Albania Power Company Seeks Emergency Funds

On Feb 4, 2012

Albania’s state-owned power utility, KESH, faces financial crisis if the government does not stump up emergency funding immediately, Balkan Insight has learned.
Albania’s government in December issued 4.5 billion lek (€33 million) in loan guarantees for KESH to import electricity and ensure the security of the supply.
The corporation now says it needs another 11 billion lek (€78.8 million) to survive the crisis, and these funds can only come from the budget.
“The [loan] guarantee was used for the bills we had to pay in November and December and now in January and February we are using bank overdrafts amounting to €150 million,” a source in KESH told Balkan Insight.
“Now the banks are not loaning us any more while the country’s consumption of electricity has risen,” the source added.
Albania’s main energy producer is facing difficulties in maintaining supplies owing to a combination of dry, cold weather and accumulated debts from the privatized electricity distributor, CEZ Distribution.
A drought that engulfed the Balkans in the summer of 2007 reduced KESH’s ability to generate electricity from its hydropower plants, leading to power outages that in some areas lasted up to 16 hours a day
One year earlier, the Ministry of Finance estimated that power shortages in 2006 cost Albania 1 per cent of GDP growth.
Albania’s power generation system hasn’t seen any major investment since the early 1980s, when the cash-strapped Communist regime stopped investing in new hydropower dams.
After the fall of Communism, the demand for energy grew rapidly. The Albanian power grid is estimated to need $1.6 billion in investments to eliminate completely the risk of power outages.