HPP Investments Dispute Resolution Issues in Albania

Hydroelectric Investments Dispute Resolution Issues in Albania

Analysis by Dr Lorenc Gordani

Head of Professional Masters Department

Tirana Business University (TBU)

small hydropower plant investments high level of risk. arbitral favourable low-cost factor, concessionary contracts BOT, ROT, BOO hydropower production SHPP AKBN construction phase

Albania offers a huge potential in small hydropower plant, but a big obstacle to uptake these investments had have to do with a wrong general perception of a very high level of risk. Notwithstanding a partial truth about many issues needed to be taken into consideration, the legal security from the arbitral intervention is one of the main regulated components of these investments. As a qualified lawyer, we have in the hand all the option to prevent the unpleasing event happen and if they take place to put all the measure of contrast and assure a full remuneration form any damage.

Then, due to the above favourable low-cost factor, there have been requested and granted more than 185 concessionary contracts BOT, ROT, BOO, in the hydropower production for 525 SHPP along the period 2009 – 2013. However, according to data reported from AKBN only around 117 have entered in the regime and 43 SHPPs are in the construction phase. The remaining 365 SHPPs with installed capacity around 1,800 MW and forecasted energy around 7,500 GWh have not yet started the construction phase.

This relatively high number of request is due to the considerable average percentage accepted of the return of investment at the level of 14-16%. On the other hand, it means the legitimate range of return of investment is at the 2-years gratia plus 6 years of full operation. However, the above has to be integrated within the main concept of the PPP’s based in marginal cost remuneration in a long-term and division of risk as well as the taken of the necessary guaranties by the parties.

In the last step of a contentious, there is the option to submit the dispute to an arbitration court. This rights, based in the PPP Law, acknowledge to any disputes between the contracting authority and the concessionary/private-public partner to settled a dispute resolution mechanisms, in the form established by the parties in the concession/private-public partnership, including the procedure of international arbitration.

Notwithstanding, some of the CA have chosen to referee to arbitration court foreseen by civil code, which is still pendent (not developed) in Albania. In more, the administrative (or civil) tribunals, are accused by all the parties as highly partial and politicise to give a decision in favour of business. The fact is that along 2016, 93% of cases in national courts results are win by lawyers of the state.

The provision established at the bilateral investment treaties may apply to any dispute arising out of or relating to an investment authorization, an investment agreement, or an alleged breach of rights granted or recognized by the treaties with respect to a covered investment. In the event that an investment dispute cannot be settled amicably, gives a national or company, choose among options to settle the dispute, invoking the dispute-resolution mechanism provided by the bilateral treaties on the protection of the foreigner investments.

Under paragraph of treaties, the investor may choose the International Centre for Settlement of Investment Disputes (ICSID) established in 1965 for legal dispute resolution and conciliation between international investors. The ICSID is part of and funded by the World Bank Group, headquartered in Washington, D.C., in the United States. It is an autonomous, multilateral specialized institution to encourage the international flow of investment and mitigate non-commercial risks by a treaty signed by member countries.

Then the Albanian law is one of the most completely developed and maybe the lack of practical experience in law enforcement has been a barrier for investors at this stage. Then for the rest, with the lower costs of production (LCOE) form the hydro, in all the Europe, what is need is only the management! To do it there is a need to tailor legal support, before of overtake a green or brown project, a management and negotiation process, and the settlement of the dispute settlement. The assistance that is needed to be offered by independent specialises legal in the regulatory matter, to do in the way that a technical feasibility potential of hydroelectricity in Albania, to be translated in an incomparable competitive business project in reality.

Disclaimer: All opinions expressed pertain to the author. While all efforts are made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations may differ and should be discussed with an expert. For any specific technical or legal advice on the information provided and its related topics, you can contact us through “lorenc_gordani@albaniaenergy.org”.

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