Government of Albania signs agreement with IFC to bring private sector to its power distribution

Albania, January 22, 2007 —The International Finance Corporation, the private sector arm of the World Bank Group, has signed an agreement with the Government of Albania to assist the country to bring private sector participation (“PSP”) to the power distribution business of the Albanian Power Corporation (“KESH”).

The agreement will see IFC’s regional advisory program for the region, PEPSEI (Private Enterprise Partnership for Southeast Europe Infrastructure), acting as lead adviser to the Ministry of Economy, Trade and Energy in structuring and implementing a private sector transaction in the distribution business of KESH, which is of strategic priority to the Government of Albania.

The Ministry of Economy, Trade and Energy and the IFC will work together to create opportunities for introducing private sector participation in power distribution and for the realization of a successful transaction.  The Ministry will use the IFC’s experience in the review of Albania’s energy sector and in unbundling of KESH assets into one or more separate companies (the “Company”) and executing a fair, transparent and competitive selection process to attract the optimal private partner to operate, finance and develop the Company.

“This agreement demonstrates IFC’s continued commitment to Albania.  Through PEP-SE Infrastructure, IFC will review the energy sector, identify critical issues and make recommendations aimed at making it fully conducive to PSP in power distribution.  We aim to demonstrate, through a successful transaction implementation, the advantages of the private sector participation in the provision of power.  Enhancing the capacity of the public sector to work efficiently and transparently together with the private investors is crucial for the successful accomplishment of the PPP said Shahbaz Mavaddat, the Director of IFC for Southeast Europe and Central Asia Department.

The advisory project would be delivered into two phases: (i) analysis of—and suggested improvements to—the existing sector set-up, recommending the best structure for the power distribution system in Albania, including restructuring and unbundling of KESH distribution assets; (ii) the preparation of the transaction, including a complete due diligence, analysis of the PSP options available, design of the transaction structures and its implementation, including management of the bidding processes up to the final contractual closures.

IFC will assist the Government of Albania to ensure adequate supply of electricity, taking into account the impact of hydrological variations during dry cycles as well as the cost of imported electricity.

IFC’s Advisory Services in south East Europe

In 2005, with the donor support and financing of the governments of Austria, Italy, the Netherlands, Norway, Switzerland and the USA, IFC launched the Private Enterprise Partnership for Southeast Europe Infrastructure, an advisory program to help strengthen the private sector in the region’s infrastructure.  The mission of the program is to help the public sector in the region increase private participation and investment in infrastructure, thus contributing to the region’s economic development.  The program is part of the IFC’s advisory services efforts worldwide, which have established an impressive record on structuring and introducing PSP in government infrastructure services and assets, spanning more than 100 projects in 67 countries. 

Through PEP-Southeast Europe Infrastructure, IFC offers direct advisory services on structuring and implementing private sector participation transactions to central and local governments in Southeast Europe.  IFC combines the focus of a development institution with the direct experience of an investor and lender to the private sector.  It is uniquely positioned to balance public concerns and the desire for improved, sustainable service quality with the conditions necessary to attract private investment.

About IFC

The mission of IFC (www.ifc.org) is to promote sustainable private sector investment in developing and transition countries, helping to reduce poverty and improve people’s lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. From its founding in 1956 through FY05, IFC has committed more than US$ 49 billion of its own funds and arranged US$ 24 billion in syndications for 3,319 companies in 140 developing countries. IFC’s worldwide committed portfolio as of FY05 was US$ 19.3 billion for its own account and US$ 5.3 billion held for participants in loan syndications.