EU & WBs / Albania Energy Market Updates

EU & WBs / Albania Energy Market Updates

Presentation of Albanian Centre for Energy Regulation and Conservation - ACERC

ACERC is a think tank centre with focus in Albania energy market and its integration on 8th Regional Area & EU IEM. The ACERC mission aim to provide a qualified contribution to the promotion of the liberalization and the effective integration as well as the efficient use of energy resources.

ACERC main activities profiles briefly consists in the release reports, articles and periodicals. In cooperation also with collaborates the offering of the activities that support capacity building of market actors, such as national and regional seminars, trainings and conferences. Initiatives completed by advocating in the energy sector promoting a forum called in Albanian School of Regulation.

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Albania: Results of a year of legitimacy in energy, Published 20 October 2015

AEM Updates 2015Posted by Adv. Lorenc Gordani, PhD Fri, October 23, 2015 14:41:15

Prime Minister Edi Rama’s talk about the results achieved in a year since the action against theft in the energy sector started:

I want to start my speech today with the same sentence I concluded it a year ago here in this room. It is a famous quote by Richard B. Fuller, who says: “There is no energy crisis. There is only a crisis of ignorance.” Here we are today, just a year later, having achieved a result that speaks for itself. Until a year ago a few people believed or even imagined such an achievement. Today, a year later, this achievement is evidence that the terrible crisis in which we found the energy sector was the crisis of ignorance. The crisis of a deep political and institutional ignorance, and due to the fact that political and social institutions were kept hostage by ignorance. A total darkness ruled by corruption and the fatal idea that energy comes from God and it belongs to everyone. It belongs primarily to those who have the courage to steal it and not to pay for it.

Today, we are at a stage which is absolutely different, not only in the energy sector, but in the very life of the country because of this radical reform which has given its first results. The first results are the healthy roots upon which the sector will be developed and will become, in a reasonable time, a major source of profit for Albania and the Albanians.

Let's go a little back in time to understand how much we have done in a year, what transformative change we have provided in a year, although the minister of energy who had a key role in this historic operation of reform and transformation is being today attacked by those who have the main responsibility of what we found last year.

A company fallen to ruin with over 1 billion dollars in debt created in just six years, from 2007 to 2013. 1 billion dollars in debt. Many of you here are part of this company and have enough memory to remember that in 2007 it started from scratch with clean financial ledgers. And only from January to August 2013, a period which a fatal collapse of the state within the sector occurred, it accumulated 270 million dollars in debt. It was a time when the government decided to attack the company with the State Police, expel those who wanted to privatize it and have the company run by a political militant in view of the elections of June 2013, thus paving the way of abuses and thefts in the hope that they would get the votes to keep going a government that has ruined Albania in many aspects.

When we took the lead of government, we faced a mountain of debts and a gap to overcome. It was a gap between the Albanian state and those who wanted to privatize the company, who would threaten the state with an international arbitration which, as the envoy of the Energy Community said today in Vienna, threatened to turn Albania into the image of shame in the European energy sector. A shame, because after a totally abusive privatization that failed even before starting, as we have said since then, the government entered a huge trade. The privatization was done for this reason, to make a huge trade. When this huge trade was ruined, it make a big mistake made, committed a big error, the great sin of the police offensive, completely exposing the Albanian state face to those who wanted to privatize the Albanian state which was deemed to become a losing party in any court.

Just think of the fact that after using the police to kick out those who wanted privatize the company, that government did not even bother to issue any document to return the property to the state, but in the property that according to the documents resulted to be of those who wanted privatize it, they put one of their administrators. Just this would have been enough to make them loose the case and pay a dizzying bill that would have made the company and the energy sector collapse definitely, and shame Albania as a country in the heart of Europe where such strange things can happen – de facto police expropriations, with no documents. Meanwhile, due to 720 million dollars in debt hidden, undeclared, not included in the debt of the state, as open accounts between the government and third parties for roads, for the supply with medicines and school materials, we were forced first of all to restore the balance of the country's finances through a new program with the International Monetary Fund.

The first thing that the International Monetary Fund has put on the table as a condition to open a new program with Albania, has been resolving the issue with those wanting to privatize the company, and the suggestion that this issue was not only resolved quickly, but resolved by agreement.

The same with the World Bank. Just as the International Monetary Fund, it would refuse to enter into a new agreement with the government, before the previous government didn’t meet any requirement to get a new financial support. The first condition was the reform in the energy sector. The second condition was the pension reform, and so on with a number of other reforms. But we had the same conversation with the World Bank; the solution as soon as possible of the problem with those wanting to privatize the company, as Albania risked at that moment to fall into an abyss from which it would have extremely difficult to recover.

That agreement, which is being today attacked for no objective reason but for reasons that we know very well, and I am sure that in a not very distant time it will be proved that it was delayed because of the legitimate fear of those who have to give account about what they have done to the energy sector, that agreement was not negotiated in the Prime Minister’s Office as would happen with deals that will be part of the criminal investigation that we will require with the support of international expertise, but it was negotiated in the offices of the Energy Community in Vienna, with the participation of 15 people of the Albanian party, and every meeting was registered. So, it was negotiated in accordance to any European and international standard.

That agreement laid the basis for us to be here today. Imagine if Albania were still to this day fighting hopeless in courts, paying a fortune to legal offices for a lost case, and the company had no possibility to operate. The scenario would be catastrophic. But where are we today? On the basis of that agreement, we are today at a time when we restored after a long time the legality relations between customers and the company.

We restored the legal economic order in a relationship that has been destroyed over many years, which was transformed in a big abusive, corruptive and electoral trade during the years in which ruled those who today attack unashamedly the minister of energy, the manager of the company and all the actors of this historic transformation, for they know very well where the path of transparency may take them, after that infamous privatization, with heavy consequences for the Albanian economy and every Albanian family. Because today, Albanian families should have been benefiting from the profits of this sector, while they are still paying their debts to the sector. Just as the Albanian state is still in the stage of facing a debt ceiling conditioned primarily from debts that are within this sector.

However, today we are in a completely new situation. We are in a situation where we can say that we have opened the path of keeping a commitment made. Of course there is still a lot to do to lower the value added tax on energy for households, in order to return consumers the great historical contribution they have given and continue to give being included in the system. Even those who pay electricity regularly for years, or those who have started to pay energy regularly. In just one year, 358.361 of them have signed agreements to enter the system.

Let me remind those who accuse us of taking drastic measures that we have paid off 40 million Euros for those who have signed these agreements. There are 200.654 household consumers who have benefited 80% reduction of the arrears for having signed the agreement. 40 million Euros are not little money either for the company or for the Albanian state. It is deserved money by means of a fair and transparent relation between consumers and the company, and not as it used to happen with the previous amnesties that only deepened the hole of debts and theft.

Only 15.523 new connections were made in 2013. While, so far, they are more than twice. 33.400 new connections have been made for 2015. These new connections are only for those who could not pay, but also for those who were not at all connected to the distribution network, which were left entirely at the mercy of fate.

Look at the figures. They tell that only in the first 9 months of this year, we have collected 503 million dollars, from 297 they did in 2013. This means that the company is no longer a corpse being kept alive artificially by state injections, but is an organism that has been renewed. This financial recovery is actually a renewal in favour of customers.

This money returned to them who by paying energy invest for a better service, for a more powerful energetic sector, so that tomorrow they will have revenues directly from the benefits of this major international property. 70% more payments in a 9-month period, compared with a year ago. And this compared to their best year. This year showed that energy prices were not increased, but decreased. It is shown by bills that people have in their hands. The outrageous propaganda, the shameful mud on a crucial reform made on behalf of our children, melted to nothing after poisoning the blood of an entire people who had to pay catastrophic prices for months.

That lie was becoming bigger every day. The energy distribution company had 52% loss from theft, abuse and lack of investment in years. 31% loss in the first 9 months of 2015, and 25% in September. It is a figure that none of our international partners would accept when we predicted it. Just as none of our international partners, and the envoy of the Energy Community, believed that we would have been here in a year.

Due to reduction of losses 53 million Euros will be spent to renew the energy network, instead of being spent to import energy. People rightly complain about interruptions, about poor power quality, voltage fluctuations, etc., but people should know that we have inherited a system that for 80% belongs to the time of electrification. We inherited a system where this year alone we are investing, thanks to their contributions, more than what has been invested in 6 years of the previous government. This is just the beginning. If in 2012 the company had 379 million dollars loss - a catastrophe - this year the company has 104 million dollars of profit. This is due to the investment of customers, those who pay regularly to repay debt and to invest in improving the quality of the network and the power supply. But we must not forget the 150 million dollars of the WB to improve the network. That money was subjected to reform.

Without this reform, not a penny would have been invested in order to keep clinically alive the crops called CEZ or OSHEE, as you want. Another 20 million Euros will be funded by the German Development Bank.

Thanks to this new aggressive but fair policy, we have paid off 100% the debts to private hydropower plants, the famous mini energetic superpower of my predecessor. You can’t be both mini and super, but this is another story. The mini superpower that produced maxi debts.

In addition, after a courageous and successful negotiation of the minister of Energy who drew a line to the private companies, no more debts will be accumulated because we have ensured that people will pay current bills.

90% of the works for the South Ring have been completed this year. After this invested is completed, the south will have energy for the first time through a networks that is not the electrification network of the 70s.

In addition, this year we are succeeding in moving to the second stage of works for the interconnection line with Kosovo. A strategic project that was blocked for ordinary corruptive reasons by those who would steal and wrap in the national flag the money needed to complete projects such as the National Road and the interconnection line.

However, this is only the beginning. What we see today with much more optimism and with a lot more conviction has still all to be accomplished in two ways. One way is the strategic direction to transform the country into a regional energy hub and a regional player, thanks to the cooperation within the Energy Community, where just concluded the rotating presidency, with a success that was guaranteed by Berlin Process.

The other direction is the practical one to provide customers who pay a decent service. People have the right to complain, for they have been in this situation for over 20 years and they can’t stand it anymore to pay and not have back the money they pay in the form of decent services. But people need to understand that to build a well-deserved service takes a whole chain of works to be done in advance.

Today, the company is investing in customer service. An ordinary accuse has been addressed recently to the company about its new building. The largest Albanian company – just imagine this. The headquarters of this power distribution company are located today in two different buildings and serves customers in the underground parking of one of the buildings. The rent for these offices or so called service points is 350 thousand Euros per year, which means that millions of Euros have been spent in rent by those who accuse today the company as if it were a clandestine betting company. Meanwhile, people wait in the streets to get services because the underground parking is full of people who are paying the bills. What kind of services can be provided in such conditions, and how can we allow the company to be located in parking lots and various buildings?

We don’t expect them to congratulate us, but how can they accuse us? They still think that Albanians are a flock of sheep, or worse, a bunch of flies who don’t deserve to gather around honey, but around the contrary of it. And they offer them precisely the contrary. What a shame.

The company's new building will be a reflection of our respect for the citizen and the of the company’s ambition. I am totally convinced that this company will be able in a short period to not only be a model of success in Albania, but also to enter the international market, similarly to successful companies of other countries, in addition to becoming a player in the market. Nothing can hinder the company anymore, now that it has been saved from the clutches of ignorance. Nothing can hinder the Albanians and Albania today, saved from the clutches of ignorance, to go on with the regional project which is progressing rapidly, thanks to the new situation of peace in the region and thanks to the interaction with other actors. We have complementary energy sources, and if we combine them into a strategic partnership with each other in the region, all of us will benefit.

These are results that speak for themselves, and thank God Albanians are neither flies nor sheep. They are very aware that this government must clean and build at the same time. These are the result of doing these two things at the same time; a great cleaning even within the company, where the many thieves who used to be in it are today are where they deserve to be, and where the healthy par is today a success story. And I am grateful to all of you, here in this room, for this success story which belongs of the people of this country, when they are guided by a clear vision, a courageous leadership and efficient administration.

Very soon, it will take us another year to be back here and talk about what this government is doing to fight informality. It is again the same old story, that we are against the poor, that we are destroying them, etc. But they don’t ask why the poor are poor in this country, and how cannot they be poor if the cause of poverty is not fought with determination. How can someone who has cancer recover if he doctor does not give him the right therapy, or refuses to operate him? It is very painful, but it is the only way to recover. Let me add here that in the month of September only the large businesses’ turnover has increased by 50%. And this is only the beginning.

To all those who say that a lot of years have passed, I want to remind that it is only two years of efforts to reach more quickly the future, struggling on a daily basis to separate from the past. Today is the day to express the deepest respect for the Minister of Energy for the work he has done. His work will remain marked in the history of Albanian efforts after the collapse of communism, to build the state and create functional sectors, for the benefit not of the government, not of the power, but of the whole society.

Many thanks!

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