For more than two decades, the Albanian electricity power sector has been facing critical financial and operational problems, as a result of a number of issues, which oftentimes caused chain reactions. The most characteristic example would be the lack of payments from the part of the end consumers, who do not pay the power distributors, who in turn do not pay the transmission operators, and so forth and so on, up to the power producing companies. With the entire electricity power system in a debt downward spiral, a major objective of the Albanian Government for 2015 is the reformation of the power sector by drafting a new bill in such regard. The new daft bill has been approved during the Council of Ministers meeting held on January 14, 2015 and sent to the Parliament for debate and approval.

Apart from the financial reasons, the said bill aims at fulfilling Albania’s undertaken obligations in the context of the Energy Community Treaty, as well as harmonising the local power sector legislation with the EU directives and rules, with a particular focus on the Third Energy Package on gas and electricity market.

The reformation aims not only to settle financial problems and problems between market players, but also to endeavor the fast growth of an effective, reliable and stable market of this vital sector for the Albanian economy and its citizens wellbeing.

The new bill has been drafted with the intention to avoid future deadlock situations with private operators, as was the case with CEZ a.s. (the Czech distribution company). Following the revocation of its distribution license, what was left from the local distribution company faced a complex and difficult situation that spread throughout all operators, leaving the electricity market even more vulnerable.

The most important changes of the new bill are briefly presented below.

One significant change introduced by the bill is the opportunity given to more entities to operate as distribution companies, in comparison to what is stipulated in the current law, which provides only for a single operator. Nevertheless, the liberalization of this segment of the market will be feasible in the event it turns out to be efficient and cost oriented.

Article 72 of the bill entitles both the transmission operator and the distributor, upon approval by the Energy Regulator Entity, to engage independent operators to carry out the measurement of electricity consumption. In addition, the bill envisages the implementation of smart meters system that will enable end consumers to take advantage from its potential benefits and proactively participate in the power supply market.

The supply of end consumers with electricity power may be performed by any duly licensed entity based on electricity prices set by the Energy Regulator Entity for the universal service obligation, and on freely agreed upon prices between parties in other circumstances. Consumers are granted with the right to request a change of supplier (local or foreign) without any additional cost. Medium and high voltage non-family consumers are entitled to use more than one supplier at the same time. The regulatory body shall initially settle any disputes that may arise regarding the change of supplier.

In order to provide additional safeguards that would guarantee the payment of the electricity consumption by the end consumer, alongside the already existing legal means, the bill entitles operators to mortgage the real estate that is being supplied with energy pursuant the conditions set forth by the law. The following conditions should be met also: the debt of the family consumer should exceed ALL 150.000 (€ 1.070) and the debt of non-family consumer should exceed ALL 2.000.000 (€ 14.285). Since the sale of real estate is prohibited when there is a mortgage on it, this measure should discourage debtors to avoid their paying debts by selling the respective real estate, and protect new owners from costly proceedings.

The new bill emphasizes the importance of an electricity power market where traders and suppliers may freely and directly engage in the sale and purchase of energy. The market rules will be approved by the Energy Regulator Entity within one year of entry of the bill into full force and effect.

The new bill sets high goals in an attempt to finally salvage the electricity power sector in Albania, as well as to modernize the entire market; however, its hopefully positive effects in the market should not be felt in the immediate, but rather in the medium term future.



Besnik Duraj

Partner Albania

+355 4 4500263