Projects in Albania

Project Summary Documents

Project Summary Documents (PSDs) are disclosed for each project prior to Board consideration. They contain project descriptions, financial details, client information, environmental issues, tender guidelines, and contact details. PSDs for private sector projects are disclosed at least 30 days prior to Board consideration and for state sector projects, at least 60 days.

Project Summary Documents

Signed projects

Board approval is the final stage in the project approval process. After Board approval, the EBRD and the client sign the deal and it becomes legally binding. Signed project lists reflect year-end data.

Signed projects  (0.1Mb)

Case studies

Take-off at Tirana Airport

The 2,750 m runway at Tirana’s Mother Theresa Airport was originally built in 1957 with the help of the Soviet Union. The airport, 27 km away from Tirana itself and near Durres, the country’s most important Adriatic port, was intended solely for military use.

In 1970, China helped to build a civilian terminal but few changes were made to the airport after this. In fact, an official report remarked that the airport’s “civilian facilities fall significantly short of international guidance standards”.

The economic problems facing the country meant that much-needed investment was in short supply – until last year. In 2005 the EBRD agreed to lend €21 million to Tirana Airport Partners (TAP), a consortium led by Germany’s Hochtief Airport, to support a €50 million refurbishment project. Tirana will be the fifth airport in Hochtief’s portfolio, alongside Athens, Dusseldorf, Hamburg and Sydney.

TAP began its 20-year responsibility for the whole airport in April last year, quickly introducing changes to the maintenance of the airport and the quality of the catering facilities. It has agreed to pay a concession to the Albanian government in return for all airport profits.

The new airport will be of a thoroughly modern variety to rival any in the world. Rescue and fire fighting services will of course be developed in compliance with international standards, including staff training, inspections and development of emergency procedures. The foundation stone for the new terminal was laid in May 2005, marking the start of what will be one of the most modern infrastructures in the country serving a million passengers a year. The construction project will also provide a much-needed new 7 km road to service the new airport.

Ten airlines already fly passengers from Tirana to 15 destinations worldwide. In March 2006, British Airways (BA) launched its thrice-weekly London-Tirana service. “What we have seen during these last five years is that Tirana, as a city, has been expanded and lots of construction is under way. As we know, there are many Albanians in London who would go to Albania to visit their families back home. This will be a good market for BA,” said David Roucham, Executive Manager for Eastern and Central Europe and the Mediterranean, when the route was announced. He expects 25,000 passengers on the route in the first year, increasing incrementally after that.

The number of flights in and out of the airport on a daily basis is predicted to increase from today’s 25 to at least 65 over the 20-year concession period. Already passenger numbers have risen from 100,000 people using the airport in 1992 to over 560,000 in 2003.

TAP will create 2,650 jobs in and around the airport in the fi rst few years of operation and a further 5,000 jobs over the next two decades. As of now, the aeronautical revenues make up 90 per cent of the airport’s income. Rent, food, retail and car park concessions are more than ten times below the European average so there is huge potential for profit once the modern terminal becomes operational in 2007.

The airport will be of particular benefit to Albania’s substantial migrant workforce. Over 20 per cent of the country’s population work abroad (mostly in Italy), a migration that has caused a population decrease of 3 per cent over the past decade.

Lending a helping hand from afar

The Albanian economy depends heavily on remittances sent home by its workers living abroad – over half of them actually delivered in person. South-eastern Europe as a whole attracts in excess of US$ 15 billion a year in remittances through official channels and, along with the unofficial deliveries, they amount to more than 15 per cent of Albania’s gross domestic product.

A massive 25 per cent of Albania’s workforce left the country in the 1990s, including half of all professionals. The University of Tirana says that half of its graduates emigrate, mostly seeking employment opportunities in the United States or Canada. However, most emigrants move to Greece and Italy.

Remittances to developing countries add up to an annual total in 2005 of US$ 167 billion, according to recent World Bank estimates. As the Western Union slogan reads: “If you can’t be there, your money can.” The problem, in economic terms, is getting this money into the country’s banking system, especially in a country like Albania where 60 per cent of the population lives in rural areas and is not accustomed to using banks.

“Remittances are one of the most important sources of finance for developing nations and therefore we must establish an environment that can enhance their impact on the overall development process,” said Adrian Fullani, Governor of the Bank of Albania. Jean-Marc Peterschmitt, EBRD Director for Bank Lending, agrees: “It is a question of educating people to use local banks and open an account.”

In September 2005 the Bank hosted a one-day seminar on remittances, attended by central bankers and other international financial institutions. The Swiss government is currently supporting the Bank’s research into this area.

Power sector rehabilitation and reconstruction

In November 1999 the EBRD approved a €30 million loan to Korporata Elektro-energjetike Shqiptare (KESH), Albania's electricity utility. The loan replaced two existing loans with KESH for the Drin River Cascade rehabilitation project (€15.7 million) and the transmission and distribution project (€10 million). These could not be implemented as envisaged because of the impact of the pyramid scheme crisis and the Kosovo war. Under the new project, future disbursements are linked to the successful implementation of a co-management contract with a qualified power utility. The main step towards accomplishment of this precedent was the signing of a co-management contract with Italy's ENEL in August 2000.

The project will enable KESH to increase the availability and reliability of power supply, with lower downstream costs stimulating industrial activity. It will also help to improve energy efficiency by reducing technical and non-technical losses and lead to the introduction of private management for the sector. In the longer term the management contract should pave the way for full privatisation. The project will be co-financed by the Japan Bank for International Corporation, the Austrian government, the Swiss government and KESH.

To further support the rehabilitation of the power sector in Albania, the EBRD approved a €24 million sovereign-guaranteed loan to KESH in 2002 to finance part of the power transmission and distribution project. 

Proceeds of the EBRD’s loan will be used to finance supply and installation contracts for the rehabilitation and upgrade of the power transmission and distribution systems and substations in the following cities: Tirana, Kavaja, Korca, Berat, and Lushnja. The aim of the project is to reduce technical and non-technical losses in the Albanian power system.

Vodafone Albania

The EBRD, together with the IFC and Greece's second largest bank, Alpha Bank, are now giving Vodafone Albania (VFAL) an €85 million loan to enable the company to grow further, stimulating competition in a previously monopolistic, now booming market. VFAL launched services in August 2001 and, in one of the world's fastest roll-outs, it only took the company 17 months to attract 378,000 subscribers and seize 42 per cent of the market.

VFAL's sole competitor is the formerly state-owned Albanian Mobile Communications, now acquired by Cosmote, Greece's partly state-owned mobile telecommunications leader. Vodafone, the world's largest mobile telecoms provider (and one of the 10 largest companies globally), is employing Vodafone-Panafon, the second-largest mobile operator in Greece, as a platform for the Group's operations in Albania and south-eastern Europe. Vodafone-Panafon closely supports the VFAL on a strategic and technical basis. It carries out network design and implementation as well as billing, also assisting with technical matters, customer care, financial, marketing and IT issues. In the long-run, VFAL is expected to take over its own affairs and Greek management will gradually move on to local hands.

Such deals are vital to Albania. Healthy competition can bring higher-quality services and lower prices, and thus contribute to market growth. Vodafone looks like the ideal company to spread the word and when the EBRD, the IFC and a commercial Bank with a strong regional presence collaborate, there is great potential for a high demonstration effect.