ensuring the independence of the energy regulator. Speaking this week during a visit to Albania at the parliamentary trade committee, Janez Kopac, the Director of the Energy Community Secretariat described Albania’s electricity system as bankrupt due to current prices and lack of reforms in the past four years.
“The Energy Regulatory Entity must be independent and should not change as many times as governments change. There have not been completed reforms in Albania, energy reforms continue remaining hostage,” said Janez Kopac.
Albania’s utmost priority will be the reform of the Energy Community and bringing to life the recommendations proposed to improve the functioning of the Community, not only by the High Level Reflection Group. It is an opportunity to create a new Energy Union” said Albanian Energy Minister Damian Gjiknuri at a ministerial council meeting in Ukraine, unveiling the priorities of Albania’s Energy Community Presidency in 2015.
Earlier this year, the Vienna-based Energy Community mediated the deal with CEZ Group which will be paid back Euro 95 million for 76 percent of the shares it bought in the Albanian electricity distribution operator in 2009 for Euro 102 million.
Albania’s medium term priorities in the area of energy comprise continuing to ensure proper implementation of action plans in relation to the electricity and gas sector and make further progress with implementation of the Albanian energy strategy, says the Energy Community. “It also involves ensuring timely implementation of the various projects aimed at improving the infrastructure for electricity production, transmission and distribution, continuing to implement regional and international commitments in the energy field with a view to establishing a competitive regional energy market and improving the implementation of the energy efficiency law.”
The International Monetary Fund considers the reform in the energy sector which is estimated to cost the state budget around $200 million in annual losses as crucial for Albania’s sustainable growth and key to bringing down the public debt, currently hovering at around 70 percent of the GDP.
“The reform in the energy sector is crucial because subsidies on energy which is stolen and not paid are a huge burden to the state budget and this outflow of money which could help the potential of economic growth must be stopped,” said Jens Reinke, the new IMF resident representative in Tirana in a televised interview.
Electricity prices are set to increase next year as part of a reform to reduce the deficit in the energy sector but the Albanian government has assured the increase will not affect household consumers.
The increase in electricity prices has also been recommended by the IMF and the World Bank which are assisting the Albanian government bring back the economy to sustainable growth after moderate growth of around 2.6 percent 6 percent annually during the 2009-2013 crisis years compared to a pre-crisis decade of an average 6 percent, when it was one of the best performers in the region, according to INSTAT.