“The best path that the government has to pursue is to align this legislation to the EU Acquis”.
FIAA: Shall we start it with a few words about Titan?
Mr. Frantzis: Titan is a multiregional cement producer. We are vertically integrated in cement aggregates and red mix. We say multiregional because we are not multinational in the strict sense having presence in every country. We are present here in Southeast Europe and we are the biggest cement producer in Southeast Europe having presence in evry country like, Greece, Bulgaria, FYROM, Kosovo, Serbia, Montenegro and Albania. We are also present in Turkey, Egypt and the US where we have a large cooperation along the east coast. Also we have terminals in Italy, France and UK. We have revenues above 1.2 billion euro and we employ in total over 7000 employees. Back in 2010, we decided to invest in Antea building a green field plant here in Albania. This investment has been realised with the equity contribution of international financial corporation IFC and EBRD which they held at the time 40% of the equity and 60% Titan. The 200 million euro investment at the time was and I think it still is the biggest green field investment in Albania.
Having Titan in our shareholders team as well as EBRD and IFC, we had always the strictest standards in environmental performance as well as health and safety quarry rehabilitation and corporate social responsibility.
I believe you are the chairman of CSR Network in Albania?
I am the Chairman of the Corporate Social Responsibility Network of Albania and I was fundamental in its creation.
How is this movement gaining attraction in Albania ? Is it being taken seriously more and more now the CSR?
I think our members are quite serious. And I think all our members have practised it seriously. Recently we had the second CSR Awards and there were a lot of companies that had submitted the best practises in CSR, and I think there are more companies that are practising it or they try to practise it. Recently there was also an event about corporate social responsibility in the banking sector.
Are there Albanian companies also or is it mostly foreign companies. What are some of the examples of the foreign companies here that are doing well in CSR?
I would be unfair to say a name and probably admitting another one. However, what I would like to say is that all companies that are our members are Albanian companies with Albanian employees and they are active here in Albania, and they are practicing here in the country. We are all spending a lot of time and effort trying to pass these practises in small and medium companies which are our suppliers and customers. We believe that at the end of the day the concept it will penetrate all the business community from the very big to the very small companies and also to be fair it is easier for a bigger company to be active and to be easily recognized as CSR Pioneer rather than a smaller company with smaller resources. Some of them are doing this right stuff without having the resources to advertise it.
Shall we have a look at what some of the greatest opportunities or one of the biggest opportunities that you have here in Albania to develop your business what are those?
Well, Albania is a developing country and cement consumption it is following very close the economic cycles of the economy. Right now the consumption is quite low because we are in the middle of a recession in Europe, so the business climate is not good in Europe. However I think, it will pick up pretty soon or I mean in the near future. And Albania is very well positioned to pick up also. In the past there was significant growth in the economy, you recall the 2008, where Albania was one of the fastest growing countries not only in region but also in Europe and certainly this is going to be repeated or we hope it will, once the economy picks up.
At the same time once Albania has to build a lot of infrastructure projects which certainly will demand a lot of cement and it will boost the economy of the country. And the country has a huge hydro potential there is a lot of projects that have to be build there.
There are the Trans European Corridors that have also to be built and which once they are there, they will boost the trade with the neighbouring countries in a multiplying effect. There also the ports that certainly need upgrade, for example Durres Port. Once you have them, you need the port in order to connect with Italy, Greece and the rest of Europe.
What are some of the barriers or obstacles in the way of operating environment that make it more difficult for you to realize these opportunities, or top maximise these opportunities?
I think that the infrastructure is one part of it, let me give you an example. We are exporting approximately 50% of our yearly production and we are bringing to the country close to over 20 million Euros of revenues. This income from revenues is quite important for the Albanian economy if you take into account also the large trade deficits of the country.
So, we could double this performance. We could bring close to 50 million Euros by increasing our production with 30% because we have this capacity right now provided that we would have additional markets to export our products. Now, these exports markets are usually far from the Mediterranean and in order to approach them, i.e the US which is a very good market and requires a lot of cement. In order to reach there you need big vessels like Panama’s which cannot approach Durres port because of the depth limitations. Right now the maximum vessel that can be loaded to Durres port is at maximum 20-25 thousands of tons. And with these kinds of vessels you are competitive only within the Mediterranean and in the region where there is a lot of surplus of cement capacity.
If the government realizes the deepening of the Durres port which is in their plans as I understand, this could give us additional possibilities for other export markets. Furthermore, there are certain legislations that impede exports, let me give you one example: Back into 2012, the government imposed an excise in the carbon tax, also in the fuels. This excise in the carbons and also in the fuels increases the cost of fuels by close to 50%. Cement plants are operating on petcock or coal and now this is a very important cost parameter. When there is an increase of 50% in this cost parameter, it means that our exports are less competitive compared to exports from other neighbouring countries.
In the European Union, there is no excise in the carbon taxes imposed on solid fuels when they are used for the production. They are only imposed when these products or petrochemical products are used for transportation or heating purposes. By the way, excises and also indirect taxes are taxes that are imposed at the end product and never on the cost parameter.
So, apart the deepening of the Durres port and lifting of these taxes, are there any other measures that the government took to improve the investment climate?
Let me explain something about Excise Tax. The business community is always complaining about taxes. We understand the importance of this tax in the fiscal budget of the government. However, if they would lift it they would impose an equivalent; it would bring the same results to the budget. For instance, the increase of the VAT of the cement production or in the position of custom on imports of cement in order to bring them at the same play level of fuels and abolishing only for exports in order to bring all parties at the same play level. Talking about other measures, the government has achieved to get the Candidate Status for its Accession into the EU. I think this was a great achievement of the government. The best path that the government has to pursue is to align this legislation to the EU Acquis. The faster it does the better would be for the business climate and it will improve the confidence of the foreign investors on the prospects of the country.
I would like to give you another example for the EU Acquis regarding the environment EU Acquis. Recycling and re-using of waste it is a multi billion investment which allows a lot of companies to develop into this new economy. This is considered as green economy. Here in Albania there are several companies that have done the investments for this recycling and they don’t find the sources. The new government has bunt in the position of green waste which now in EU is a product easily transportable and traded between countries. Of course you don’t do it in a irrational way, you need to have legislation in place, controls, institutions, you need to know where the waste will go and how it will be used. However, this is a multibillion economy and there are a lot of companies in Albania that would take advantage of that. Recently, there was a CSR meeting organized by the Dutch Embassy and there was a Dutch company which was interested in the re-fiberalisation of clothing materials. It was a patented investment and they were interested to do it here in Albania. But they didn’t do it because it is not allowed and they not import this industry. I think that the Albanian economy will have a lot of opportunities with these business ideas.
Is there anything else to add that we didn’t touch?
Let me add something more about cement companies. Cement companies in Europe are the best place to co-process the alternative fuels, fuels that are created from waste and substitute solid fuels. Without damaging the environment, because you don’t burn raw material which is scarce, because of the technology cement plants are considered the best place to co-process alternative fuels. Usually, in the central Europe, cement plants are paid for utilising alternative fuels. Practically, they have a negative cost of energy. This would increase further our competitiveness. And this would give us the ability to export to other countries, thus contributing even more to the Albanian economy.