TIRANA, Nov. 28 – The municipality of Tirana has launched an international call for the first five pre-university schools out of a total of 20 it intends to build under a controversial public private partnership in a bid to reduce overcrowding and put an end shift classes in the Albanian capital.
In an announcement published on the Public Procurement Agency, the country’s largest municipality invites bidders for a late December international tender to build five schools for a total estimated investment of about 1.94 billion lek (€14.4 million). The new schools will be built under a 7-year public private partnership build-operate-transfer contract under which the selected private company will have to use their own funds to build and maintain schools in return for annual installments the municipality will pay them to meet investment costs and an annual interest rate of up to 6.3 percent, making it similar to a seven-year loan.
Once the construction of schools finishes in 18 months, the municipality of Tirana will have to pay the concessionaire an average of €7 million a year for seven years before the schools are transferred to state-ownership.
The municipality has already made available a 28,000m2 construction site in its 9 and 11 administrative units in downtown Tirana suffering one of the highest overcrowding rates with classes of more than 50 students and teaching carried out in morning and afternoon shifts.
Tirana Mayor Erion Veliaj has described the public private partnership formula supported by the Albanian government as a solution to have 20 schools in a short period of time and put an end to classes in shifts in 57 Tirana schools.
The new schools are also financially supported by an education infrastructure tax the municipality of Tirana introduced in 2016 in a bid to reconstruct existing pre-school and school facilities and build new ones. The municipality collected 496 million lek (€3.6 million) in 2016 alone.
The ‘temporary’ tax which will be in force for seven years ranges from an annual 1,800 lek (€12.7) for Tirana households to 4,000 lek (€28.4) and 37,000 lek (€263) for businesses depending on their size was strongly opposed by businesses, especially those with several units due to having to pay for each unit.
In its 2018 draft budget, the Albanian government expects the 8-year 2017-2024 Tirana municipality PPP on building new schools to cost taxpayers about 6.4 billion lek (about €48 million) but with no immediate effect for 2018.
The cost of about a dozen public private partnerships the Albanian government has signed with private companies in the key health, waste-to-energy and customs sectors is expected to increase by a third in 2018 and is set to register sharp hikes in the next few years as the Albania proceeds with an ambitious but rather controversial €1 billion PPP project.
The ambitious government project intended to compensate major energy-related foreign direct investment already in their final stage has sparked concerns among some economists and international financial institutions who say the planned road, education and health PPP investment could create new arrears and hamper efforts to bring public debt to 60 percent of the GDP by 2021.
In its 2018 budget report, the Albanian government expects taxpayer support to eight existing PPP contracts and three new concessions that become effective in 2018 to increase to 9.4 billion lek (€69.2 mln), up from about 7.2 billion lek (€53 mln) in 2017, registering a 30 percent or €16 million annual hike.
The IMF expects the Albanian government’s commitments to PPPs to climb to €1 billion, around 7 percent of GDP by 2021, posing a threat to the Albanian government’s agenda of reducing public debt to 60 percent of the GDP by 2021.
