Albania Faces Renewed Energy Crisis

Power lines | Source : Flickr

Albania’s main energy producer, the state-owned Albania Power Corporation, KESH, has told Balkan Insight that it faces difficulties in maintaining supplies owing to the lack of imports from the private utility company, CEZ Shperndarje.

Dardan Daci, a spokesperson for KESH, accused CEZ of using more than its allocated share of power reserves to supply its customers since the start of the year, while failing to meet its legal obligations on electricity imports.

“The energy debt between KESH and CEZ in 2012 alone is estimated at 700 GWh of electricity,” Daci said.

Because of the CEZ’s failure to import power, waters levels at the Fierza dam on the River Drin, Albania’s main power reserve, have fallen steeply since August.

“The level has fallen because of CEZ's illegal use of electricity,” Daci said, adding that the power giant had totally ceased importing electricity in September.

The Fierza dam is considered the backbone of the electricity generating system as it regulates the flow of water for two other major dams, Koman and Vau i Dejes.

Faced with a revenue shortfall, the country cannot afford costly electricity imports, meaning a fresh risk of the kind of extended power shortages that have plagued the grid over the past decade.

A drought in the Balkans in the summer of 2007 reduced KESH’s ability to generate electricity from its hydropower plants, leading to outages that in some areas lasted for up to 16 hours a day

A year before, the Ministry of Finance estimated that power shortages in 2006 had cost Albania 1 per cent of GDP growth.

Although CEZ Shperndarje admits it has not undertaken its share of electricity imports, it blames suppliers and a hefty fine from the government for the problem.

“During August we contracted an import of 350 MW [of electricity], but because one of the contracted companies failed to meet its obligations for 150 MW, and delivered only 50-100 MW, we imported only 250-300 MW of electricity,” Ina Xhani a spokesperson for the company, said.

Xhani added the company’s situation worsened after it was hit by hefty fines from the government, which complicated its difficult financial situation.

“In mid-August we received an unfair fine from the tax administration, which was claiming VAT and income tax on the energy that has not been invoiced to the clients … of around 4 billion lek (€28.5 million),” she said.

According to Xhani, the fine was "an enormous financial burden for the company," because it had to pay the state immediately 2.1 billion lek (€15.1 million) only to guarantee its right of appeal, forcing CEZ to cut electricity imports.  

“Instead of using [the money] to import electricity, we had to pay the tax authority and were not able to secure imports for the beginning of September,” Xhani concluded.