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EBRD helps generate electricity for Albania
€40 million Bank loan to build new thermal power plant to benefit locals
The EBRD is lending Korporata Elektroenergjetike Shqiptare (KESH), Albania’s
state-owned power utility, €40 million to help improve power supply for
residents and businesses across the country.
The 15-year loan will enable KESH to finance the construction of a new
oil-fuelled thermal power plant in Vlore, just off the Adriatic coast in
south-west Albania,. With an expected production capacity of up to 135
Megawatts, the plant will help diversify electricity supply in a country which
is currently 95 per cent dependent on hydropower, which has lead to erratic
supply patterns.
The loan builds on the success of €54 million in loans by the Bank to KESH in
1999 and 2002 to help it restore some existing generation and reduce losses by
improving transmission and distribution networks, but also to improve
management of the sector. Under a co-management contract introduced and
administered by the Bank as part of the 1999 loan, the Italian utility ENEL
has been assisting KESH to overcome various sector problems. As a result,
Albania has been making progress to end an electricity crisis partly created
by excessive demand resulting from the illegal use of electricity, non-payment
of bills, and tariffs below full cost recovery. The timing is now right to
address the supply imbalance.
Anthony Marsh, Director of Power and Energy at the EBRD, said the project will
help reduce Albania’s reliance on hydro power while making it more efficient,
ensure a reliable and continuous supply of electricity for the country, and
reduce Albania’s dependence on electricity imports to manageable levels. It
will also help Albania meet a requirement for joining the Union for the
Coordination of Transmission of Electricity (UCTE), an association of west and
east European transmission-system operators promoting the reliable operation
of electricity networks, of which it must be a member if it is to be a real
player in the Southeast Europe regional integration process.
The total project cost is estimated to be up to €110 million, which will be
financed in cooperation with other institutions including the World Bank,
European Investment Bank, and KESH. The ENEL assistance programme is being
funded by the government of Italy via the Cooperazione Italiana. Additional
technical cooperation funds to implement the project have been provided by the
United States, via the USAID and USTDA.
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