WB okays $150 mln power recovery project on Albania

“The project will support the sector recovery plan to address longstanding technical and financial issues,” said Tahseen Sayed, World Bank Country Manager for Albania.
TIRANA, Sept. 29 – The World Bank’s Board of Executive Directors has approved US$150 million in IBRD financing for the Power Recovery Project in Albania, supporting the country’s power sector reforms, particularly the reliability of the electricity supply and the financial viability of the sector.
“The Power Recovery Project supports the implementation of government reforms, and will help to increase investment; improve management and performance, especially in distribution; and reduce inter-company arrears,” said Tahseen Sayed, World Bank Country Manager for Albania. “The project will support the sector recovery plan to address longstanding technical and financial issues.”
The power sector is facing serious financial and operational challenges in Albania, manifested by a large unfunded deficit of about US$550 million and a large level of technical and commercial losses of about 42 percent – the highest in the region – due to non-payment of electricity bills by consumers, as well as poor collection rates, says the World Bank. Energy generation relies almost entirely on hydropower, which means that emergency power imports are often required during dry seasons.
The Albanian government’s reform efforts for power sector recovery include diversifying generation sources, reducing distribution losses and improving collection, and improving the power market model in line with EU directives. A comprehensive Sector Recovery Plan will be implemented to address the pressing sector issues, especially its fiscal viability.
“The key project entities are the Distribution Company, OShEE, which will benefit from the reduction of losses and improved billing and collection rates; KESh, Albania’s main generation company, which will benefit from improved financial sustainability; and the Transmission System Operator, OST, which will benefit from the installation of an enhanced metering data center to facilitate the market restructuring,” said Salvador Rivera, World Bank Senior Specialist for Energy and Project Team Leader. “The project is a first, necessary step to support sector reforms, leading to improved quality of service and reliability.”
Since Albania joined the World Bank in 1991, the Bank has financed a total of 83 projects with over US$1.95 billion of IDA credits and grants and IBRD loans to the country.
Prolonged drought in the first half of this year severely affected the country’s wholly hydro-dependent domestic electricity generation and electricity exports but grid losses in the now 100 percent state-run electricity distribution system suffered a moderate decline, according to a report published by the country’s state Institute of Statistics, INSTAT.
Albania’s deputy Prime Minister Niko Peleshi, who heads a nationwide task force targeting to reduce grid losses and thefts, says Albania is estimated to have lost around 200 million dollars in 2013 from power losses which rose to 43 percent. The losses which are a result of massive power thefts and dilapidated distribution system are equal to 70 percent of electricity generation from the Drin cascade in northern Albania, where the biggest hydropower plants are situated.