Books on Albania
Update No: 115 - (21/12/06)
Moisiu, Berisha secretly meet over elections
Albanian President Alfred Moisiu held a secret meeting with the Prime Minister
Sali Berisha late on December 17th in a fresh bid to overcome the political
crisis ahead of local elections. The local media say the meeting came after
mounting pressure by foreign diplomats to bridge the impasse. There was no word
on the outcome of the meeting.
Media in Albania say that US diplomats, despite the previous statements on
non-interference in inter-party negotiations, have stepped up contacts with the
authorities and the opposition in a bid to bridge the differences regarding the
local elections slated for January 20th.
The authorities made it clear that they are willing to talk on electoral reform
but not on the election date. The opposition, on the other hand, calls for
postponement of elections saying the needed reform cannot be wrapped up in due
Albanian parliament held a session on December 18th, just two days before the
start of election campaign, in a fresh bid to enforce changes in electoral
EU calls Albania to hold fair, free local elections
The European Union on December 19th called on the Albanian government and the
country's opposition parties to work together to ensure the coming local
elections are fair and free. "All Albanian political parties bear a
responsibility for the fair and free local elections," said a statement at
the end of a routine meeting between the European Commission and the Albanian
The commission also warned that Albanian political leaders should not expect the
international community to mediate their political disputes.
Albania's largest opposition party, the Socialists, said that they would boycott
the Jan. 20 local elections unless the Democratic party-led coalition government
changes the way the voters are registered. The opposition party accused the
ruling government led by Prime Minister Sali Berisha of issuing fake birth
certificates which can be used as identification to vote, saying it could allow
people to vote more than once.
The government denied the accusation. Albanian Prime Minister Sali Berisha has
said the opposition's decision to boycott the local elections is a "fatal
mistake," hinting that the elections would go on without the Socialists.
Albanian President Alfred Moisiu called the country's political parties to
"cooperate with responsibility and trust each other so that they can
achieve consensus to fulfil their constitutional obligations towards the country
and the people."
Energy crisis in Albania deepens
While the politicians squabble, the people are more pre-occupied with
practical matters. The economy is booming by GDP growth rates of around 7% per
annum in the 200s. But this has generated an endemic power crisis, in what has
long been a very inefficient industry.
Albanian citizens are facing interruptions in power supply lasting from four to
14 hours a day, although the Albanian Electric Power Corporation has not
officially announced imposing restrictions yet.
The residents of the capital Tirana are faced with four- to six-hour
restrictions in electricity supply, Makfax's correspondent reported. Elsewhere
across the country, power cuts last for eight hours, and even 14 hours a day in
the villages. The biggest hydro-electric plant in the country, "Fierza,"
is operating with minimum water supplies.
Albanian Prime Minister Sali Berisha himself admitted that the country faces an
energy crisis, while the Government and the National Electric Power Company
expects to overcome the crisis by imports.
Albania's Continuing Energy Crises
For most Albanians power outages have long been a common fact of life. Such
was the case when the country was encapsulated by one of its worst energy crises
last autumn, leaving some districts with only a few hours' supply of electricity
every day. Losing more than half of the domestically produced electricity in its
crippled power grid, the country is enlarging the gap between the energy
supplied and the energy needed to sustain the growth of its national domestic
Since the early 1990s Albania has faced increasing difficulties in matching the
demand for energy dictated by its economic growth with constant supply. The
implications of the energy gap that has been created have become a matter of
public concern due to the inability of the various governments to address the
"We have an unseen emergency, and such emergency requires a particular
method of dealing with it," said Minister of Energy Genc Ruli in an
interview for the BBC. According to Ruli, there has been a sort of blindness in
energy platforms in Albania such that whenever the nation is hit by a crisis, it
has served as an omen for politicians to direct their attention toward energy.
Meanwhile, as the crisis has weakened and the first drops of rain are
registered, their attention has drifted. According to a case study conducted by
the Albanian Institute of International Studies (AIIS), the energy crisis in
Albania has had a direct impact on the deterioration of living conditions.
Comparisons with other countries in the region indicate that energy consumption
in 2000 was 3.2 times lower than in Croatia and 3.8 times lower than in Greece.
This difference is mainly attributed to electricity shortages. According to an
AIIS survey 86.2 per cent of the population experience power cuts, while 2 per
cent of the population has no access to electricity.
The change in energy consumption in Albania is an important factor contributing
to the energy crisis. If in 1991, households consumed 14.6 per cent of the total
used energy, in 2001 their use increased to 21 per cent. According to World Bank
estimations, the demand for energy from households has increased by 8.4 per
cent, while only 4.1 per cent of such increases was satisfied. The sharp
increase in the energy demand cannot be satisfied by the current supply level
that is achieved through a mix of internal production and imports.
In the midst of its energy crisis in the fall of 2005 Albania received various
warnings by international agencies about the effects of the crisis on its
economy. The International Monetary Fund (IMF) warned that if things did not
improve, economic growth in 2006 would be virtually nonexistent.
Istvan Szejeky, head of the IMF for Southeastern Europe warned that Albania was
headed for challenges with its GDP if the electricity situation was not
rectified. He implied that the projections suggest that the country could endure
a tailspin directly caused by the lack of electricity. Growth targets might not
be met, according to Szekely. He suggested that growth goals might need to be
revised by the DP government if the energy supply is not stabilized.
According to Szekely, small businesses were the sector of the economy affected
the most by the energy crisis. "We've recommended to the government to be
cautious in its economic growth projections for 2006 in light of the electricity
challenges," he said.
The World Bank head in Albania, Nadir Mohammed suggested the efficient
management of the power corporation is indispensable to restore the flow of
electricity. The central bank cautioned that the energy crisis could limit
economic growth forecasts and observed that the lack of power was crippling the
economy. It called upon the Albanian Energy Corporation to increase supply
regardless of reserves.
According to the AIIS study, the continuing energy crises in Albanian may have
an impact on its sustainable economic growth. Constant power outages due to the
crises are having an impact on the economy. Because businesses have to depend on
generators to derive energy as the failure of the power grid deepens, an
increase in prices for services is accumulated due to the higher cost of energy
that is created by such alternative sources. Because of the deficiencies in the
current hydro platforms and growing demand, Albania has become dependent on
energy imports. Electricity imports have increased by from US$25.6 million in
1990 to US$256 million in 2001. Such increase in imports has had a dire effect
on the trade and cash flow deficits.
The investment environment in Albania is dominated by the energy crises, which
makes the country less attractive to foreign investors. According to the
industrial output index that is compiled by the Centre of Research and
Development, the energy crisis are is the main negative effect on Albania's
industrial output. Because of the crises foreign investors opt to divert their
investment in more stable economic environments.
According to the European Bank of Reconstruction and Development (EBRD), time is
not entirely on KESH's side when it come big customers. Customers like the
cutting-edge cement factory in Fushe Kruja are opting for other options.
"With KESH we still have 2-4 hours of power outages per day and the quality
of the power is poor -- voltage fluctuations can damage equipment," said
Derek Williams, project manager for the cement mill owned by the Lebanon Seament
"When we were planning the new cement works, KESH said they'd fix things up
to improve our power supply. I think they might have been able to do so. But in
the end we couldn't risk our decision on their ability to deliver so we decided
to build our own 24-megawatt, oil-fired power plant. We will be independent of
The performance of KESH compared with other European power utilities remains
quite poor. One-third of power generated is still being lost, two-thirds of that
through theft. Power outages and devastating voltage fluctuations are common in
the heavy industry zones outside the capital, Tirana.
The problem behind the crisis
Before the collapse of the communist regime Albania was an energy exporter.
After the collapse of the regime the country fell into deep crises. In the early
1990s the power outages were caused by inefficiencies in the distribution and
transmission network, while in the last years the crises are attributed to
shortages in supply and resources.
Albania has an inadequate power plant capacity in face of growing demand.
According to data from the Albanian Energy Corporation (KESH) the generating
capacity of electricity was reduced by 14 per cent in the last decade. Such
diminished capacity has contributed in the decrease in domestic supply as demand
has been constantly increasing. According to KESH domestic production satisfied
97 per cent of the demand in 1990, while in 2001 it satisfied only 47 per cent.
An important factor contributing to the energy shortages are the high levels of
energy loss. According to KESH experts, technical and non-technical losses
amount to 14 per cent of the electricity supply, or 56 per cent of the domestic
The power grid
The electricity transmission and distribution network is not able to face
the increasing demand for electricity in the market. To match the demand for
electricity KESH has been forced to increase imports; however, such imports
cannot satisfy total demand because the import capacity is limited by the
capacity of the interconnection lines linking Albanian to international
Almost all of Albania's electricity comes from hydro-power plants. Prolonged
droughts in the country have had a negative impact on the country's production
capacities; in addition no investments in new power plants have been realized in
15 years. There are plans to construct a new thermoelectric power plant in the
city of Vlora; however such plans have been faced with popular discontent. An
interest group called Citizens Alliance for the Development of Vlora's Bay have
organized a series of protest requesting a referendum.
Germany to extend 2.6m Euro low-interest loan to Albania for SMEs
Germany signed, on November 8th, a contract with the Albanian government to
extend a low-interest loan of 2.6 million Euro to Albania to support small and
medium-sized enterprises (SMEs), website reporter.gr said.
The loan is aimed at assisting the development of Albanian SMEs from all
industrial sectors in urban and rural areas. The funds are to be extended
through German state-run development bank Kreditanstalt fuer Wiederaufbau (KfW).
The loan will be repaid in 40 years and has a grace period of 10 years, at a
0.75 per cent annual interest rate, the website reported German commitments to
Albania in financial and technical aid since 1988 are estimated at some 370
million Euro (US$472 million).
Govt signs 7m Euro loan with World Bank
Albania signed a 7.1 million Euro loan deal with the World Bank to improve its
business environment and strengthen its institutions, website reporter.gr said.
The loan will finance a Business Environment Reform and Institutional
Strengthening Project (BERIS) aimed at supporting Albania's efforts to
strengthen the public sector's capacity to improve business environment to
attract investments and foster exports, Albanian Finance Ministry was cited as
saying by the website.
The WB loan was extended in two parts. A 2.5 million Euro Special Drawing Rights
(SDR), or close to US$3.7 million, was lent through the bank's soft-loan wing
International Development Association (IDA). This loan is to be repaid in 20
years with a grace period of 10 years, the statement said. The second part is a
17-year loan worth 4.4 million Euro, that has a grace period of four years.
Albania will co-finance the project with US$500,000, the website reported. The
project has to be implemented by January 2011. It has three components:
facilitating business entry and operations by improving quality of business
regulations, including their potential impact on market competition.