Albania, electricity and the way forward

Jul 02, 2007 02:00 AM

by Robert C. Austin

Lack of a reliable power supply not only brings misery to many Albanians, but also deters investors.
With a new director at the helm of the state power corporation, however, prospects may be getting brighter.

Albania's transition to a democratic state has imposed huge sacrifices on the population. The biggest trouble area, for ordinary people, has been the persistent lack of a stable supply of electricity. Under the old regime, it was easy to meet demand as people had so few things that required power, the country was even an exporter of energy.
The new Albania is totally different -- since 1990, Albanians have witnessed a steadily worsening electricity situation. By now, many have come to accept the erratic power supply as a fact of daily life.

Albania is not alone in the region when it comes to energy shortages. The situation in neighbouring Kosovo is no better. Across the Balkans, countries have been impacted by the closure of Bulgaria's Soviet-era nuclear plants.
Every year, Albanians say the latest winter was the worst ever. This past winter was extremely difficult, with daily cuts and the constant noise of gas generators running. However, there may finally be light at the end of the tunnel, although patience is still required.

Albanian Power Corporation's (KESH) new chief, Gjergj Bojaxhi, represents a new generation of leaders, educated and trained in the United States, who have returned to Albania. He brings a wealth of experience with the World Bank and other private sector financial institutions. In addition, he previously served as deputy minister in the Ministry of Trade, Economy and Energy.
Bojaxhi, 33, joined KESH in March. He now has one of the most challenging jobs in the country. Failure to deliver has major implications -- elections can be won and lost on the power issue.

He must chart a way forward that will not only bring relief to Albanians, but also reassure foreign investors who worry about Albania's precarious power supply. So far, the actions taken bode well for both the short and long term, and suggest that Bojaxhi has the creativity and drive to apply multiple solutions on a step-by-step basis.
Albania faces specific disadvantages when it comes to energy production. It is dependent on hydro power, and therefore on climate conditions. Albania has experienced less rain than ever, and reservoirs are dry. As a result, the country can only meet 50 % of its electricity needs. Importing power is always an option, but an expensive one. As the country is forced to buy electricity abroad, the state budget suffers.

So what is the solution? According to Bojaxhi, a number of avenues should be pursued. First, he is focusing on improving efficiency and employee engagement in their work. He is creating better awareness of Albania's situation through the news media and, most importantly, he has been a highly visible campaigner in the effort to persuade people to pay for the energy they use.
Some districts of Albania have become notorious for ignoring power bills and sabotaging lines to gain free power. While Albania's commercial clients have a near perfect record in paying up, individual consumers, especially in parts of northern Albania, have been less enthusiastic. Around 25 % of home consumers are not paying their bills and Bojaxhi intends to cut them off. He is probably the first KESH director to actually take to the field with staff to deal with the problem.

This is only an initial step. Long-term solutions, which will enable KESH to have a secure a stable supply of electricity, are also on the table. For example, the company intends to privatize distribution lines over the next two years. Bojaxhi believes that private sector control over distribution, with a focus on the bottom line, can only improve things. A new transmission line -- between Elbasan and Podgorica -- will make imported power more accessible as long as it can be paid for.
Plans for an oil-fired plant in the southern city of Vlora are also in the works. Feasibility studies for a new hydro-power plant in Bushati in northern Albania are under way. Smaller projects are also possible on Albania's many rivers. International donors have already made huge contributions towards improving things.

Meanwhile, some suggest raising prices might encourage people to conserve more. Bojaxhi says this is not an option right now. A significant price hike was imposed just over a year ago, and any further increases have a huge social cost for many Albanians. Price rises, he says, can come later once supply is guaranteed.
With no plans to privatize production, the focus is on upgrading existing facilities and building new power plants. Bojaxhi accepts that over the next two years, there will still be problems. Foreign investors, who need steady power, are hoping a permanent solution to the problem -- possibly the most pressing one facing Albania -- is finally within sight.

Robert C. Austin teaches the history and politics of South-eastern Europe at the Munk Centre for International Studies, University of Toronto.

Source / Southeast European Time
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