Privatization revenue hits record low as sale of remaining assets delayed

In its 2014 Transition Report, London-based EBRD says little progress has occurred in strategic privatisation over the past year.
TIRANA, Nov. 25 – Privatization revenue hit a historic low in the first ten months of this year when at only 29 million lek (Euro 203,000), it registered the lowest level for the past decade, according to Finance Ministry data.
Back in 2013, privatization revenue stood at around 16.7 billion lek (Euro 117 million) after the sale of four small and medium-sized hydropower plants to Turkey’s Kurum.
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. The Finance Ministry said Kurum had around 3.5 billion lek (Euro 24.3 million) deducted in VAT refunds for the steel plant operations in Elbasan.
In its new action plan on European Integration published after the country was granted EU candidate status last June, government announced the privatization of the few remaining strategic enterprises in a bid to attract foreign and domestic capital.
The privatization plan for 2014 included the sale of ten enterprises, wholly-owned or where government has a majority stake. Government also planned to sell its minority shares in at least ten other enterprises, including Albtelecom fixed-line phone operator and internet provider in the final quarter of 2014. The Economy and Trade Ministry had previously set a price tag of 34 million Euros for the remaining 16.7 percent state owned stake in Albtelecom. Currently, 76 percent of Albtelecom’s shares are owned by Turkey’s Calik Group which in 2007 bought them for 120 million Euros. The Calik Group is also present in Albania with the Eagle Mobile operator and the BKT bank.
Some 40 other wholly-owned minor assets, currently not in use, are scheduled for privatization.
In its 2014 Transition Report, London-based EBRD says little progress has occurred in strategic privatisation over the past year. “Although privatisation is largely complete in Albania, there are still a number of companies where significant state shares remain, some of them in strategic sectors such as energy, natural resources and telecommunications.”
Some 95 million Euros in Czech foreign direct investment flowed out of Albania last June after a deal reached with CEZ Group eighteen months after having its electricity distribution licence revoked in Albania.
In 2014-2016 economic and fiscal program government says it plans to collect of 172 million euros from strategic and non-strategic privatizations in the next three years.
The privatization list initially included minority stakes in ARMO oil refiner and OSHEE distribution operator (currently 100 percent state-owned) after a deal was recently reached to pay back Euro 95 million to CEZ Group in an out-of-court solution to the dispute after the CEZ giant had its Albania licence revoked in early 2013. Government also plans to collect Euro 5 million from the sale of several small assets such as buildings or military facilities.
The 14.9 percent minority share in ARMO oil refiner will be offered for 22 million Euros in a tender scheduled for 2015. The Albanian government also plans to sell Albpetrol oil company after its failed privatization in 2012. The company’s assets are estimated at Euro 95 million.
INSIG, the only remaining state-run insurer whose privatization has failed several times, is not on the privatization list.
The Albanian government has collected a total of around 90 bln lek (USD 833 mln, Euro 632 mln) from the privatization of state-owned assets since the early 90s when the country’s 47-year communist regime collapsed, according to study conducted by Open Data Albania research centre covering the 1993-2011 period.
The study based on Finance Ministry data shows that most privatization revenues were collected during the past decade from the sale of key assets in the banking, telecommunication and energy sectors. What’s particular about privatizations in Albania in the post 2000 period is that they have peaked in general elections years or pre-election years such as in 2001, in 2004 and in 2009. The study finds out that privatization revenues in these years have covered 20 to 30 percent of budget deficit.