Albania Unveils Massive Privatization Plan

By Jonilda Koci

Four hydropower plants are the first public property assets put up for sale following Prime Minister Sali Berisha’s unveiling of a privatisation plan, which aims to sell just about everything.

“We should move towards complete privatisation,” Berisha said weeks after the local elections, which apparently drained the state budget and affected Albania’s liquidity.

Under the plan, all of the remaining 1,280 public properties will be sold except for schools, hospitals, public buildings and offices.

The four hydropower plants — Ulez, Shkopet, Bistrica 1 and Bistrica 2 — are profitable enterprises that contribute 5.5% of the country’s total energy production.

By year’s end, the government also aims to sell the oil production company Albpetrol and the insurance company giant INSIG. After that will be the remaining state-owned shares in the already privatised oil refinery ARMO, the energy power distributors OSSH and CEZ, and the fixed telephony Albtelekom.

To make the process smoother, the government drafted legislation to review INSIG’s privatisation and exclude the concept of minimum price — a move widely criticised as a willingness to sell public goods at any price.

The Socialist Party-led opposition, caught in the deepening political impasse with the government after the latest election-related dispute, charges privatisation abuse.

“We will not recognise as legal the started process for privatising the national assets,” opposition leader Edi Rama said, vowing to return the assets when the opposition assumes power.

Many however, oppose privatisation for economic reasons. “If there is no appropriate economic climate, you cannot advance such a privatisation project, especially in the strategic sectors. Keeping them state-owned has been thus far the only mechanism to protect citizens from energy price increases,” former Vice Minister in charge of energy Pajtim Bello said.

The government offered the fight against corruption as reason for the plants’ sale, but the rush to pass the initiative while capitalising on the opposition’s boycott and the lack of full transparency and debate during economic crisis, raises questions.

“It is fundamental that this process is competitive and transparent, avoiding favours to economic lobbies close to the country’s political leadership,” former Minister of Public Economy and Privatisation Zef Preci told SETimes.

Experts also point to loopholes in the privatisation procedure that enable investors to own stakes in natural resources — dams and lakes — where the plants are located. Responsible dam management is a very sensitive issue in Albania, given years of consecutive flooding and the much publicised mismanagement of the KESH power plant dam in the northwest.

The government offers another motive for the sale. “These privatisations aim to inject fresh capital to create additional sources of liquidity for the govenment,” Adviser to the Minister of Economy, Trade and Energy Fatmir Mehmetaj told SETimes.

Preci counters that however important liquidity is, the process itself needs to be competitive and transparant. “Hurrying the process makes me think we have to do with a relatively prejudiced privatisation that risks bringing unqualified investors.”

“This cannot be called privatisation. This is simply public property expropriation,” Erion Brace, a Socialist member of parliament’s Commission for Economy and Finance, told SETimes.

Regardless of opposition claims, public debt and falling revenues are an acute issue for Albanians, and the state budget will be reviewed in mid-year. The extent of the benefits generated by plants’ sales remain to be seen.