Albania Gets $150m from World Bank for Power Sector

The World Bank gave Albania $150 million on Friday to help it upgrade electricity distribution and transmission after Albania settled a dispute with Czech CEZ group and retook control of the electricity distribution monopoly.

Fully reliant on hydropower, Albania's electricity sector has been suffering from droughts as well as theft, failure to cash in receipts and technical losses in the grid. Imports of electricity have been a regular drain on the state budget.

"Increased reliability and financial sustainability of the energy sector are among the most important reforms needed to stimulate economic growth and restore fiscal balance in Albania," said Ellen Goldstein, a World Bank official.

Goldstein, the World Bank's country director for Southeast Europe, believed Albania's out-of-court settlement with CEZ was "quick and fair" and allowed it to move ahead with "with these crucial reforms and much-needed investments in the system.".

The sale of the electricity distribution monopoly to CEZ did not help turn the sector around but locked it in a chain of debt between CEZ, power generation monopoly KESh, the power transmitter OST and small private operators of hydro power stations.

The previous Albanian government stripped CEZ of its licence in January 2013 after their disputes over prices and imports. CEZ took the matter to court but the Socialist government of Prime Minister Edi Rama chose to resolve the issue amicably.

The deal with CEZ, which created a clear ownership structure in the sector, was reached late in June on the same day the European Union invited Albania to join the 28-member bloc.

One of the biggest financiers of Albania's electricity sector, the World Bank said Albania will have to improve its service to customers and cut distribution losses from current rate of 42 percent to around 20 percent by 2018.

"The programme will also provide short term support for financing of power imports during periods of dry weather," added Salvador Rivera, the World Bank's energy programme team leader.

(Reporting By Benet Koleka; Editing by Toby Chopra)