This is a sample Country Profile written by Platts UDI Editorial Director, Christopher Bergesen. Over 200 country profiles are available as part of the UDI International Electric Power Sourcebook. Contact Platts sales staff  for more information (telephone 212-904-3070).

ALBANIA
Area (sq km): 28,750
Population (X1000, 2005): 3,154
Capital: Tirane
Other cities: Durres, Elbasan
Languages: Albanian
Currency: Lek
Exchange rate (per $US, 2005): 103.6
GNP ($million, 2005): 8,379
Frequency (Hz): 50
Voltage: 220
Electricity consumption (kWh per capita, 2005): 1,850

The Republic of Albania is a small country centrally positioned on the western edge of the Balkan Peninsula. It has a 360km coastline on the Adriatic Sea and at one point is just 75km from Italy across the Strait of Otranto. Albania has land borders with Greece in the south, Macedonia in the east, Kosovo in the northeast, and Montenegro to the northwest. For hundreds of years, Albania was part of the Ottoman Empire and did not gain its independence until November 1912. It is Europe's only predominantly Muslim country. Although not territorially affected by years of turmoil in the former Yugoslav republics, the country was nonetheless deeply involved in Serbia's lengthy dispute with Kosovo, whose population is 90% Albanian.

Albania has notably rugged terrain, particularly in the north where the Dinaric Alps extend from Macedonia. Almost three-quarters of the country is at elevations over 300m and Maja e Korabit in the central part of the country is 2,753m high. In the west, low hills descend to the coastal plain, the most densely populated area with most of the country's arable land. The longest river is the Drin, which rises at two locations, one in Macedonia and one in Serbia. Other major rivers include the Devol and the Osum. Albania also borders on three large lakes: Lake Scutari in the north and Lake Ohrid and Lake Prespa along the Macedonian border. Albania is subject to frequent earthquakes.

During World War II, Albania's military forces distinguished themselves fighting the Axis Powers. For 40yrs thereafter, Albania's leader was the reclusive Enver Hoxa who developed and ran a strict communist state. Albania, then as now one of Europe's smallest and poorest countries, first traded with the Soviet Union and Central European countries, but, in 1961, Hoxa severed relations with the Soviets on ideological grounds and switched the country's allegiance to China. In 1978, another ideological dispute ended this quixotic relationship leaving the country with virtually no trading partners. Hoxa finally died in April 1985 and was replaced by Ramiz Alia who initiated a few tentative reforms. The reform process accelerated as communist influence in Europe waned and, in December 1990, the government endorsed independent political parties and ended the communist's political monopoly.

Albania began its post-communist transition with many of the awkward features of centrally-planned economies including over-investment in heavy industry, collective agricultural policies, few consumer goods, obsolete infrastructure, and massive underemployment. In the early 1990s, Albania's leaders began privatization activities and loosened restrictions on trade and foreign investment and these initiatives were rewarded with positive growth. The Albanian economy remained in fragile condition and economic conditions again deteriorated after 1996 accompanied by periods of social unrest, political instability, and, latterly, by thousands of refugees fleeting the fighting in Kosovo.

As the regional political situation stabilized, Albania's economic development resumed and GDP growth from 2003-2006 was about 6%/yr. The economy is still reorganizing, as shown by the fact that construction accounted for a third of GDP in 2006. Going forward, Albania's prospects are decent as the country is centrally located in a potentially fast-growing region and has the lowest labor costs in Europe.

As part of the continuing transition to a market economy, the government is planning to continue its privatization initiatives and hopes to divest state-owned companies in the industrial and service sectors including oil, electric power, telecommunications, transport infrastructure, and water resources. A "Strategic Sectors Privatization Strategy" was developed to coordinate the various privatization programs and establish the main objectives and techniques needed to move forward.

Notwithstanding the government's generally successful efforts to maintain macroeconomic stability, Albania has some significant financial challenges. One is a large current account deficit attributable to a steady increase in imports. In 2007, this was exacerbated by widespread electricity shortages attributed to drought conditions and a concomitant quadrupling of power purchases. The adverse financial impact of these expenditures is somewhat offset by a large and continuing flow of remittances from Albanians working abroad. These amount to almost 15% of GDP.

Albania is relatively rich in natural resources including chromium and other metals, reserves of 200mn barrels of oil and 100bn cubic feet of natural gas in the southwest, and exploitable lignite deposits near Tirane. Albania also has substantial additional hydroelectric potential. The Ministry of Economy, Trade and Energy (METE) is responsible for energy policy and takes the lead on most matters related to operations of state-owned energy companies. Another important government player is the natural resources agency Agjensia Kombetare e Burimeve Natyrore (AKBN), which was formed in August 2006.

The national oil company is Albpetrol sh a, which has been in operation for over 60yrs and produces small quantities of heavy crude from about a dozen fields. The country's Patos-Marinza oil field was discovered in 1928 and the country's oil production peaked in 1975 and then began a slow decline which accelerated due to lack of funding for field development and technical expertise. Until 1989, Albania was a net exporter of petroleum products, but within 10yrs was importing three-quarters of its requirement. Albania has four oil refineries, but only the installation at Ballsh is in regular operation while the Fier refinery is operating at about half capacity. The operating refineries were owned by Albpetrol subsidiary AMRO: this company was sold to a U.S.-Swiss group for about $200mn in June 2008.

Smaller international oil companies have a variety of oil exploration programs underway in Albania. These are focused on resources previously evaluated by Shell and others. In addition, the port cities of Porto Romano and Vlore are being discussed as a possible terminus of a cross-Balkans oil pipeline originating at Bulgaria's Black Sea port of Burgas.

Albania is also hoping to increase its domestic utilization of natural gas while at the same time serving as a transit point for supplies from the Caspian region to Italy and the western European grid. Since domestic supplies are inadequate, imported gas will be required for local use, delivered either by pipeline or as liquified natural gas (LNG). In March 2006, a multinational consortium called ASG Power signed a Memorandum of Understanding (MOU) with the Albanian government for a $1.9bn LNG terminal and power plant at Seman (Fier). The consortium is headed up by Swiss utility Azienda Elettrica Ticinese (AET) and includes other European and American investors. To date, this project has not advanced.

The country's largest industrial complex is the Elbasan Steel Works, re-built by Chinese contractors in the mid-1970s. Elbasan is also the location of the country's largest cement plant and a chromium smelting plant.

The state-owned Albanian electric utility is Korporata Elektroenerjitike Shqipetare (KESH). In the late 1990s, KESH was transformed into a joint stock company and was organizationally consolidated. Over the last few years, KESH has again been reorganizing in line with recommendations originally presented in the 1996 EU Electricity Directive and reinforced by Albanian commitments under the 1999 Thessaloniki Agreement covering development of the electricity market in southeastern Europe. KESH remains the country's dominant power company with more or less the same business structure on the production side. The transmission system operator (TSO) function has been turned over to a nominally separate business unit called Operatori Sistemit Transmetimit (KESH-Ost) and, as described below, the KESH distribution group has gone through a number of reorganizations.

Until a combination of demand growth and bad water years led to significant electricity shortfalls, Albania had long benefitted from reliable supplies of low-cost hydroelectricity from three major plants taking advantage of steep gradients and deep gorges on the Drin. During the democratic transition, the government was deeply engaged with many pressing social and economic issues, and by and large, the power sector garnered little attention. In fact, 20yrs passed after the construction of the country's newest power plant at Komani before construction started in earnest on new generating capacity.

By the early 1990s, KESH was getting over 95% of its electricity from its hydroelectric plants with enough left over for a small export trade, but the situation changed rapidly thereafter. This is mainly attributed to recurrent droughts accompanied by widespread electricity theft and power diversion. One bad spell was in the late 1980s, and there was dry period in the mid-1990s when water levels in the Drin River were said to be the lowest in 100yrs. The grid essentially collapsed for three days in November 1994.

Supply improved for a time, but in 2000 and 2001, water inflows to the Drin were the lowest ever recorded, leading to widespread electricity shortages. This came at the end of a period of particularly rapid demand growth, up 10.4%/yr from 1992 to 2001, a period also reflecting a fundamental shift in usage patterns after the Albanian economy opened up. During this period, electricity consumption by agricultural, mining, and industrial customers dropped, while domestic and small commercial customers increased their usage substantially.

After several years of improvement, conditions deteriorated again starting in 2005 and, by 2007, domestic generation by KESH was 2,845 GWh, just half of the annual total during the previous two years. As a result, imports spiked to 2,793 GWh, quadruple the 2006 value. Total demand in the year was 5,693 GWh, down 8.7% from 2006. Matters were not helped by the fact that the availability of economical imports from Bulgaria, heretofore an important supplier, was adversely affected by the shutdown of two low-cost nuclear units at Kozlodui at the end of 2006. Subsequently, supplies bid into KESH were halved and import prices nearly doubled to some €80/MWh, leaving KESH scrambling to serve load and under even greater financial pressure.

Over 90% of Albania's hydroelectric generating capacity is installed in three power stations on the Drin River. Furthest upstream is Fierza, finished in 1980 with Chinese equipment (4 X 125 MW). Next is Komani, completed in 1986 with four 150-MW turbine/generator sets from the French companies Neypric and Alsthom-Jeumont. Finally is Vau i Dejes (5 X 52 MW) online in 1972/73. The latter, initially named Mao Tse-tung, was one of the first large hydraulic plants built with Chinese turbines outside Asia. (Some of Albania's other hydroelectric plants were also originally named after communist icons including Karl Marx, Lenin, and Friedreich Engels. Enver Hoxa also named a plant after himself.) Komani and Fierza are the second and third largest hydroelectric plants in the Balkans, trailing only the large Serbian plant at the Iron Gates on the Danube River.

Albania's largest thermal plant is an 185-MW oil-fired facility at Fier. The six units at Fier were installed from 1966-1980 and have a mix of Chinese and Czech equipment. The plant was sold in early 2008 to Greek investors. Albania also has a 24-MW oil-fired plant at Ballsh and about 25 MW of lignite-fired capacity, all in very small units which are mostly inoperative.

About 15yrs ago, KESH began extensive rehabilitation of its main hydroelectric plants and other infrastructure using funds from numerous multinational financial organizations. In November 1994, the European Bank for Reconstruction and Development (EBRD) made a DM 23.76mn loan to initiate the Drin River Cascade Rehabilitation Project. The total project cost was ECU 46.6mn with the balance of the funding made available from the Japanese Overseas Economic Cooperation Fund (OECF), the Japan Bank for International Cooperation (JBIC), the Swiss Secretariat d'Etat a l'Economie (SECO), and a grant from the Austrian government.

The 1994 project covered four hydroelectric plants, Fierza and Vau i Dejes on the Drin, and Shkopeti (24 MW) and Ulza (25 MW) on the Mat River. Specific goals included replacement or repair of electro-mechanical equipment, installation of modern automation and control systems, safety improvements,ýand dam inspections and upgrades. Equipment and service participants included Andritz from Austria and VA TECH's Swiss branch as contractors for mechanical equipment, Alstom Italy and Koncar from Croatia for electrical works, Alstom France for the controls, and local contractor TRISS for civil works. KESH was the project manager with assistance from Colenco Power Engineering Ltd from Switzerland. After years of delay, funds were finally released in April 2001.

The most important assignment was at Fierza, where work got underway in April 2003. VA TECH delivered two new 32,000t runners and four new governor systems, disassembled and reassembled all the generator parts, and also refurbished other mechanical components and auxiliaries, including the intake gate. The first unit was returned to service at the end of November 2004 and the modernization project was completed in 2006.

Germany's KfW separately funded the BiSaBu Project (Bistrica, Saranda, Butrinti) to implement a regional management unit (RMU) and rehabilitate associated generation, transmission and distribution facilities in southern Albania. In November 2000, KESH appointed German engineering consultancy Fichtner to assist it with the DM 40mn project, which included rehabilitation of the Bistrica-I (22.5 MW) and Bistrica-II (5 MW) hydro plants, reconstruction of local electricity distribution systems, construction of an 18km, 110kV transmission line from Bistrica to Saranda, and reconstruction of the Bistrica and Gjirokaster substations. This project was completed from 2004-2006. Fichtner also was involved with the rehabilitation of the Korca Substation (S/S) in southeast Albania under a 1999 contract financed by KfW.

In March 2003, the Italian government announced a €42.5mn credit package made available to KESH through METE for restructuring and T&D improvements. Specifically, the monies will be used to plan a new dispatch center, build or upgrade KESH offices, build four new substations, complete system repairs in the Shkodra region in the northwestern part of the country, and buy new meters.

Billed electricity sales in Albania in 2007 were 3,580 GWh, up 3.6% from 2006.

Albania's transmission system consists of 120km of 400kV line, 1,110km of 220kV line, 50km of 150kV line, 1,198km of 110kV line, and 1,242km of 35kV line.

In 1972, KESH built a pair of 220kV transmission lines to Macedonia. The first 400kV export line carried power from Elbasan over the mountains to Korce and from there a 220kV line continues to the Greek border. KESH also has a 150kV interconnection with Greece (Bistrica-Igumenice), a 220kV interconnection to Montenegro (Vau i Dejes-Podgorica), and a 220kV interconnection to Kosovo (Fierze-Prizren).

Albania's distribution system has 140km of 20kV line, 5,620km of 10kV line, 2,860km of 6kV line, and 13,600km of 0.4kV line.

Total network losses in 2007 were 36.4%, virtually all at the distribution level.

Albania's subtransmission and distribution systems have been weakened by years of inadequate maintenance and lack of spare parts and their modernization and rehabilitation have been another economic-development priority. Three major problems have been identified: 1) the 110kV subtransmission system is seriously overloaded, causing losses, voltage drops, outages, and transformer failures; 2) lack of reactive supply capability at major industrial load sites and other locations causes abnormal power factors; and 3) outdated system control, protection, and communication equipment threatens system safety and reliability.

In 1996, the European Investment Bank (EIB) made an ECU 12mn loan to KESH to help build substations at Babice, Durres, and Vlore along with a 100km, 220kV line between Vlore and Fier. In December 1995, the EBRD made an additional ECU 10mn loan to KESH as part of an ECU 90.7mn transmission system project also funded by the World Bank, the OECF, and the Italian and Swiss governments. At the time, this was one of the largest investment and reform initiatives in Albania.

Reduction of technical and other system losses is another important program being funded in part by the IDA, which provided a credit of $7mn, the European Investment Bank (EIB), and the Italian government. One major component is the installation of more than 80,000 new electric meters. Other activities include an overhaul of billing procedures, the implementation of new payment monitoring and collection schemes, and a new national dispatch center with modern control equipment.

In August 2004, KESH spent €4mn with Areva T&D and Hyundai for new power transformers and new control and communications equipment at various locations.

In October 2006, the EBRD made a €16mn loan to KESH which, with a €21.6mn IDA loan, will be used with KESH's own funds for a transmission project. The work scope included new control and protection equipment at six substations.

In May 2007, Croatian transmission equipment manufacturer Dalekovod dd won a €42mn tender called by KESH-OST and Montenegro's Elektroprivreda Crne Gore to build a 400kV transmission line from Tirana to Montenegro's capital Podgorica. This project was first agreed in July 2004 and is being funded by KfW. It is the most important transmission project in Albania at present and will be a key link in the ongoing electricity integration of the Balkans. The two-year project includes 128km of line on Albanian territory and 29km in Montenegro. Components are a double-circuit line from the Tirane-2 S/S to the Vau i Dejes switchyard, and a single-circuit line from there across the border to Podgorica-2 S/S. Extensions are also being built for the Elbasan-2 and Podgorica-2 substations. Preparatory works began in September 2008 with full-scale construction starting the following month. The line is to be up and running by year-end 2009.

An undersea cable connection from Albania to Italy has been a discussion topic for years and is now the subject of three proposals which may be competing or complementary. None have progressed to the implementation stage.

In November 2007, the government reportedly approved construction of a €700mn subsea connection to Italy as part of the ASG Power LNG terminal and power plant development at Seman. Specific design details are not readily available.

In January 2008, Italy's Moncada Energy Group srl said it had won approval for a 500-MW, 400kV DC cable to be built on a merchant basis. The 154km route includes 14km onshore in the Brindisi area, a 130km subsea run across the Strait of Otranto (reaching a maximum depth of 825m), and 10km onshore in Albania. Conversion stations will be at the 380kV Brindisi Sud S/S in Italy and the 220kV Babica S/S in Albania.

In September 2008, Italian conglomerate Gruppo Marseglia said it would cooperate with Italian TSO Terna SpA on €600mn, 300km cable across the Adriatic from Puglia to Albania.

Albania's energy regulator is Entit Rregullator te Energjise Elektrike (ERE). The agency was founded in 1995 according to provisions of the "Law on Regulation of the Electricity Sector" implemented in September 1995. ERE was one of the first entities of its kind in the Balkans and enforces applicable portions of the "Law for the Energy Sector" and the "Law for Gas." ERE is in charge of electricity licensing, tariff approvals, consumer protection, and dispute resolution.

For 2008/09, KESH low-voltage tariffs are set at L7.50 to L12/kWh. The average tariff for residential consumers is estimated to be L8.23/kWh.

Medium-voltage rates are L7 to L10/kWh with additional charges of L1.13 to L1.40/kWA for reactive power.

High-voltage tariffs are L7/kWh plus L1.05/kWA for reactive power for KESH-connected customers and L5.2/kWh plus L0.98/kWA for reactive power for customers with their own HV connections.

For all three voltage categories, on-peak charges varying from L9 to L11/kWh apply during specified hours.

Despite numerous obstacles, the Albanian government has stayed committed to privatization of its largest public-sector enterprises. The effort got underway in 1996 with a World Bank program delineating several interrelated processes including developing and establishing a regulatory framework for the electric power sector, implementation of a new financial accounting system, training for ministry and utility staff, and other steps directed towards corporatizing KESH and preparing for its reconstitution as a joint-stock company.

In late 2000, the government implemented a two-year action plan to improve KESH's financial situation, reorganize the utility, and elucidate new tariff and investment policies. In 2001, KESH was reorganized into three divisions -- generation, T&D, and distribution -- under the leadership of a supervising council and a single general director. At the same time, a new statute was passed assigning wider powers to the general director, eliminating two deputy director general positions, and otherwise clarifying the government's removal from direct operational control while maintaining its policy-guidance responsibilities.

During 2001, KESH also eliminated some of the business units formed in earlier reorganization efforts. For example, 38 distribution affiliates were consolidated into nine. Major efforts were also completed to roll out new information systems for billing, personnel, investment management, and administrative control.

Although the first efforts to privatize three pilot distribution companies were not successful, early efforts to reform Albanian power sector started to yield positive results in 2002 and 2003, particularly in reducing non-technical losses and improvement of collection rates.

In April 2002, the government accordingly approved Council of Ministers Decree No 171 which was a "Power Sector Policy Statement" developed with assistance from U.S. Agency for International Development (USAID) and the World Bank. The policy statement committed the government to the usual goals, i.e., development of an electricity market which would provide adequate electricity at reasonable prices using economically and environmentally sound sources and operated in accordance with accepted legal, commercial, and market principles. Given the country's small size and precarious power supply situation, Albanian plans to develop a competitive electricity market are notably ambitious.

In May 2004, KESH awarded a €300,000 contract to Germany's Lahmeyer International for technical assistance in preparing its restructuring and privatization plan.

On 20 December 2006, the Council of Ministers approved the decision to establish a new joint stock company Operatori i Sistemit te Shperndarjes (OSSH), also known as Distribution System Operator sh a (DSO), as a key step towards adopting a wholesale/retail public supply model. In January 2007, the International Finance Corp (IFC) was appointed lead advisor to METE on the reorganization and privatization of OSSH. The IFC subsequently retained Canada's SNC Lavalin as technical consultant, Ernst & Young as accounting consultant, and French law firm Gide Loyrette Nouel as legal consultant for the project.

In May 2007, the KESH Supervisory Council approved creation of OSSH along with a new structure for the KESH distribution division with eight branches. The following month, OSSH was legally registered. The appropriate due diligence reviews were completed in September 2007 and a final strategic options report was prepared and delivered to the government in January 2008 that proposed to grant OSSH a license for distribution and retail power supply throughout Albania. At the same time, long-term debt that KESH incurred for distribution projects is to be assigned to OSSH with new mechanisms put in place to repay the debt and balance the various accounts. After resolution of these and other issues such as asset titling, an invitation for expressions of interest in OSSH's formation and operation was published in March 2008.

In October 2008, Czech power company CEZ was named the winner of the OSSH tender process. The company bid €102mn for a 76% stake in the Albania company and the process moved on to the next phase of final negotiation of terms and conditions. The only other bid, from Italy's Enel, was rejected for not complying with tender conditions.

The wholesale public supply license will remain with KESH, but under a separate management structure with eventual transition to a new legal entity. A new DSO division termed "Retail Public Supplier" (RPS) will be created to buy energy from KESH and resell it to tariff customers. DSO will also be responsible for operating, maintaining and expanding the distribution system as well as securing electricity to cover technical and non-technical losses in the distribution system.

While institutional changes at the distribution level have been repeatedly delayed, Albania has made more progress in selling off generation assets. In early 2002, the government announced that it was planning to privatize 83 local minihydro plants -- mostly in northern Albania - and that an Italian company, Essegei, in collaboration with a local industrial concern VeVe Group, had expressed interest in 30 of the facilities.

In 2004, six private companies, including Essegei, were awarded concessions for 32 minihydro plants and 10 more were purchased outright by seven other companies. In November 2005, the Council of Ministers approved a draft law to expedite the privatization process, which is supervised by Ministria e Financave, the finance ministry, and Agjencia Kombetare e Privatizimit the national privatization agency, and coordinated with METE and KESH. Virtually all of Albania's 80 minihydro plants are now in private hands. Given the number and relative importance of these small hydro plants, ERE has completed a detailed study of the appropriate pricing of minihydro output on the Albanian grid.

In February 2008, a consortium of Greek construction company Atermon SA and Roder & Blackwell Consulting was declared the winner of a June 2007 repair-operate-transfer (ROT) concession for the Fier thermal plant. The consortium, which was the only bidder, intends to invest €100mn in rehabilitating the facility and has nine months to return 80 MW to service from the effective date of the contract.

After two decades with essentially no new power plants, Albania now has a variety of medium-sized hydro plants along with a modern combined-cycle plant in various stages of planning and construction. Most are being developed as independent power plants (IPPs). Albania is thought to have about 4,500 MW of hydroelectric potential, of which about a third has been utilized to date.

In February 2000, Italy's Enelpower and Becchetti Energy said they would develop the 100-MW Kalivac hydro project on the Vjose River on a build-own-operate (BOO) basis. Project development continued under the name Kalivac Green Energy sh pk and, in 2006, Swiss engineers Lombardi SA began preparation of tender documents and other materials for the €140mn project. The design includes a 45m, concrete-faced rockfill dam, a small reservoir, two 200m penstocks, and a dam toe powerhouse with two main Kaplan turbines and a smaller Francis turbine for reserve flows. Total design capacity is 92 MW.

In February 2005, an Italian consortium called Tassara-Geoteca Progetti-Kinglor (TGK) led by steel company Carlo Tassara SpA presented METE with a proposal to build a 300-350 MW hydroelectric plant at Skavica. The site is on the Drin River about 200km northeast of Tirane near the Macedonian border. The project, first evaluated in 1978, was reportedly approved at 500 MW in November 2007 with a cost of €600mn.

In April 2005, Enex, a renewable energy consortium led by the Icelandic national power company, Landsvirkjun, was awarded a 25yr, build-own-operate (BOO) concession for the 70-MW Bratile project. This plant is on the Devol River and is expected to operate in concert with a second upstream facility called Upper Devol. The preliminary design for Bratile envisions a 110m dam and a powerhouse with two generating units supplying 250 GWh/yr. In 2006, the project cost was estimated to be €110mn. In February 2007, Landsvirkjun enlisted Norway's Statkraft in the scheme.

In March 2006, ASG Power said it would build a 1,200-MW combined-cycle plant as part of its planned LNG terminal scheme in Fier. This project has not advanced as yet.

In January 2007, Italy's Ansaldo Energia and engineering, procurement, and construction contractor Maire Tecnimont were given the go-ahead for a 100-MW, single-shaft combined-cycle block at a greenfield site about 6km north of Vlore near an oil terminal. Ansaldo is supplying KESH with a dual-fuel V64.3A gas turbine which will burn distillate oil initially and is expected online in March 2009. Ansaldo also secured a long-term service agreement (LTSA) for the €92mn plant, which should supply about 800 GWh/yr. The project is being financed by the World Bank, the EBRD, and the European Investment Bank. The pre-qualification tender for the Vlore project was launched in July 2004.

In October 2007, METE advertised for expressions of interest for a hydroelectric plant in Ashta village, Bushat commune, Shkodra district. The Ashta site is below the Fierza Dam and will be the fourth and last cascade plant on the Drin River, not far from the Montenegro frontier. The scheme has been under development for over 10yrs. In 1996, KESH entered into an agreement with the Slovenian power engineering firm Litostroj for two 42-MW turbines for the $170mn project. In late 1998, a construction contract was signed with Hainan Science, Technology and Trade Co of China that included a line of credit for $150mn from the China Export and Import Bank (Eximbank). In February 1999, it was reported that Chinese specialists were at the site doing preliminary investigations, and in March 2001, it was reported that the contractor was in fact China International Water & Electric Corp. In January 2002, an Albania press account had it that construction would start "soon," but this did not occur. Instead, the project was re-tendered in January 2008.

In July 2008, a 50:50 joint venture of Austrian power groups EVN and Verbund won the tender beating out Suez units Electrabel and CNR. In September 2008, the Austrians signed a 35yr concession agreement for the Ashta plant. Among other provisions, KESH committed to buying the plant's output for 15yrs. The current plan is to build a 48-MW plant using VA TECH's straflowMatric technology for commissioning by 2012. The project is expected to cost about €160mn.

In December 2007, Enel said it would build a 1,300-MW power plant burning imported coal as part of an agreement with METE to assist in the development of Albania's energy sector. In September 2008, Enel announced that it would invest €140mn in the new power plant, which is to be sited at Porto Romano near Durres along with a new coal port. The project will be jointly financed with the Albanian government.

In January 2008, Austria's EVN won a tender to complete the 60-MW Banja hydroelectric plant and build two other storage hydro plants on the Devol River, Lozhan (130-140 MW), and Graboves (180-190 MW). The whole scheme would take 6-8yrs to build and cost about €950mn. The concession deal is expected to be completed by year-end 2008. Construction on two 30-MW units at Banja started in 1986, but was subsequently halted. In 1994, Verbund agreed to finish construction, which at the time was estimated to be 40% complete with a further investment of $120mn required for completion. By 1999, however, the project had again stalled.

In January 2008, KESH advertised for expressions of interest in the construction of a 100-200 MW power barge to be built at Porto Romano near Durres.

In April 2008, Public Power Corp, the Greek national power company, and Germany's RWE AG signed an MOU for a 500-800 MW coal-powered plant in Albania, with RWE holding 51% of the venture, PPC 39%, and Titan Cement Co AS (10%). The Albanian plan is in lieu of earlier discussions with RWE regarding the construction of a coal-fired IPP in Greece, a plan adamantly opposed by Greek trade unionists fighting further privatization of the Greek power sector. Titan Cement, Greece's largest cement company, has a new cement plant under construction in Fushe Kruje north of Tirane and this has been mooted as the site for the new power plant.

At one time, KESH planned a pair of 100-MW fluidized-bed units to extend its small lignite-fired plant at Elbasan. The status of this project is unknown.

The Albanian government is anxious to use renewable energy technologies for some of its new generating capacity, in part to diversify the country's fuel mix and in part to facilitate compliance with various EU directives.

In early 2003, METE staff started negotiations with GE Wind Energy in Germany regarding the supply and commissioning a privately-owned 5-6 MW pilot wind park, but this plan did not advance.

In September 2008, Gruppo Marseglia announced an ambitious green energy plan for Albania including a 140-MW bioliquids power plant and two wind farms (234 MW in total) in Lezhe District costing some €400mn. According to Marseglia, ERE has licensed the wind plants and KESH-Ost has agreed the required connections.

Moncada Energy also has a 500-MW wind project under development in Albania.

Albania's hydroelectric resource is substantial and further development would be a welcome addition to the overall capacity mix in the Balkans, perhaps displacing output from the region's lignite-fired power plants. On the other hand, the vagaries of local precipitation have caused considerable hardship for KESH customers in recent years. This all argues for tighter integration of the Balkan power companies to balance flows of thermal and hydro power between the various countries.

Greater private-sector participation in these local and regional development efforts is desirable as, so far, multinational lending and development organizations have shouldered the financial burden for refurbishing and developing Albania's electricity system.

10 Oct 2008
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