EC: Albania has again little progress in the energy sector

In its Progress Report for Albania, the European Commission noted that our country has made little progress in the energy sector.

ALBANIA 2013 PROGRESS REPORT

Chapter 15: Energy
The new energy sector strategy is still being developed.
As regards security of supply, electricity generation capacity improved with the operation since September 2012 of the new Ashta hydro-electric plant. The government adopted a regulation on the identification, assessment and granting of concessions for hydro-electric plants. An intergovernmental agreement with Italy and Greece on the Trans-Adriatic Pipeline (TAP) project and the Host Government Agreement between the TAP consortium and Albania were ratified in March and April respectively. In June the TAP project was selected to bring Azeri gas of the Shah Deniz 2 field from the Turkish border via Greece and Albania to Italy. This pipeline will allow Albania to have access to natural gas resources. Albania has adopted a national sectoral plan for the development of the TAP project and has signed a joint agreement with the energy regulators of Italy and Greece. Albania remains over-dependent on hydropower and vulnerable to hydrological conditions. There was no progress with regard to
increasing the capacity to monitor the implementation by economic operators of the legal obligation on emergency oil stocks.

In the field of the internal energy market, adoption of the new Power Sector Law is still pending. Substantial adaptation of the market model, including cost-reflective pricing and a clear legal framework is urgently needed to ensure the viability of the sector. The role and responsibilities of the different actors on the electricity market need to be clarified and their accountability strengthened. There has been no progress as regards the unbundling of the generation and wholesale supply operations of the state-owned power company KESH. KESH’s financial difficulties during 2012 undermined its capacity to import electricity and to
pay small local power generators and created a need for increased commercial loans, which had to be guaranteed by the state. The situation improved during the first half of 2013 due to heavy rainfall, allowing Albania to increase its electricity exports. However, the low financial liquidity of the entire electricity sector remains a concern. Losses and bill collection rates remain at an unsustainable level. The dispute between the distribution company CEZ Shperndarje (CEZ Sh) and KESH resulted in the Energy Regulatory Entity (ERE) withdrawing CEZ Sh’s distribution licence and putting the company under public administration for a one-year period. CEZ Sh subsequently started an international arbitration procedure. New electricity tariffs approved by the ERE in May are in place. ERE’s administrative capacity and operational independence remain weak.

Amendments to the Law on Natural Gas, aiming at further alignment with the acquis, have been adopted. ERE issued licenses for gas transmission and distribution to Albpetrol, the Albanian oil and gas company. Albpetrol has yet to fulfil all the legal requirements of a transmission system operator.

The Law on renewable energy was adopted aiming at further alignment with the acquis. Implementing legislation for the new law remains to be adopted. The development of the National Renewable Energy Action Plan is delayed. Rules concerning access to the grid for renewable energy installations are to be included in the new Power Sector Law.
Administrative barriers for licensing and authorisation of renewable energy investments and connection of renewable energy producers to the grid have not been reduced. The law on biofuels remains to be amended in order to approximate it to the acquis on the use of renewable energy in transport.

Training was provided to auditors in the field of energy efficiency of buildings. The Law on energy efficiency has still not been adopted. Implementation of the national energy efficiency action plan is hampered by a lack of political commitment, administrative capacity and financial resources. The preparation of the second national energy efficiency action plan is delayed.

In the areas of nuclear energy, nuclear safety and radiation protection, Albania ratified the amendments to the Convention on the Physical Protection of Nuclear Material in April.
Amendments to the Law on protection against non-ionising radiation and implementing legislation on public safety standards for exposure to non-ionising radiation were adopted.
Guidelines on the procedure for recognition of a medical physicist by the Radiation Protection Commission were also adopted. The Radiation Protection Office increased its capacity, hiring two additional staff.

Conclusion
There has been little progress in the field of energy. There have been some improvements as regards the supply of energy, but diversification of electricity sources is still lacking. The conditions for a competitive electricity market are not yet in place. The high level of losses and low bill collection rates need to be urgently addressed. Overall, preparations are not very advanced.

energjia.al, 17.10.2013