Energy prices rise sharply in Albania

05/03/2008

An increase of up to 70% in Albania's energy prices will affect consumers who use more than 300 kWh a month and businesses other than those in the flour and bread industry.

By Jonilda Koci for Southeast European Times in Tirana -- 05/03/08

Albania's electricity system depends on hydropower plants. [Getty Images]

After two years of energy crises, the state-owned Albanian Power Company, KESH, increased its rates Saturday (March 1st). The decision was approved by the Energy Regulatory Agency (ERE) in an attempt to improve the financial situation of the only supplier of energy to Albania.

The price of energy will increase for those using more than 300 kWh a month from .06 euros per kWh to .10 euros per kWh.

Although KESH proposed to the ERE an average increase of 37%, the regulators lowered it to an average of 18% with a ceiling of 70% increase. Trade and services businesses will also be affected, but bakeries and the flour industry will be exempt from the hike after the price of bread soared recently.

The opposition has expressed concerns about added inflation. "The increase of the energy price is a new stimulus for a new increase of prices in the market to be added to the other products," said Socialist Party parliament group official Erion Brace.

Minister of Economy Trade and Energy Genc Ruli, however, said the rate hike is necessary, "The price of energy is increasing because the cost we pay for this product has increased."

Albania suffered a series of severe energy crises during the past two years. The country's energy system is based on hydro plants and drought severely affected domestic production, adding stress to the plants, which were built during the communist area.

Due to increased demand and decreased supply, KESH had to import electricity, which is now 40% of the country's consumption.

Until this price increase, KESH has paid more for the imported electricity than it has been allowed to charge its consumers.

KESH General Director Gjergji Bojaxhiu said, however, that this new increase is insufficient to resolve KESH's financial crises and it cannot guarantee a 24-hour supply of energy for Albania.

Ruli responded to critics who said low income Albanians would be most affected. "The poorest part of the population won't be influenced," he said

ERE chairman Bujar Nepravishta added, "According to our analyses, 76% of the Albanian families consume no more than 300 kWh a month," so their prices will not increase.

KESH's loses about 8% of the energy produced because of technical problems with transmission. Total losses are about 35%, including energy that is stolen or not paid for by consumers.

KESH is undergoing a privatisation process and one of its branches -- the Operator of Distribution -- is expected to be privatised this summer.