Spectre of Power Cuts Haunts Albania Again

Power lines | Source: Flickr

Albania’s main energy producer, the state-owned Albania Power Corporation, KESH, has announced that it faces difficulties in maintaining supplies owing to a combination of dry weather and accumulated debts from the privatized electricity distributor, CEZ Distribution.

In a statement on Thursday the company said that CEZ owed KESH roughly €58 million in unpaid electricity, and the utility company is faces difficultes in securing costly imports to guarantee the flow of the supply.

“CEZ is our sole client and its payment for electricity is vital for the company,” KESH said in a statement, underlining that it was currently drawing on a €45 million overdraft to secure the power supply.

CEZ refuses to pay the debt because it says Albanian state-owned companies and public institutions owe the power distributor nearly €150,000 million.

Faced with a revenue shortfall, the country cannot afford costly electricity imports, meaning there is a renewed risk of the kind of extended power shortages that plagued the grid in the past decade.

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.