Albania liberalises electricity market to ease budgetary pressure

By bne IntelliNews November 28, 2011

bne -

Albania has moved to liberalise its electricity market in a bid to ameriolate the impact of falling domestic production on the country's budget. Tirana complains it is having to subsidise both major consumers and power distributor CEZ by tens of millions of euros a year.

The parliament adopted a bill on November 26 that will allow big industrial consumers to buy from suppliers other than the state-owned monopoly producer KESH and power distributor CEZ Shperndarje.

The new legislation was adopted as Albania's power consumption rises, while output from hydroelectric power plants - which generate over 95% of the country's electricity - has declined because of the lack of rain. That has forced KESH to borrow funds in order to import electricity, and the government's guarantee on those loans could push up Albania's public debt, currently at 59.4% of GDP, warned Finance Minister Ridvan Bode.

Energy Minister Nasip Naco told parliament that the bill will halt the practice of having to subsidise the power distributor, a subsidiary of Czech utility CEZ, and major customers, Reuters reports. KESH is obligated to supply CEZ Shperndarje at a regulated price of ALL2 (€0.014) per kilowatt hour (kWh) from its own output, and import electricity to cover any shortfall. CEZ, which is regulated to sell at ALL7 (€0.049), needed 800m kWh of electricity on top of domestic output so far this year - an amount approximately equal to the electricity consumption of the country's steel and cement plants.

Naco said that by selling electricity at 3.5-times the price it is buying it from KESH, CEZ Shperndarje is currently being subsidized with €35m-40m a year by the Albanian state. He added the new bill complied with the EU's July 2009 directive aimed at promoting competition in the domestic energy markets.

Under the new legislation, KESH will no longer be required to import electricity, and will concentrate solely on generation, continuing its obligation to supply CEZ. Any business consuming more than 50m kWh per year will qualify to buy electricity from the unregulated market under the new bill.

Meanwhile, Albania will continue to subsidise domestic customers and small business. Tirana has said it expects electricity demand to rise in 2012 and the liberalisation of the market will allow for the power produced by hydropower plants with 100% public ownership to go to the supply of households and small and medium-sized business.

According to data released by Albania's statistics office INSTAT, electricity consumption in the country increased by 8.7% on the year in the first half of 2011, but at the same time production dropped by 45% on year in the same period due to lower rainfall, forcing KESH to import 1,452 GWh of electricity in the first six months of 2011.

Related Articles

Macedonia kept on hold as Balkans edges towards EU goal

Clare Nuttall in Bucharest -   Macedonia’s EU accession progress remains stalled amid the country’s worst political crisis in 14 years, while most countries in the Southeast Europe region have ... more

Austria's Erste rides CEE recovery to swing to profit in Jan-Sep

bne IntelliNews - Erste Group Bank saw the continuing economic recovery across Central and Eastern Europe push its January-September financial results back into net profit of €764.2mn, the ... more

INVISIBLE HAND: Rhetorical wizard Draghi conjures up a QE battle

Liam Halligan in London -   Mario Draghi is being hailed, once again, as a rhetorical wizard. The president of the European Central Bank has done it again. After the October meeting of the ECB’s ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss