Albania presents the Skavica hydropower plant by 500 Mil/Euro

Albania presents the Skavica hydropower plant by 500 Mil/Euro

Analysis by Dr Lorenc Gordani

Professor, Tirana Business University (TBU)

Skavica hydropower plant; 500 Mil/Euro; Prime Minister Edi Rama; opening ceremony of the Skavica HPP project; preliminary work done; pre-feasibility of HPP Skavica project; IPF6 consortium; Infrastructure Facility Project; Western Balkans Investment Framework – WBIF; EU instrument; grant of about 1.5 Million Euros

Prime Minister Edi Rama at the opening ceremony of the Skavica HPP project has shown-up the preliminary work done during the perform of pre-feasibility of HPP Skavica project. The outcome study prepared that have been waiting from a while and was pre-announced at the start of the Karavasta PV 140 MW project on 27 May 2020, is a product of the high level of a team experts of the IPF6 consortium (Infrastructure Facility Project) funded as part of the Western Balkans Investment Framework – WBIF, an EU instrument fund that have contributed with a grant by 1.5 Million Euros since 2017.

Finally, the team has started the work in January 2019 and is already at an advanced stage to prepare for the implementation of the Skavica HPP project. Thus, currently thanks to this funding, at the first completion of this phase, a wide group of experts working in several technical analyses has come up with several variants (two of which more reputable), which represent economic effects and environmental impact of the HEC Skavica project.

In fact, this project has been planned by many decades ago, because as it is known Skavica is an element that is missing in the original Drin cascade project of ‘60. The design and construction of the Skavica hydropower plant have been a historic target for all Albanian governments before and after the 1990s. A project, which, with the construction of the Arbri Road, is finally becoming much more feasible and concrete only now.

Moreover, today this project, despite the various difficulties that remain and have pushed it in time, becomes even more strategic and absolutely an necessity. In fact, several times in these years we have tried to find the right actors (most recently in 2016) to be able to invest in this project, but now the state enterprise KESH has decided to undertake it itself as have confirmed Premier Rama.

In this context, financing is an essential issue, but despite the innovations and problems, it will not be so difficult to solve as the options are numerous for such primary importance production project as this especially with the opening of the energy market and pushes for the functioning of the integrated regional market itself (i.e. it is useful in the function of the independent Kosovo market and the whole regional energy market integration).

The fact is that the project is more important than its huge direct interest for electricity production because it optimizes the entire cascade, and it will put an end of the water spills and floods that follow as a result. Therefore, now, we avoid pouring money in the form of water, causing subsequent damage, which always is becoming more costly to the state budget to reimburse and help people recover – said Premier Rama.

In addition to this, there is also an excellent opportunity to put hydropower resources into operation, with close access to the power exchange market (the country of the region are doing the same). A transformation that would turn the public company KESH into a giant of electricity production, where thanks to the water reserve will directly position to a dominant role at least in our region, taking advantage of sales when the price will peak in regional power exchanges (and of course keep a role of balancer in the national one, in close upcoming in the next months with APEX).

On this regard, among other things, the form of financing remains to be specified, as it is known that KESH has a recognized debt of 450 Mil/Euro from OSHEE. KESH itself is also expected to trade the energy generated through the power exchange market or region (before the release of APEX), and will be list on the stock exchange with other main public companies. For this, it has also been working for a long time with “clearing” accounts that have seen recently the cancel of 150 Million/Euro of OSHEE.

Moreover, the Albanian Investment Corporation has already been established from several months, as we already have a new framework on Collective Investment Enterprises, Capital Markets, etc. On the other hand, the Albanian government has just successfully launched a Eurobond of 650 million euros, etc. At the same time, the project is expected to continue with a joint trans-border solution with Kosovo or Macedonia, which would enable funding from international organizations in part in the form of a grant (normally around 10%).

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, may contact us through “lorenc_gordani@albaniaenergy.org”.

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