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Germany and France agree financial aid for energy reforms in Albania

Albania’s Ministry of Energy and Infrastructure signed a loan agreement with German development bank, KfW and French development agency, AfD to assist the country in implementing reforms related to the green transition, Albanian Energy and Infrastructure Minister, Belinda Ballku said on Tuesday (6 June).

The loan agreement, worth 100 million euros, aims to support Albania in reforming its power sector. Despite generating 100 per cent of its power from renewables, the country had to import significant quantities to avoid power outages last winter and thus was exposed to the crazy prices of the worldwide electricity market, Minister Ballku said. “This reform has opened the way for the implementation of new policies and projects, and projects which I would call innovative in the field of renewable energy, energy efficiency and remodelling of the domestic market,” the Minister said.

“The reform in the electricity sector has been one of the most challenging processes, but a process that I want to call well achieved and that the Ministry of Infrastructure and Energy, together with the enterprises and sectors it has, has carried out in the past five years. This reform started in 2018, as I said, and it has been a complicated, difficult and challenging process,” the Minister said. “The help of foreign partners has been valuable and it was not without purpose that the instrument of borrowing based on policies was chosen for the realisation of this reform.”

The loan was made possible thanks to “significant progress” by Albania in implementing the energy sector reform, thanks to the dedicated efforts by all relevant institutions in the sector, such as the country’s Infrastructure and Energy Ministry, Finance and Economy Ministry and the Albanian Power Exchange (ALPEX), AfD said.

The separation of the country’s power distribution operator (ie. unbundling) was one of the main objectives of the reform. “‘Unbundling’ has been my first challenge of 2019, all the leaders who are here in the sector remember well all the work we have done, the efforts. The way we sat down at the table constructively to discuss with each other, but sometimes also clashing with our funders and partners, as it was a reform that required changing a whole operating mentality, but that as I promised in 2019, maybe with slower steps, but surely, we succeeded and today we can definitely say that what we have promised, that is, the separation of the distribution service from other activities related to the supply and reduction of electricity,” the Minister said.

KfW and AFD alongside other international donors, aided Albania in establishing ALPEX, which was launched in April earlier this year. As the Minister underlined, this was also another “milestone” set out in the reform package. “It was a process that required the maximum attention of the Ministry of Infrastructure and Energy, but on the other hand, it also had the support of our partners, step by step throughout this process.”

The Albanian power exchange will be a “guarantor” of energy development and free, transparent and fair power trading in Albania, the Minister noted. At present, ALPEX has 9 operators registered as members, while 16 operators are in the evaluation phase and 4 banking institutions have expressed interest in becoming members, Minister Ballku added.

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