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Hydropower plant development projects hit a snag

27 February 2014

Several dozen companies with plans to build several hundred small and medium hydropower plants in Albania were warned lately that the sole purchaser of independently produced electricity, the National Power Corporation, (KESH) could not be able to pay the exorbitant price assigned by the contracts.

Companies won rights to develop hydropower plants between 2006 and 2009 under the promise that KESH will buy the electricity produced on spot for 9.3 leks per kWh (6.6 euro cents).

The problem arises by the fact that KESH actually sells its electricity for 2 leks per kWh to the power distribution company and must cover the difference through its own resources.

But the expected production from small and medium HPPs is expected to arrive in 1 or 2 billion kWh, which will require tenths of millions of euro payments from KESH. KESH has total turnover of 70 to 100 million euros per year and currently is failing to pay on time the independent producers. The new government has announced plans to renegotiate the contracts to lower prices.

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