Government to support increase in electric energy prices

TIRANA, Nov 16 – The Albanian government has supported the latest request by the Albanian Electric Energy Corporation (KESH) to raise by 16 percent the price of electricity it sells to the privately-owned Distribution System Operator, better known by its Albanian initials, OSSH.
Economy and Energy Minister Dritan Prifti said in his weekly meeting with the media that the current price with which KESH sells its energy is much lower than the prices provided by other companies in the world.
“KESH sells its energy to OSSH for a price of 2.2 leks per KW/hour. No other company in the world sells at such a low price,” Mr. Prifti said.
The request to increase electricity prices has come not only from KESH, but also from the Transmission System Operator (TSO) and OSSH. The first two are state owned, while OSSH was privatized earlier this year by CEZ, a Czech energy company and a giant in the European energy market.
KESH’s chief executive, Muharrem Stojku, said the request to increase electricity prices has come because the existing prices do not justify expenses.
“We have requested a possible minimal tariff in order to meet costs and some alternatives above costs. The cost price requested is 2.55 leks per KW/hour. Such a price will help KESH pay its debts within a 5-year period without making major investments,” Stojku said.
On its part, TSO has asked for an increase in the transmission tariff from 0.5 leks to 0.9 leks per KW/hour without including the value added tax (VAT). TSO justifies its request with a need for funds to further investments in the transmission system and to pay its loans.
In addition, another reason why both KESH and TSO have made their requests is because the Albanian government has declared that it will not give more funds to them from the state budget as it has usually been the norm in the last years.
OSSH, the third company to request an increase, was the first to do so at the end of September. OSSH asked to increase its electric energy price to its clients by 19 percent to 31 percent depending on the customer’s category.
CEZ, the owner of OSSH, is expected to invest some 8 billion leks (60 million euro) in the electricity distribution system in the 2009-2010 period.
However, the last decision regarding the price increase belongs to the Energy Regulatory Entity (ERE), the independent state institution which supervises the energy market in Albania. ERE is expected to make its decision on December.