EU & WBs / Albania Energy Investment Updates

EU & WBs / Albania Energy Investment Updates

Presentation of Albanian Centre for Energy Regulation and Conservation - ACERC

ACERC is a think tank centre with focus on the Albania energy market and its integration in the regional IEM. The Acerc mission base on the in-depth knowledge of EU and regional energy law and policy and strives to provide a qualified contribution to the promotion of the liberalization and effective integration as well as efficient use of energy resources.

Acerc
main activities briefly consists in build-up collaborations and supports to market players in study researches such as the certificate reports, articles and periodicals. The transfer of high expertise through building-up institutional capacities by national and regional training courses, seminars and conferences. The institutional representation and integration within framework of the forum of Albanian School of Regulation.

For more visit us at the Official Website of Acerc | Albanian Energy Market - AEM Group in LinkedIn

ICSID Centre for Settlement of Inv : Mamidoil Jetoil Greek Petroleum Products Societe Anonyme S.A. v. Republic of Albania (ICSID Case No. ARB/11/24)

AEI Updates August 2015Posted by Adv. Lorenc Gordani, PhD Thu, August 20, 2015 19:26:37

Mamidoil Jetoil Greek Petroleum Products Societe Anonyme S.A. v. Republic of Albania (ICSID Case No. ARB/11/24 )

Subject of Dispute: Oil storage and distribution project

Economic Sector: Oil, Gas & Mining

Instrument(s) Invoked: BIT Greece - Albania 1991

Applicable Rules: ICSID Convention - Arbitration Rules

(a) Original Proceeding

Claimant(s)/Nationality(ies): Mamidoil Jetoil Greek Petroleum Products Societe Anonyme S.A. (Greek)

Respondent(s): Republic of Albania

Date registered: September 12, 2011

Composition of Tribunal

President: Rolf Knieper (German) - Appointed by the Chairman of the Administrative Council

Arbitrators: Steven A. Hammond (U.S.) - Appointed by the Claimant(s)

Yas BANIFATEMI (Iranian, French) - Appointed by the Respondent(s)

Date of Constitution of Tribunal

Constituted: March 1, 2012

Party Representatives

Claimant(s): Respondent(s):

Bahas, Gramatidis & Partners, Athens, Greece

Haxhia & Hajdari, Tirana, Albania

Luther Rechtsanwaltsgesellschaft, Hamburg, Germany

State's Advocate Office of the Republic of Albania

Derains & Gharavi, Paris, France

Language(s) of Proceeding: English

Status of Proceeding: Concluded

Outcome of Proceeding: Award rendered on March 30, 2015; attached to the award is a dissenting opinion by arbitrator Steven A. Hammond.

(b) Annulment Proceeding Applicant/Requesting Party Claimant(s)Date registered: August 3, 2015 (Claimant(s)) Composition of ad hoc Committee (Appointed by the Chairman of the Administrative Council)

President: Donald M. McRAE (Canadian, New Zealand)

Members: Doug Jones (Australian, Irish)

August REINISCH (Austrian)

Date of Constitution of ad hoc Committee

Constituted: August 19, 2015

Party Representatives

Claimant(s): Respondent(s):

Freshfields Bruckhaus Deringer, Paris, France

State's Advocate Office of the Republic of Albania

Status of Proceeding: Pending (ad hoc Committee recently constituted)



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Energy efficiency, special fund for energy conservation Posted on 11:17 - 14 August 2015 by Sonila Mehmeti

AEI Updates August 2015Posted by Adv. Lorenc Gordani, PhD Wed, August 19, 2015 14:48:23
TIRANA, Aug 14 (ATA)- The Ministry of Energy and Industry (MoEI) has come up with a draft law on “Energy efficiency” which includes energy conservation guides for all electricity consumers, including public administration, big companies and citizens. For the first time it foresees an Efficiency Fund.

According to sources from MEI, Albania has vowed to reduce by 11 percent the energy consumption until 2020 making enhancement of energy efficiency a top priority. Once the new bill comes into effect, the new rules will apply to public sector and big companies first. The measures will prevent excessive consumption ranging from banning household applies which do not save energy to construction of buildings with insulation materials.

As to the old apartment buildings and houses, the ministry will set up an Efficiency Fund, which will support their reconstruction up to 50 percent. By the new law, a special monitoring structure will be established to control its implementation.

The govt. plans to invest until 2020 around EUR 500 mln in energy sector on the basis of energy recovery strategy in a bid to liberalize the energy market in the country and minimize the losses in distribution network.
/n.m/ /a.ke/sm/

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Greece, Azerbaijan discuss sale of DESFA’s shares 13 AUGUST 2015

AEI Updates August 2015Posted by Adv. Lorenc Gordani, PhD Fri, August 14, 2015 18:23:12

Baku, Azerbaijan, Aug. 13

By Azad Hasanli – Trend:

Greece and Azerbaijan discussed the sale of a package of shares of DESFA gas transportation system operator to SOCAR (State Oil Company of Azerbaijan).

This issue was discussed at a meeting of Greek Minister Panos Skurletis with SOCAR Energy SA Greece director general Anar Mammadov, the ministry of industrial reform, environmental protection and energy of Greece said.

During the meeting the minister stressed the positive attitude of the government in the field of energy cooperation with Azerbaijan.

On the same day Skurletis met with Ian Bradshaw, the managing director of the Trans Adriatic Pipeline (TAP) consortium, Michael Hoffman, the external affairs director and Rikard Scoufias, TAP Country Manager for Greece.

The sides reviewed the technical issues and agreed to hold a meeting soon to discuss and resolve the remaining issues to intensify the further actions that will allow beginning the design work for TAP in Greece.

Greece’s government is considering the sale of 49 percent share in DESFA to SOCAR.
SOCAR won a tender in December 2013 on the sale of the 66 percent share in DESFA for 400 million euros.

Currently, the deal is being considered by European Commission’s Directorate-General for Competition, and the procedure will last until late 2015.

In November 2014, the European Commission started an inquiry into the compliance of the deal on acquisition of a stake in DESFA with the EU’s regulations.

The company is currently carrying out work as part of ensuring the Azerbaijani gas supplies to Europe.

Work is underway in this regard within the second stage of development of the Shah Deniz offshore gas and condensate field, and for expansion of the South Caucasus Pipeline.
Aside from that projects are being developed for construction of the Trans Anatolian Natural Gas Pipeline (TANAP) and the Trans Adriatic Pipeline (TAP).

TAP will transport natural gas from the giant ‘Shah Deniz 2’ field in Azerbaijan to Europe.

The approximately 870 km long pipeline will connect with the Trans Anatolian Pipeline (TANAP) at the Turkish-Greek border at Kipoi, cross Greece and Albania and the Adriatic Sea, before coming ashore in Southern Italy.

The pipeline’s construction is expected to start in 2016.

TAP’s initial capacity will be 10 billion cubic meters per year, expandable to 20 billion cubic meters per year.

TAP’s shareholding is comprised of BP (20 percent), SOCAR (20 percent), Statoil (20 percent), Fluxys (19 percent), Enagás (16 percent) and Axpo (5 percent).



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Characteristics and Perspectives of Energy Market in the Western Balkans, by Lorenc Gordani | Thursday, August 13, 2015

AEI Updates August 2015Posted by Adv. Lorenc Gordani, PhD Thu, August 13, 2015 18:24:32

The economic and energy landscapes in the WBs, part of the 8th regional area in process of integration, are diverse, but at the same time have many features in common. Then a short analysis of the strong and weak points, as well as the opportunities and threats of the region, as a whole, leads to some interesting common features, as presented below.

The final energy consumption per capita quantifies, that amount of energy consumed per inhabitant, comparing to the average EU final energy consumption is still lower from 4 to 6 times. This is consider a clear indicator of lower economic development in the Energy Community region.

Final Energy Consumption in 2012 (in toe/capita)

The energy intensity, that display the gross inland consumption used to produce one unit of GDP (energy/GDP in toe per million EUR), in 2012, was five times higher than the average energy intensity in the EU. Whilst it can vary widely among countries, it strongly correlates with the level of industrialization and the economy’s mix of services and manufacturing. Undoubtedly, it indicate also the attention which a country pays to energy efficiency, together with the policies in place, plays an essential role.

Energy Intensity of the Economy in 2012

However the old, inadequately maintained energy industry is one of the reasons for the high energy intensity in the Energy Community region, at the same time, the still widely spread practice of price regulation keeps the region’s energy prices at an artificially low level. With the low price level, there is little impetus to increase energy efficiency or competitiveness.

Prices of Electricity Charged to Industrial End-Users (consumption band IC) in EUR cent/kWh, Jul-Dec 2013

Then the benchmark of the respective prices for electricity industrial end-users among the Contracting Parties are rather limited. When compared with the EU average, the Energy Community electricity prices for industrial end-users were roughly 40% lower. However, in terms of energy costs, this implies a business environment with a similar level of competitiveness.



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CGGC signs EPC contract for thermal power project in Bosnia and Herzegovina Updated: 2014-09-10 ( cggc.cc )

AEI Updates August 2015Posted by Adv. Lorenc Gordani, PhD Wed, August 12, 2015 21:39:11

On August 30, 2014, CGGC signed the EPC contract for the 450MW unit of the Tuzla thermal power station in Bosnia and Herzegovina. With a total investment of RMB7,453 million, the project has a construction schedule of 56 months.

On August 27, CGGC and Elektroprivreda signed the construction contract for unit 7 of the Tuzla thermal power station in Sarajevo. The scope of the project includes the engineering, procurement and construction of a 450MW co-generation unit west of the current Tuzla thermal power station in Bosnia and Herzegovina.

Founded in 1946, Elektroprivreda, the project owner, is one of the top three power generation companies and also the largest company in the Federation of Bosnia and Herzegovina. With total assets of EUR 1.75 billion, Elektroprivreda has a total installed capacity of 1,680MW and seven coal mines, all in sound operation.



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Reforms and the Opening Investments Opportunity in Albania by Lorenc Gordani | Tuesday, August 11, 2015

AEI Updates August 2015Posted by Adv. Lorenc Gordani, PhD Tue, August 11, 2015 14:56:24

The Government of Albania is moving forward with an integrated approach to addressing problems in the energy sector overtaking important institutional changes in line with the European Union directives. The objectives of EU policy on energy are competitiveness, security of supply and sustainability. However, the liberalization of the energy market and the introduction of private operators in the market is one of the main challenges of the energy sector under European Union directives.

Albanian from a long period is searching to do progress in aligning its legislation with the EU acquis in the field of energy. The previous law no. 9072, date 22.5.2003 “On power sector” has been revised about 13 time in order to be further aligned with the EU general principles and the acquis on award of energy sector. These changes were reflected in accordance with energy sector development, affecting the improvement of energy supply and energy market opening, but the diversification of electricity sources were still lacking.

Attracting of the investment was the rationale behind many of the here above measures and actions taken. However, the private investment has remained far below the levels hoped. Then during 2014, was prepared the new Law “On the Power Sector” in full compliance with the Third Energy Package of European Union and in specific with the Directive 2009/72/EC dated 13 July 2009 "On common rules for the internal market in electricity”. A process now already completed with the enactment of the new Law on the Electricity Sector no. 43 on 30th April 2015.

Notwithstanding, the new law on the electricity sector approved, constitutes a decisive step forward, it is only the first ones on a long path of the energy reforms in Albania. The adoption of this law, it will be opened the road towards other legal acts, as in particular the preparation of the new design of the Electricity Market and the further liberalisation, with the aim to achieve an efficient and a well-balanced and competitive market opening.

The new law foresee by first the restructure of the institutional relationship between the three public power companies responsible for generation, transmission and distribution (KESH, OST, and OSHEE). Specifically, the responsibility for wholesale purchases from independent producers will shift from KESH to OSSHE. ERE will defines rules that enable and promote the establishment and operation of an open wholesale market for generation, wholesale and supply (Article 8, par.1 point a). The draft law also sets in place a schedule for moving all medium-voltage customers out of the regulated tariff structure by end-2017, beginning with 35KV customers by end-2015 (on completion, the share of de-regulated consumption would increase from 13 to 40 percent).

The draft law also clarifies the responsibilities and full independence of the energy sector regulatory authority (ERE). Activity of ERE as seen in last the submitted applications of the three public power companies for tariff adjustments, which were approved and went into effect in January 2015, which see the restructuring of the retail tariff for households by eliminating the subsidized lower block. As a result, the current tariff for 2012–2014 of 7.7 lek/kWh for consumption of up to 300 kWh and 13.5 lek/kWh for consumption above that threshold was replaced with a single tariff of 9.5 lek/kWh;

Increase in tariffs for commercial users ranging from 10 to 39 percent and adjustment in the purchase price for electricity from independent power producers to reflect current import prices, based on a benchmark price from the Budapest power exchange. GoA in cooperation with the World Bank, will also undertake a review of current tariff methodology, with a view to moving toward more frequent and automatic adjustments based on market pricing.

In October 2014, there was launched also a very important campaign to enforce criminal penalties for electricity theft and disconnect service for non-payment of bills. The criminal code has been revised to make power theft and damages to the electricity system infrastructure punishable by imprisonment rather than just an administrative offence. As a result, there were able to reduce electricity distribution losses in October 2014 to 35%, compared with 45 percent in October 2013.

For 2014 as a whole, the distribution losses amount to have averaged 38 percent. The OSSHE is committed to further reducing distribution losses by about 5 percentage points per year, to 15 percent by 2019. The level of distribution losses will be monitored as an indicative target under the GoA program with the IMF. Even the improving of collection rate bills that amounts to 83.4 percent in January-October 2014 to 93 percent in 2019. The efforts in this area are supported by a World Bank project that is financing a targeted investments in priority areas to accelerate cash collection and reduce losses, including metering, grid infrastructure, and upgrades to the commercial billing and collection system.

The government is also committed to ensuring that budgetary, no budgetary, and local government institutions make timely payment of electricity bills. These efforts will be supported by a restructuring of the state electricity companies with a view to improving efficiency. In this regard, the distribution company will have very shortly a performance management contract. It is currently working with qualified expertise and is expect a contract to be signed in mid-2015.

During the 2015-2017 period, will continue the implementation of the program for development of the National Energy strategy for the period 2015-2030. The main challenges during 2015-2017 period and beyond, are linked to the improvement of the structure of supply with primary energy sources, building of the new generation capacity of the country, reduction of network loss, further building of energy exchange capacities with the countries of the region etc.

In the context of liberalisation of the energy market and entry of private operators into the generation market, so far, there have been concluded 169 concession contracts for the construction of 450 hydro-power plants, with a total installed power of 2.9 GW, and an overall investment value amounting to approximately EUR 2.615 milliard. Actually 96 hydro-power plants are productive, with a total installed power 180 MW, which generate 0.9 TWh/year.

The priorities of the 2015-2017 period as part of the long-term priorities of the government for the development of the energy sector are connected to the implementation of the construction of big, medium and small hydro-power plants: investment is expected to have a considerable impact on both the balance of production and exchange of energy and budget revenues.

Main investment are linked to the construction of HPP in Devoll river (280 MW), Osum river (152 MW), Vjosa river (350 MW), Drin / Skavice river (200 MW). The measures taken for successful implementation of the above-mentioned projects are linked with the creation of fiscal and procedural facilities, including schemes to facilitate the crediting of small HPPs.

The main Albanian Projects for the increase of interconnection capacities are the construction of the Albania-Kosovo interconnection line, which is expected to be concluded within 2016 year. During the period 2015-2017, we will work to prepare the technical specification for the construction of the interconnection line with FYROM, Albania-Macedonia, and identifying the financing source. Along with the building of interconnection capacities, work is focused even on the strengthening of the national transmission system, through investments in the strengthening of existing lines and building of new lines, thus increasing the transmission capacity and the supply stability in the country.

The main Albanian project in the construction of transmission lines are project of the south ring, the line 220 kV Tirana2-Rrashbull, the line 220 kV Elbasan - Fier, project of Tirana Ring. With the passing of the Distribution System Operator Albanian in state-owned, is developing a master plan for this sector. This project will be financing with a loan of USD 150 million from the World Bank, of which USD 93 million will be invested to strengthen the distribution network and several substations, as well as supplement with electricity meters of customers, where OSHEE Jsc will co-finance about USD 45.3 million for this project, as part of the obligations arising from the loan agreement.

The here communication came within the framework of preparation of the analytic report, about Energy Market and Investments Opportunities in Albania, to be shortly release in the upcoming period by ACERC. In cases of interest to the directly cooperation as author with analyses or for any kind of involvement or support as well as a partner, contact us at the info@albaniaenergy.org. For more keep update with the EU & WBs / Albania Energy Investment Updates or visit the Official Page of ACERC.



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Albania Opportunity for Investors and Land Developers: Spitalla, Koplik & Vlora, 11 July 2015

AEI Updates August 2015Posted by Adv. Lorenc Gordani, PhD Tue, August 11, 2015 09:21:01

Albania is seeking private sector developers to obtain, develop and operate three fully serviced areas, located in Koplik, Spitalla and Vlora, as newly created Technical and Economic Development Areas (TEDAs). The GoA invites all the interested developers to engage with the Government in non-binding dialogue ahead of a potential tender process.

The initiative seeks in specific to create world-class technical and economic development areas (TEDAs) on land in Koplik (Shkoder district, approx. 61 ha), Spitalla (Durres district, approx. 202.7 ha) and Vlora (Vlore district, approx. 230 ha). As currently, envisioned, future developers will be offered exclusive development and operator rights on these properties, through a long-term lease.

All three areas are in close proximity to a skilled labour force, educational institutions, and city centres with sizeable populations. Developers and investors will benefit from Albania’s competitive, educated and multi-lingual labour force, as well as recent reforms that have improved the country’s business climate and competitiveness. These include steps to strengthen the conditions for investment and improve business and transportation linkages, especially in Europe. These initiatives make Albania an exciting venue to work in the region.

The initiative is designed to enable investors to explore these three opportunities, leading to a potential formal tender process. TEDA investors, developers or operators are hereby invited to submit their formal request in way to starting a non-binding dialogue that intended to ensure a showcase to the TEDAs. Respondents are asked to provide information indicating that they are qualified to perform the services and to submit their qualifications indicating the name and location of the entities and contact person with contact details.

As well as the portfolio of the relevant activity including: List of relevant projects; Previous international experience in land development, financing, construction, and attraction of new leasehold businesses particularly related to the development and management of similar projects. In last any questions, stipulations or conditions the entity may wish to discuss with the GoA with regard to this opportunity.

The GoA will provide to the developer: Clean usage and long term lease rights to approximately 202.7 ha in Spitalla, 61 ha in Koplik or 230 in Vlora. Size of the leasehold is subject to negotiations; The TEDA Authority to provide expedited government services. An incentives package including measures to eliminate developer liability for existing land pollution, if any; Fiscal and economic incentives for developer and users; Customs incentives. In more, adequate infrastructure (water, power, communication, sewer and drainage facilities) to the borders of the TEDAs; Parallel promotion of the TEDA through AIDA and the different Ministries.

The GoA expect from the developer: Provide perimeter fence and entrance gate and administrative office space for TEDA management, customs operations and government support area; Plan and execute the development of necessary basic infrastructure within the TEDA to provide serviced industrial and commercial land to users; Provide or arrange for the provision of management, promotion and maintenance services to attract and sustain users; Construct or arrange to construct manufacturing, commercial, office, parking, warehouses and other facilities required by investors to their operators, or that may be desirable for marketing the area to end users; Comply with international environmental standards including waste management and demonstrate that the surrounding community is not adversely affected by the TEDA operations; Market the TEDA to end users that comply with international and EU standards regarding monetary business operating standards.



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Private Electricity Production Booms in Albania, 24 JUL 15

AEI Updates August 2015Posted by Adv. Lorenc Gordani, PhD Sat, August 08, 2015 21:54:52

The annual report from the regulator shows that private electricity production reached a peak over the past year, with private companies now producing a fifth of the country's electricity.

Gjergj Erebara, BIRN, Tirana

New small hydropower plants and the privatization of several medium-sized hydropower plants have increased private sector electricity production in Albania to almost a fifth of total production, a report by the Energy Regulatory Agency for 2014 shows.

It says the private electricity production market in Albania is now worth 8.1 billion leks (about 58 million euros).

During 2014 alone, 13 new private hydropower plants with a total installed capacity of 37 MW were connected to the grid, adding to 38 megawatt/hours to national production.

Private production of electricity in Albania started in 2000 when dozens of small hydropower plants, mainly built during the Communist era, were privatized.

The market grew fast after 2008, when the government signed hundreds of concession agreements to build new HPPs under the promise of long-term purchasing agreements.

“About 98 private HPPs are currently producing electricity in Albania with a total installed capacity of 294 MW,” the regulatory authority report said.

Ashta hydropower plant, an Austrian downstream plant built over the Drini River in northern Albania, is currently the biggest producer. This 50 MW plant produced about 200 GWh during 2014.

Dozens of other private hydropower plants are under construction and are expected to join the grid over the next few years.

Devoll Hydropower project is the biggest under construction. It should be completed by 2019.

Albania has still plenty of other rivers that could be used for electricity production, but this lucrative business has also caused concerns about potential damage to the environment.



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