Tirana plans new attempt at Albpetrol privatisation in 2016

Tirana plans new attempt at Albpetrol privatisation in 2016
By Valentina Dimitrievska January 8, 2016

The Albanian government is planning a second attempt to privatise state-owned oil company Albpetrol this year, but is targeting just €95mn from the sale of the company.

The price included in a ministry of economic development document is well below those offered when the company was put up for sale back in 2012, in a murky process that was later cancelled. Conditions in this industry have drastically changed since then, due to the fall of oil prices.

Albpetrol has been included on the Albanian ministry of economic development’s draft privatisation plan for 2016. This sets the target of raising €99.3mn for the state budget of which the lion’s share will be from Albpetrol, local media reported on January 7.

This is despite a December 2015 announcement from energy minister Damian Gjiknuri that the government had put the sale of Albpetrol on hold for the time being, as falling oil prices caused interest from foreign investors to drop.

Now, a working group with technical assistance from the International Finance Corporation is studying the possibility of restructuring Albpetrol to sell it to a strategic partner and to obtain €95mn from the sale of the company, business news provider Monitor said, quoting a document from the ministry.

The value of €95mn that the government intends to obtain from Albpetrol privatisation is low compared to the prices offered in 2012. Chinese consortium Win Business offered €298mn and Bankers Petroleum €106mn. However, the two lost out to Chicago-based Vetro, owned by local tycoon Rezart Taci and bidding through a Singapore-registered consortium.

The attempt to privatise Albpetrol then fell through after Vetro failed to pay a €170mn down payment. The consortium had offered €850m for Albpetrol, more than twice as much as the second-highest bidder. The flawed tender process sparked criticism of all sides involved, and has never been fully investigated.

Aside from the planned sale of Albpetrol, the government plans to raise over €4mn from the privatisation of small and medium-sized companies in 2016, Monitor said.

In 2017, the government aims to receive €53mn from the sale of state-owned stakes in telecommunication company Albtelecom, which is a unit of Turkey’s Cetel, and oil processing firm ARMO. The government is currently preparing the legal framework and procedures for the sale of these companies.