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Related Links

- The Inspection Panel    
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Management Response
- Përgjigjia e Grupit të Menaxherëve
- Q & A on Vlore Thermo Power Plant 
Pyetje dhe Pergjigje per Termocentralin e Vlores
- Energy and Infrastructure - Europe and Central Asia
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National Agency for Energy
- Albania - EU Energy Efficiency Center
- Ministry of Economy,
Trade and Energy

Related Studies

- Environmental Impact Assessment of Vlora Thermo-Power Plant (1.5041 MB, PDF)
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Studimi i Vlerësimit të Ndikimeve Mjedisore të TEC-it të Vlorës        (527 KB, PDF)
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Addendum to the Final Environmental Impact Assessment of Vlora Thermo-Power Plant (942 KB, PDF)
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Shtesë në Vlerësimin e Ndikimit Mjedisor të TEC-it të Vlorës  (356 MB, PDF)
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National Strategy of Energy Sector: Actual Situation and Problems in Albanian Energy Sector(First Part) (1.41 MB, PDF)
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National Strategy of Energy Sector(Second Part) (1.39 MB, PDF)

Over the transition period from a centrally-planned to a market-based economy, Albania, like most other transitional countries, experienced difficulties in a number of sectors, including the power sector.  Whereas the country was a net electricity exporter in 1992, electricity demand grew rapidly from then until 2000, and since 1998 Albania has become increasingly dependent on electricity imports.   Part of the demand growth was due to consumers taking much of their electricity for free by not paying their bills or by tampering with their meters, or by making illegal supply connections.  This behavior also caused financial difficulties for the Albanian Power Corporation (KESH), preventing it from making the needed investments to rehabilitate and expand the power system, which was badly run down at the beginning of the transition period as a result of neglected maintenance. 

Furthermore, since nearly all domestic production comes from hydropower plants, the power system is vulnerable to variations in rainfall.  Lack of rainfall caused a power crisis characterized by severe load shedding from 2000 to 2002 and a second crisis from late 2006 through 2007.  The recent crisis was exacerbated by a steep increase in the price of imported electricity.  There was also considerable load shedding between these crises, despite a Government subsidy from 2000 to 2004 to help pay for imported electricity, because of transmission constraints on importing electricity and difficulties in procuring imports at the times they were needed, and there were interruptions and voltage fluctuations due to overloading of dilapidated transmission and distribution equipment. 

In an attempt to address the fundamental issues affecting the energy sector, the Government of Albania and the Albanian Power Corporation initiated at the beginning of 2001 a Power Sector Action Plan focusing largely on improving KESH’s financial performance through increasing collections and reducing illegal use of electricity.  This plan has been updated each year since then.  In addition the Government adopted a Power Sector Policy Statement to serve as the basis for sector restructuring and strengthening of the Electricity Regulatory Authority (ERE).  These initiatives led to modest but fragile improvements in KESH’s performance (the company’s financial position deteriorated again after 2005), significant tariff increases and substantial sector restructuring.  However, the sector's problems are so deep-rooted that sustained efforts will be needed for a considerable period of time, with considerable support from the international donor community, until the sector is either under capable private ownership or able to finance all needed investments to fully meet demand with high-quality electricity on its own.

The World Bank has so far taken the lead role in the sector, and is well placed to continue this role.   It support has included: a power component of the Critical Imports Project (1992) to finance urgent system repairs; the Power Loss Reduction Project (1994) designed to address the problem of illegal electricity consumption; the Power Transmission and Distribution Project (1995); the Power Sector Rehabilitation and Restructuring Project (2002), which supported sector reform and further rehabilitation of transmission and distribution; the Power Sector Generation and Restructuring Project (2004), which provides further support to reform as well as finance for the Vlore thermal power station; and the Energy Community of South East Europe (ECSEE) APL2-Albania project (2005) for transmission system strengthening and support of Albania’s participation in the Energy Community.  Two new projects are under preparation under the ECSEE Program, one for distribution system strengthening and reduction in distribution losses and increase in collections, the other for improving dam safety.  The IFC is assisting the Government to privatize the newly separate power distribution company.





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