Brace: Energy system is collapsing

The Socialist MP, Erion Brace, rang the alarm bells about the energy system in Albania, saying that it is going towards a total financial collapse, and he blamed the decision making and policies of the government for this.

“The decisions dictated or oriented by the government and sealed by the Energy Regulation Entity (ERE), not only have not resolved or avoided the collapse of the entire energy system in Albania, but due to the political rather than economic and financial nature, they are putting the burden of this bubble on the Albanian citizens and the only public company remained in the energy sector, the Albanian Energy Corporation (KESH)”, Brace declared.

Obliged by the difficult financial situation of CEZ, the government oriented ERE a few months ao to reduce the price with which the Czech Company buys energy at the public producer, KESH, from 2.83 ALL to 2.2 ALL per KWh.

“What is happening is even more serious. ERE not only is favoring for the next two or three years with 80 million USD, but they are also favoring them by giving a proactive effect to their decision. The decision has started since January 1st, 2012, and it continues until May. The financial effect increases with 2 billion ALL, or 20 million USD”, Brace declared.

Since KESH is suffering its own financial crisis, the government has guaranteed to compensate the financial effects of this decision with budget funds, which will decrease the KESH income for the next three years with 100 million USD, as shows an official document issued on June, signed by the Minister of Finances.

“This money doesn’t come from the pockets of the government representatives. This money comes from the Albanian taxpayers, who not only pay a very expensive power bill in order to cover the expenses of those who don’t pay electricity at all, but now their money will be used to solve the difficult situation of KESH, due to the political decisions that favor a private company, CEZ”, Brace declared.

But even with the government’s intervention, the situation in the energy sector is deteriorating. The debt sector that has included our market is getting bigger. Official data show that CEZ owes 95 million USD of unpaid obligations to KESH. While private and government institutions owe to CZ hundreds of millions of Euros in unpaid bills. KESH owes 280 million to second level banks, to the government and suppliers, and as KESH has confirmed, this burden is growing each day.

“This history involves a lot of money, but it is a bubble that will explode soon over the Albanian citizens’ head, who will be obliged to pay not only the cost of this crisis, but also the cost of this bubble of mutual debts between all companies that operate in the energy sector. This will also explode over the heads of those who are investing today in energy, answering to the Prime Minister’s calls”, Brace declared.

The financial crisis in the energy sector has officially peaked by the end of last year, when it almost infected the public finances. Facing difficulties caused by natural droughts and unpaid bills by CEZ, KESH was obliged to ask 3 billion ALL from the government, what risked the crossing of the legal public debt limit. Two months later CEZ informed that government that they were unable to import energy, due to the great financial losses. The system is now entangled in a dangerous net of debt that is expanding even outside the market, since on the bottom of it banks are the creditors of these companies.