Failing to collect the payment, the Albanian government has recently borrowed 12 billion lek (Euro 84 million) from commercial banks to pay unpaid bills to private companies for public works
TIRANA, April 16 – Turkey’s Kurum is finding difficulty in paying off the Euro 110 million after securing a winning bid for the privatization of four small and medium sized hydropower plants in Albania, putting cash-strapped government into severe financial difficulty, local media report. Failing to collect the payment, the Albanian government has recently borrowed 12 billion lek (Euro 84 million) from commercial banks to pay unpaid bills to private companies especially those involved in the construction of roads. Some 9 billion lek will be used to pay off firms involved in the construction of national roads and another 2 billion lek for rural road and water supply system construction.
Top Channel TV reports Kurum is negotiating with the IFC, the World Bank’s private sector lending arm, which also served as government’s consultant in the privatization process, but has not been able to reach a deal yet.
Under the contract signed last March, Kurum’s deadline for the payment was early next May, but if the company fails to make the payment the process will head into failure.
Turkey’s Kurum International, which in Albania already operates the Elbasan steel plant, offered a total of Euro 109.5 million on the privatization of four small and medium sized hydropower plants, being the highest bidder. In an international tender held on December 21, Kurum International offered Euro 52 million on the purchase of the Bistrica 1 and Bistrica 2 HPPs in southern Albania with a capacity of 27.5 MW and Euro 57.5 million on the Ulez and Shkopet HPPs which have an installed capacity of 49.2 MW.
For Kurum, one of the country’s largest electricity consumers, the purchase of the HPPs will considerably lower its power costs as a new law in force since the beginning of 2012 stripped big electricity consumers to have power supply at regulated tariffs from the local distribution operator.
Earlier this year, the Albanian government invalidated a record staggering bid worth Euro 850 million on the privatization of Albpetrol oil firm after the winning bidder, Albanian-led Vetro Energy consortium, failed to pay the financial guarantee leading to the finalization of the contract.
Czech-owned distribution operator CEZ Shperndaje also had its licence revoked because of failing to meet contract obligation but the divorce is heading to arbitration court where Albania risks losing 200 million euros in claims by CEZ Group.
