The absence of a stable and predictable regulatory framework in Albania undoubtedly accounts for the country’s financial instability and stagnant development. The possibility of an upcoming tumble in the national economy calls for reforming one of the most vital national legislative sectors: concessions and PPPs. The law on concessions and PPPs has been amended several times, in an attempt to be harmonized with the respective EU legislation and the needs and trends of the Albanian market. As a result, it has inevitably evolved into a hybrid system that has often created legal deadlocks between investors and the state authorities.
Over the last decade, the Albanian government has opted for allocating the largest part of the state budget to fund the development of national infrastructure, leaving niche market sectors without adequate financial support. However, the poor-quality works performed by local and international companies created a vicious circle where large expenditure was required to complete unfinished projects and provide maintenance for existing ones. In order to reverse a –budget-wise– unfavorable situation, the Albanian government started considering the assignment of the country’s main highways in concession/PPP to specialized companies that would also undertake the respective maintenance works.
The implementation of a new concession/PPP scheme sets the focus on Milot-Morine highway connecting Albania to Kosovo. According to a feasibility study conducted almost five years ago, the operation of the highway would incur toll charges of 5 Euro for passenger vehicles and 10 Euro for transport vehicles. However, the sustainability of the study was strongly contested by the competent authorities and several experts, on the grounds that it disregarded a series of major technical and financial elements, including, inter alia, the previously unsuccessful concession venture of the Tirana international airport, the impact on the personal financial situation of Albanian and Kosovar citizens, the business relationship between the two countries and the comparatively low toll tariffs of 1,5 to 2 Euro currently imposed in the same region. On the technical level, the highway remains under construction, with several issues outstanding, discouraging investors from participating and supporting a partially delivered and under-performing project.
In light of the above, the currently procured concession/PPP contract aims at the construction, upgrade, operation and maintenance of the highway for a period of 30 years. Even though the tender process was initiated in 2014, there have been several delays and postponements from the competent authorities and participating investors, which still seem reluctant to facilitate the procedure. The Ministry of Transport and Infrastructure provides limited information on investors’ rates of return and the special framework that will be implemented for the highway’s ordinary users, such as local farmers, small businesses, students and public clerks, whereas to date there has been no provision for an alternate toll-free route to the highway, as international practice mandates.
Upon the elimination of all socio-technical barriers on the performance and operation of the project, the Milot-Morine highway will be the first large-scale concession/PPP and investment project to be implemented in Albania. With the deadline for receiving applications for the tender not having expired yet, the final implementation scheme of this cooperation remains unknown, between concession and PPP. Investors are clearly in favor of a concession arrangement that will secure for them full control of the SPV that will own the project; equally, the Albanian government targets to get the investor lay the initial investment and carry out the full management of the project. Moreover, due to the expanding scale of the project and its subsequent public economic impact, the tender procedure shall inevitably surround a public debate on the efficiency and sustainability of the possible investment scheme. In such case, the Albanian government will be forced to make a tough decision between the easier way of concession/PPP with respect to the project management and maintenance and a more complicated decision calling for better management of public money and the creation of a fund for the maintenance of the highway.