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TIRANA (Albania), July 5 (SeeNews) – The European Bank for Reconstruction and Development will continue to invest in narrowing the infrastructure gap in Albania which remains significant in terms of transport links, energy, municipal and environmental infrastructure, a senior EBRD official told SeeNews.
“We will continue maximizing opportunities to finance public infrastructure through commercial means whenever possible,” the head of EBRD office in Albania, Matteo Colangeli, said in an interview with SeeNews.
The EBRD recently disbursed the first 117 million euro ($136 million) of its loan to the Albanian power generation company KESH and the second 100 million euro tranche could follow in the coming months, Colangeli added.
“We are also working on another $50 million sovereign loan to rehabilitate regional and local roads. Stepping up our support for SMEs is another key priority in Albania. We are working with local banks to deepen our reach in the private sector by risk sharing with them,” the head of EBRD's office in Albania said, outlining projects of interest to the bank.
Colangeli also said EBRD is significantly scaling up its investment activity in Albania in 2018. The key project this year will be the financing of the Trans Adriatic Pipeline (TAP) project, with half of the investment to be allocated for the construction of the gas pipeline in Albania.
“This should entail an EBRD loan of up to 1.2 billion euro, with 500 million euro from our own funds and the rest syndicated to commercial banks. This will be our largest investment in the country to date,” he noted.
On July 4, the EBRD board of directors approved a loan of up to 500 million euro for the construction of TAP. The gas pipeline will stretch from Greece's border with Turkey, via Albania and across the Adriatic Sea, to Italy's coast. The TAP consortium said earlier this week it has lowered into the ground around 85% of pipes on the route of the pipeline in Albania and Greece. The consortium plans to start full-scale operation of the pipeline in 2020.
EBRD is also supporting the establishment of a well functioning gas sector through providing technical assistance to build capacity at Albania’s newly established transmission system operator, Albgaz.
Moreover, EBRD and the EU are structuring a comprehensive programme in support of boosting the competitiveness of tourism industry in Albania. The programme will be funded by EBRD through a sovereign loan of up to 60 million euro and a EU grant of 40 million euro.
Colangeli said he hopes the preparation of the programme will be concluded during the course of this year.
The programme foresees investments in a number of projects that will enable the country’s tourism potential, such as improvements to local roads and the upgrade of municipal and environmental infrastructure.
“Half of the funds will be targeted to four priority regions - Berat, Fier, Korca and Shkoder – while the rest will finance projects across the entire country. Part of the EU grant will also be used to rehabilitate cultural heritage sites,” Colangeli noted.
In parallel to these investments, the programme envisages support to micro, small and medium-sized enterprises active in the tourism value chain through financing via local commercial banks and advisory services to improve skills and know how.
“We will also work with the municipalities involved and tourism associations to build capacity. We are very pleased with the close co-operation with the EU on this innovative program, which ultimately will contribute to the establishment of a sustainable and inclusive tourism industry in Albania, and hope to complete its preparation as soon as possible during the course of this year,” the head of EBRD Albania office said.
“Agribusiness and renewables are two sectors which in my view will attract growing investment in the years ahead,” Colangeli said, adding that EBRD is implementing a large programme to enhance access to finance in the sector, partnering with the government of Albania and local financial institutions.
The start of the EU grant programme under the Instrument for Pre-Accession Assistance in Rural Development (IPARD) later in the year should further boost investments, he said.
“Renewables have been a traditional catalyst of FDI for Albania, although this has been concentrated in the hydro power sector which virtually accounts for the entirety of power generation in the country at present. This is set to change in the coming years. We are working with the government to establish a supportive regulatory environment for solar power development and to prepare competitive tender processes for utility-scale solar capacity allocation. We expect the first competitive solar tenders to take place next year.”
According to Colangeli, Albania faces two key challenges in the years ahead.
“The first is related to FDI. This has been dominated in recent years by two large energy projects (TAP and a hydro power plant developed by Norway's Statkraft) both of which should be completed by 2020. Filling the gap that will be left by these two projects will be crucial to maintaining economic growth and also to attracting much needed skills and know how,” the EBRD official opined.
The second challenge relates to optimizing the limited sovereign borrowing capacity in the context of Albania's significant infrastructure needs by mobilizing private sector investment whenever possible.
“EBRD has a crucial role to play in supporting Albania towards meeting these challenges and continue on its path towards EU integration,” Colangeli added.
The Council of the European Union granted the status of EU candidate country to Albania in 2014.
To date, the EBRD has invested almost 1 billion euro in over 80 projects in Albania.
($ = 0.85783 euro)