TIRANA, July.14- Albania’s Finance Minister has declared that the state budget cannot afford long-term energy imports, made even more crucial due to power shortages which began earlier than usual this summer. There is presently a considerable difference between the price at which the government buys energy from abroad, around 9 lek/ kilowatt-hour, and the price at which it sells to local consumers, 7 lek/kilowatt-hour. Bode has repeatedly called for charging consumers more for the electricity they use. Bode said that the prices used in Albania have to approach the EU level prices if the country wants to deal at market conditions and solve the crisis. Power cuts have plagued Albania throughout its 17 years of the transition from communism, harming the business community and making life very difficult, especially for the Albanians living outside of Tirana, which usually have longer electricity rationing hours. The world bank had long ago suggested increases in prices after compiling a detailed study about Albania’s energy situation which included specific recommendations to KESH. The same increase in prices has also been proposed by the IMF in the third agreement signed with Albania a week ago.
World Bank strategy
To end the energy crisis, which occurs yearly, KESH should have started implementing price increases starting in 2005, according to the WB report. The price should have gone from 7 to 8.1 lek/ KwH Once again, the WB proposed to KESH to at least increase consumer electricity costs to 7.4 leks in 2006.
The World Bank has suggested that KESH has to adapt to requirements of the market, transforming itself into a true commercial entity with entrepreneurial spirit.
At the same time, it should continue its efforts to minimize technical and network losses, estimated at 33.5 percent. The optimal next step would be losses of no more than 21 percent. KESH should also detach itself from its state dependency and become fully self-sustainable.
Energy related investments in the period 2006-2010 have been predicted at the level of $1.3 billion, of which 30 percent would be raised through the private sector.
These investments, though, need security and political stability, hence the WB proposed the increased price.
