“An independent, functioning and reliable justice system is a basic element required for all!”
FIAA: During the first four years of the operation phase of the Ashta Hydro Power Plant, what have been the most significant challenges that you have had to overcome?
Mr. Dietmar Reiner: We have invested more than 200 Million EURO until end of 2012 to build a state of the art Hydro Power Plant. VERBUND and its partner EVN were the first large–scale private investors entering the Albanian Energy Sector. Due to the difficult situation in 2008, the time when the concession agreement has been signed, it was agreed with the government to enter into a long-term power offtake agreement. This agreement entered into force in April 2013, until June 2016 KESH was the off-taker, but then it was transferred to OSHEE. In the last four years there were a lot of challenges in the Albanian energy sector, especially in the downstream business, with the difficult situation in the distribution system and the supply to endcustomers. These difficulties also influenced our business; we were mainly suffering from payment delays which created for some periods huge arrears mainly to our lenders. Due to the background of our shareholders as large public utilities in the energy sector in Austria, the understanding of the situation and our belief in the success of the necessary reform in the energy sector, we and also our shareholders and lenders kept calm and focused during this time.
What has been the key to success in overcoming them?
First Point, even after the political change in 2013 there was continuity in the close and good cooperation with the government and our main local partners, the offtakers. This is a very important factor for foreign investors. Second, the reforms of the power sector initiated in 2013 have been successful – just compare the daily media 2013 and now. Third, our contract partners managed to demonstrate respect of contract conditions and we have proven our understanding of the situation. I am convinced, it was the best for all involved parties to find an amicable and mutual solution for the problems arising during this time.
From your perspective, how has the business operating environment for foreign investors changed in the last years?
I would like to answer in the political tradition of my home country as neutral and as fair as possible: The initiation of the current ongoing large infrastructure investments in Albania, TAP and the Devoll HPP, have been made long time ago, but the current government has proven business continuity to these investors. This is a good sign for new investors considering investing in Albania. It should not be forgotten, that the economy in Europe is since years in a “crisis modus” and the appetite of European based strategic investors, like we are, is significantly reduced. So the reduced investments here are not only due the situation in Albania.
Finally, I would like to encourage the current and the next government to continue with reforms and to successfully compete with the other south east European countries for new foreign investments.
What are your expectations for the performance of the Albanian economy in the current situation being in the middle of the electoral year? To your opinion what are the upside and downside risks in the medium term?
I believe in continuation of existing businesses, but only after the electoral campaign and after successful formation of the next government we may expect new reforms, drivers and initiation for new investments and business. I really hope, that the justice reform get back on track as soon as possible, the justice system gets unblocked and out of bad news. An independent, functioning and reliable justice system is a basic element required for all, not only for investors as we are.
What improvements in the business operating environment do you feel are critical to attract more foreign investment in Albania?
The key for Albania’s future is the ability of the Albanian political decision makers to overcome the current democratic crisis and transfer the situation into a win-win situation for the Albanian society. The second key criteria is the successful implementation of the justice reform. Every new investor eyeing on Albania is immediately focused on these issues.