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The project

The Government of Albania is in the process of restructuring the Albanian Power Corporation (KESH), with the aim to accelerate private-sector participation (PSP) in the Albanian energy sector.

Through this project, a majority of the share capital of the Distribution System Operator (DSO) will be offered to a strategic investor. The DSO was established as a separate legal entity in June 2007, and it will be granted a single distribution license with a duration of 30 years, as well as a single Retail Public Supplier (RPS) license with a duration of five years, for the entire country. The DSO will be responsible for operating, maintaining and expanding the distribution system throughout Albania, as well as for buying energy in the open market to cover losses in the distribution system (both technical and non-technical). The RPS will be responsible for buying energy from the Wholesale Public Supplier (WPS) and reselling it to tariff customers. The WPS, which will be owned by the Government, has the obligation to provide sufficient supply to the RPS to satisfy the demand from tariff customers.

The Albanian Government has undertaken a series of reforms in the power sector with the aim to:

  1. Establish a competitive electricity market consistent with EU requirements;
  2. Set up and enforce an effective and transparent legal and regulatory framework;
  3. Enhance security of supply in the power sector;
  4. Attract strategic investors to the sector through the implementation of a privatization.

The process of restructuring the Albanian Power Corporation (KESH), which involves the transformation of KESH from a vertically-integrated company into an unbundled one with three independent entities, is almost complete. The unbundling of the Transmission System Operator was completed in June 2006, and the unbundling of the Distribution System Operator started in December 2006.

Distribution and Retail Public Supplier Tariff Structure and Customers

Distribution services will consist of the following:

  • Network usage: the DSO will provide access to the network to retail public suppliers, eligible customers, qualified suppliers and Small Power-Producers;
  • Metering and meter reading;
  • Disconnection and reconnection services; and
  • Connection.

The RPS will contract for distribution services on behalf of tariff customers. Non-tariff consumers, qualified suppliers and Small Power-Producers connected to the distribution system will be individually billed by the DSO. Retail (Tariff) Customer Categories include:

  • Household customers at low voltage;
  • High-voltage, commercial customers, i.e., customers with a direct connection to 110/x kV and 220 kV transformers;
  • Medium voltage commercial customers (6kV – 35 kV); and
  • Low voltage commercial customers (0.4 kV).

The privatization of power distribution is a priority for the Government of Albania. It will contribute to the economic and social development of the country through long-term sustainable development of electricity distribution activities and efficiency gains ( significant reduction of distribution losses and upgrade of the distribution networks through adequate investments).

Private-Sector Participation is also being implemented for power generation. Current energy production represents only one third of total hydro-potential yet to be exploited and the Government is offering concessions for the construction and operation of small and medium hydro-power plants on all its major rivers.