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Albania  

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ALBANIA


  
  

Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
Millions of US $ 6,124 4,695 4,100 109
         
GNI per capita
 US $ 1,740 1,380 1,340 120
Ranking is given out of 208 nations - (data from the World Bank)

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 time.
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 legislation. 

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 authorities. 
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."

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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 product.
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 crisis. 
"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 company. 
"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 KESH."
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 supply. 

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 networks.

Alternative sources
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.

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FOREIGN LOANS

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.

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