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EBRD loan to modernise Albania's hydro power plants
About half of Albania's power capacity will be modernised as a result of a loan approved yesterday by the Board of Directors of the European Bank for Reconstruction and Development (EBRD). This will allow Albania to export more electricity and provide sufficient and reliable domestic supply.
The DM 23.76 million (ECU 12.44 million equivalent) loan to the Albanian Power Corporation (KESH) will be used to rehabilitate Albania's main hydro power supply facilities, Fierza and Vau i Dejes, which are located at the Drin River Cascade, and three smaller but essential hydro plants elsewhere in the country (Ulza, Shkopeti and Selita).
Jacques de Larosière, President of the EBRD, said: "Delays in implementing large-scale rehabilitation of Albania's power stations would result in substantial costs to the Albanian economy. This project is one of the country's largest investment projects, and will ensure the continuation of power exports which are urgently needed to enhance Albania's balance of payments. It will also enhance the reliability and quality of electricity supply and reduce the risk of power failures which adversely affect domestic industries. Moreover, the EBRD is instrumental in mobilising additional funds on concessionary terms to finance 57 per cent of the total project cost".
The total project cost is ECU 46.1 million. The Swiss Government has signed a grant agreement with Albania for ECU 6.5 million equivalent, and the Austrian Government has expressed its intention to make available a grant of ECU 6.4 million. The Overseas Economic Cooperation Fund of Japan (OECF) is considering co-financing the project through a loan, on concessionary terms, equivalent to ECU 13.4 million. The project will be the Bank's first co-financing operation in conjunction with Austrian development assistance and the OECF. The EBRD is also providing technical cooperation funds amounting to ECU 930,000 to help KESH strengthen its commercial management and investment planning capabilities, to implement an institutional reform programme, and for project management.
As a result of installing modern mechanical and electrical equipment, the project will reduce the health risks faced by power station personnel . The dam structures will be made safer and more stable, the dam monitoring system will be improved and an advance flood warning system (in compliance with internationally accepted dam safety standards) will be established.
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