“At the gist of this reform stands the target to liberalize the market, which means starting next year, customers linked to the 35kW grid will no longer be offered regulated tariffs from the state run distribution operator,” says Energy Minister Damian Gjiknuri.
TIRANA, July 23 – With the distribution operator back under full state ownership after a deal with the Czechs, the Albanian government says it is drafting a new energy law which targets liberalizing 30 percent of the market by lifting regulated prices for businesses linked to the mid-voltage grid.
In a televised interview, Energy Minister Damian Gjiknuri said the new law will change the market model, create opportunities for the restructuring of companies.
“At the gist of this reform stands the target to liberalize the market, which means starting next year, customers linked to the 35kW grid will no longer be offered regulated tariffs from the state run distribution operator. We will continue with other commercial and industrial customers connected to the 20 kW and 10 kW in order to have 30 percent operating at market tariffs in the next two years,” said Gjiknuri.
Government say the law will pave the way to much needed investments in the electricity distribution system and inject liquidity in the market.
CEZ Shperndarje has been recently rebranded as the Albanian Electricity Distribution Operator (OSHEE) after the deal brining the company 100 percent under state ownership.
After stripping giant electricity consumers from having power supply at regulated tariffs from the local distribution operator in 2012, the Albanian government says the new measure will further reduce the burden of state-run KESH power corporation to provide electricity to other big businesses connected to the mid-voltage grid. New changes to the energy law envisage that businesses connected to the mid-voltage grid will sign contracts with private operators which will use the state-run distribution grid to supply power to them at a tariffs set by the energy regulator.
Energy Ministry officials say the new changes will considerably improve the situation of state-run KESH power corporation and the distribution operator as businesses linked to the high and mid-voltage grid account for around a quarter of domestic electricity consumption.
The liberalization of the energy market will also ease KESH power corporation from its obligation to buy electricity from private hydropower plants at regulated prices by allowing them to sign contracts with private businesses.
Since 2012, big electricity consumers connected to high voltage grid which include steel and cement plants, have been supplied electricity by private operators.
Average regulated electricity tariffs for business consumers vary from 8.5 lek/ kWh to 10 lek (Euro 0.06 to 0.07) per kWh based on low or medium voltage power supply.
“Years of neglecting the energy sector left the Albanian energy sector in a very bad shape, with an unsustainably high share of electricity not paid for, the state-owned companies in serious financial difficulties, and investor confidence alarmingly low, says the Vienna-based Energy Community Secretariat which mediated the deal with CEZ Group which will be paid back Euro 95 million for 76 percent of the shares it bought in 2009 for Euro 102 million.
With the ownership issue over CEZ now solved, the Albanian government is negotiating with the World Bank over a $150 million loan to invest in Albania’s dilapidated distribution grid and reduce grid losses estimated at around 50 percent causing around 150 million euros in losses annually to the state budget.
