Waiting for the Rain to Fall

AIM Tirana, October 1, 2001

Albania is facing the most serious energy crisis in decades

Morning and afternoon, a terrific noise echoes through the streets of the capital city of Albania. The mighty orchestra of generators is well tuned. As if on a sign, thousands of generators rumble to life simultaneously. When the 500 thousand inhabitants of Tirana go to bed, they fall silent for a while. Since the beginning of last year, anyone who runs a business, owns a shop, restaurant or a bar, had to buy a generator for himself.

During the summer, the crisis did not seem to matter much, but with colder days drawing nearer, the grumbling and complaining has increased. "I have decided to shut down my shop. I am giving someone a haircut and half-way-through it, the electricity goes out", says Llmi Shanaj, owner of a modest barber shop close to the busy Zogu i Pare boulevard in Tirana.

Minister of State for Energy Dritan Prifti is doing his best to boost the public morale. "Compared with last year, this winter we will have more electricity although there are still going to be power-cuts", he says. Llmi Shanaj does not believe him. The old man, a barber for over 20 years, disagrees: "There is not going to be enough electricity and nobody seems to care".

Bukuric Kaca, owner of an ice-cream shop in Rruga e Shallvareve street is perfectly aware of the losses her business suffered due to frequent power-cuts: "My earnings have dropped by half", she says. The entire economy of Albania is affected by the same affliction. The inflation rate previously set at 2 percent has now reached 4 percent...

Up to 1993 the 3 million citizens of Albania had no idea what a shortage of electricity was. With a modest heavy industry production and a private consumer expenditure not worth mentioning, the then existing five hydro-power plants managed to produce sufficient quantities of electrical power, at times with a surplus to export. Today, the 6 million kWh (kilowatt hours) imported daily from neighboring Macedonia in the east and Montenegro in the north cannot cover the daily needs of the country. Albania needs 22 million kWh per day. It produces merely 13 million kWh daily.

There is but one firm in the entire country licensed to deal with electric-power supplies, the Albanian Electricity Corporation (KESH). A while ago, it was transformed into a commercial enterprise partly funded by the Italian state-owned Power Company, ENEL. Ylli Demiraj, department manager of KESH, attempts to explain the origins of the current crisis: "The truth is as simple as can be. The sharp rise in expenditure in recent years was not followed by the expansion of capacities which have retained the level they had in the eighties. Apart from the power plant at Komane built in 1986, no other investments were made in the meantime.

In 1990, Albania consumed 3,3 billion kWh per year. At the start of the transition process, the heavy-industry was brought to a halt and the expenditure dropped to 2,75 kWh per year. But, with the onset of the free market economy, many Albanian families - having dreamt in vain of washing machines, color TVs or, simply, electrical heaters for so long - rushed to install as many as possible wall-plugs at each and every corner of their homes. At the same time, the number of hydro-electric power plants and other sources of energy remained the same. And that was when it all started. Albania's power supply policy took the road of no return. The first signs of crisis manifested themselves in 1998. Minister of State for Energy Dritan Prifti, head of KESH for the past two years, admits mistakes were made, but points out: "We cannot be held accountable for all the misjudgments made in the management of the state power system in the past two decades."

KESH spokesman Dritan Ylli points out the progress made in the last two years. According to him, skilful management and the increase in the payment-rate of 80 percent have induced the donors to untie their money-bags. "The job done in the past two years has encouraged the donors and as a result the sum of $100 million, frozen since 1998, was allotted", says Ylli. The money assigned by Brussels was employed for the reconstruction of the power infrastructure. The Albanian government, although having subsidized KESH with 5 billion leke, is nevertheless prepared to import a certain amount of the needed electricity. But, the power grid is outdated and its capacity is limited.

One of the major afflictions burdening the country's power supply situation for a long time now is the customary reluctance of Albanian consumers to settle their accounts. At the start of 1997, only a half of the population paid for the power spent. In the meantime, EEK was transformed into a commercial enterprise, meaning that the "goods" delivered had to be paid for if bankruptcy was to be avoided. Debtors were penalized. A special "power-police" task force was founded with the sole task of dealing with debtors.

Dr. Zef Preci, former Minister of Public Economy and Privatization, presently Director of the Economic Policy Institute, believes that the best way of collecting outstanding debts is by compiling a list of debtors employed in the governmental and public sector. This would allow for all listed as debtors to be denied the right of being issued any governmental certificates or diplomas before settling what they owe. While this would certainly be beneficial to KESH, it would still not do away with the crisis. The State Energy Minister points out that the solution of the problem and the attainment of standard parameters call for a long-term strategy extending to a 20-year period. He claims that is what he is working on at the moment. On the other hand, perhaps all is not as grim as it may seem. According to the KESH spokesman, lights will not go out at all - in three-years time. When the hydro-power plants in Bushot in the north and the Kalivaqi plant in Tepeleni in the south are built and when the plant in Korci in the southeast of the country starts production. All of the above mentioned projects are in progress, but it will take three years to carry them out. Up to that time, lights will continue to go out daily.

The crisis reached its peak at the end of last year when, after a long draught, the most powerful power plant in the country broke down. At the time, power cuts in the capital lasted up to eight hours. In the interior, entire regions had no more than eight hours of electricity per day. The State Energy Minister promises that blackouts will not be as frequent this winter. In the meantime, accustomed to putting up with all sorts of things, this year too Albanians will tacitly go on buying candles.

AIM Tirana

EDI LESI