TIRANA, July 11 – The European Commission criticized the government for uncontrolled Public-Private Partnership contracts, which have already reached a historic high for Albania – as much as 31 percent of the country’s GDP.
What is more important, the EC predicts that only in 2019 the government will sign even more PPP contracts, worth as much as 15 percent of GDP.
“PPPs have reached a value of 31 percent of gross domestic product (GDP) and are expected to increase by 15 percent in 2019,” the CEC report says.
In the evaluation report of the fifth economic reform program covering the years 2019-2021, drafted by the Albanian government, the EC emphasizes that the further increase of PPP contracts will also bring an increase in public debt, which is already at a high level (about 70 percent of the GDP).
The European Commission raises concerns that these contracts are being awarded without making the necessary risk analysis and without making a measurement of the cost-benefit ratio. In doing so, the state could reduce the many fiscal risks that come from these contracts, also highly criticized from other international financial institutions.
In addition, the EC wrote the Albanian government is increasing the award of PPP contracts, but does not add staff that monitors and evaluates these contracts and complex projects. According to the EC, “this means that PPP-related financial obligations are not being fully assessed and statistically recorded.”
The 2018 progress report, published in May 2019, also saw the European Commission criticizing the Rama government for awarding without control, without competition and without transparency PPP contracts.
The EC criticized the government’s approach to accepting any “unsolicited offer” from private companies, which has brought about a reduction in competition between companies during the bidding process – as the company making the unsolicited proposal almost always becomes the winner of the tender, other companies have no interest in participating in the race.
The same concerns about unsupervised and unproved PPPs have been raised earlier by the World Bank, the International Monetary Fund and the European Bank for Reconstruction and Development. Their main concerns are the lack of transparency and competition, the lack of risk analysis and the acceptance of unsolicited proposals by private companies, which in most cases are non-for-profit contracts for the state and a burden on public property.
