The-End of Monopoly in Albanian Energy Distribution
Part of Report: Energy Market and Investments Opportunities in Albania
Dr Lorenc Gordani | Monday, August 17, 2015
The-End of Monopoly in Albanian Energy Distribution
Part of Report: Energy Market and Investments Opportunities in Albania
Dr Lorenc Gordani | Monday, August 17, 201515
The-End of Monopoly in Albanian Energy Distribution
Part of Report: Energy Market and Investments Opportunities in Albania
Dr Lorenc Gordani | Monday, August 17, 2015
The-End of Monopoly in Albanian Energy Distribution
Part of Report: Energy Market and Investments Opportunities in Albania
Dr Lorenc Gordani | Monday, August 17, 2015
The-End of Monopoly in Albanian Energy Distribution
Part of Report: Energy Market and Investments Opportunities in Albania
Dr Lorenc Gordani | Monday, August 17, 2015
The-End of Monopoly in Albanian Energy Distribution
Part of Report: Energy Market and Investments Opportunities in Albania
Dr Lorenc Gordani | Monday, August 17, 2015

The End of Monopoly Era on Electricity Distribution in Albania

Part of Report: Energy Market and Investments Opportunities in Albania

Dr Lorenc Gordani | Monday, August 17, 2015

Albania from a long period is moving forward to aligning its legislation with the EU acquis in the field of energy. The previous law no. 9072, date 22.5.2003 “On power sector” has been revised more then 13 time in order to be further aligned with the EU general principles and the acquis on energy sector. However, attracting of the investment and entering of a private parties, rationale behind many of above measures and actions taken, the outcome has remained far below the levels hoped.

Then, on 30th April 2015 was enacted the new Law on the Electricity Sector no. 43 “On the Power Sector” which aim the full compliance with the Third Energy Package of European Union and in specific with the Directive 2009/72/EC dated 13 July 2009 "On common rules for the internal market in electricity”. The new law foresee by first the restructure of the institutional relationship between the three public power companies responsible for generation, transmission and distribution (KESH, OST and OSHEE).

Specifically, regard the vertical unbundling of DSO, the new law establish that the distribution system operator shall be unbundle and independent from other activities not relating to the distribution of electricity. Regard the timeline, the distribution system operator who carries out this function before the entry into force of this law, shall fulfil the obligation of separation not later than 31 December 2017.

In meanwhile in order to prove the separate legal organization and operation from other activities, it shall maintain a trade name and trademark, different from other names and trademarks of other activities not related to the distribution of electricity. Then, the distribution system operator must take measures to avoid creating uncertainty amongst stakeholders regarding the name and trademark to use, in order to demonstrate its unique identity, first of all in relation to the supply company.

In same time, where the distribution system operator in order to be independent in terms of organization and decision making from other activities not related to distribution of electric power, shall apply the conditions that the persons responsible for the management of the distribution system operator must not participate in responsible structures of the integrated electricity company, directly or indirectly, for the day-to-day operation of the generation, transmission and supply of electricity.

In regard, appropriate measures must be taken to ensure that the professional interests and skills of the persons responsible for the management of the distribution system operator are taken into consideration, ensuring that they are capable of acting independently in order to fulfil the company's tasks and objectives. Even the financial treatment of the persons responsible for management and those responsible for oversight bodies of the DSO controlled by the state will be adopted by the CoM. In more, the activities of the distribution system operator shall be monitored by ERE, which in cooperation with the competition authority shall mitigate potential benefits the operator may acquire by distorting competition.

The all is complete by the general provisions regard horizontal unbundling of the activity non relate with the energy sector. The prevision on accounts unbundling state that any licensee shall, in their internal accounting, keep separate accounts for each of the exercised licensed activity, and for any other activity not related to energy sector, with a view to avoiding discrimination, cross-subsidization and jeopardising of competition. These accounts may be presented as consolidated, apart from cases when carried activities relate to energy distribution or transmission.

In more revenues licensee obtains from any right over the transmission or distribution system shall be specified in the accounts of the licensee. Any licensee shall draw up, submit to audit and publish their annual accounts in accordance with the effective legislation on accounting and financial statements and the international accounting standards. The audit shall, in particular, verify that the obligation to avoid cross-subsidies among the licensed activities is respected.

Regard the operating of the grid of the distribution of electric power, to the Distribution System Operator is assigned the owns of the high, medium and low voltage electricity, for the purpose of allocating it to its clients, with the division line from the transmission system. Among other is state that the distribution system operator is responsible for the maintenance and operation of safe system of electricity distribution in its licensed area.

In regard of the TPA is required that the distribution system operator provide non-discriminatory electricity distribution services to all electricity distribution network users, ensuring the access to and use of the distribution networks of all applicants that meet the requirements of the law. The distribution system operator monitors how performance indicators in respect to the quality of the services and request provided by technical regulations in force are observed.

To make the here above prevision effective in attracting the investors, a sets of schedule action relate more specifically with the reality of Albania are putted in place. The above measure are seeing by October 2014, a launched of very important campaign to enforce criminal penalties for electricity theft and disconnect service for non-payment of bills. The criminal code has been revised to make power theft and damages to the electricity system infrastructure punishable by imprisonment rather than just an administrative offence. As a result, there were able to reduce electricity distribution losses in October 2014 to 35%, compared with 45 percent in October 2013.

For 2014 as a whole, the distribution losses amount to averaged 38 percent. The OSSHE aim to further reducing distribution losses by about 5 percentage points per year, to 15 percent by 2019. The level of distribution losses is monitored as an indicative target under the GoA program with the IMF. Even the improving of collection rate bills that amounts to 83.4 percent in January-October 2014 to 93 percent in 2019. The efforts in this area are supported by a WB project that is financing a targeted investments in priority areas to accelerate cash collection and reduce losses, including metering, grid infrastructure, and upgrades to the commercial billing and collection system.

The government also aim to ensure that budgetary, no budgetary, and local government institutions make timely payment of electricity bills. These efforts will be supported by a restructuring of the state electricity companies with a view to improving efficiency. In specific, the distribution company will have very shortly a performance management contract. It is currently working with qualified expertise and is expect a contract to be signed in mid-2015.

During the 2015-2017 period, will continue the implementation of the program for development of the National Energy strategy for the period 2015-2030. The priorities of the 2015-2017 period as part of the long-term priorities of the government for the development of the energy sector are connected to the developing a master plan for this sector. This project is finance by a loan of USD 150 million from the WB, of which USD 93 million will be invested to strengthen the distribution network and several substations, as well as supplement with electricity meters of customers, where OSHEE Jsc will co-finance about USD 45.3 million for this project, as part of the obligations arising from the loan agreement.

Then, notwithstanding, the new law on the electricity sector approved, constitutes a decisive step forward, it is only the first one on a long path of the energy reforms in Albania. The adoption of this law, it will open the road towards other legal acts, as in particular the preparation of the new design of the Electricity Market and the further liberalisation, with the aim to achieve an efficient and a well-balanced and competitive market opening. However, the liberalization of the energy market and the introduction of private operators in the market is one of the main challenges of the energy sector under European Union directives.

Back to top ↑