Albania: 80MEUR loan from EBRD/EIB for unfinished TPP Vlora, Italian Mare Engineering Technimont sued for malfunction turbine

Published on 16. February 2016., SEE Energy News

80 million euro loan (2.3% as foreign debt) was taken for construction of the Vlora TPP, which has not been a single day of work due to a defect in the construction process.

External debt made by state-owned enterprises for which the Albanian government has entered as guarantor, (which means that if companies fail to settle their payments are made from the state budget), has reached 188 million euros, an amount as 5.5 percent of the stock of external debt of the country.

Register of reports detail the state debt by the end of September 2015, the amounts, creditors, terms and Albanian companies have received loans. Most shows that have gone financing for infrastructure projects, mainly energy.

Among these loans is lending 80 million euro (as 2.3% of external debt) received for construction of thermal power plant in Vlora, who has not been a single day of work due to a defect in the construction process. By lending to the Vlora TPP so far been paid 35.6 million euro, while also remain to be repaid 44 million euros.

In total loan 80 million euro for the TPP, 40 million are provided by the European Bank for Reconstruction and Development (EBRD), the signing of which was made in July 2004 and were to be paid the 14.9 million uro by April 2019.

40 million euros were taken in 2004 were the European Investment Bank (EIB), of which remain to be settled by the beginning of 2023 and 29.3 million euros.

The Albanian government took 80 million euro loan for construction of a power plant in the south of the country with the aim of diversifying the sources of energy, driven by World Bank advice.

The loan will be settled with the proceeds to be secured from the sale of energy produced by TPP since it was built. But during the construction defect in the cooling turbines it has made the final production impossible. The works for the construction of TPP of Vlora completed in 2009, but production was not activated until today, making a loan of 80 million Euros for its construction to be paid from the state budget, tax Albanians for a service there is ever offered. The conflict between the Albanian government and the company that has built TPP is currently in the Court of Arbitration.

The company hired to build the plant through a loan from the World Bank, is the Italian “Mare Engineering Technimont”. Differences between them and the Albanian authorities started in 2009.

According to the agreement, the Italian Company should have completed the work in May 2009, but before the plant started working, a serious breakdown was presented at the cooling system.

After this problem, KESH refused to accept the work and asked the World Bank to suspend the remaining payment of 10 million EUR.

KESH also asked the World Bank to execute the 5 million EUR guarantee of the project.

The World Bank initially supported KESH by accepting both requests of the Albanian part, making it the first case when an Albanian institution executes the guarantee to a foreign private company.

But the disagreements between the Albanian authorities and the Italian company deepened and peaked with the trial at the Court of Arbitration.

KESH demands 11 million EUR from the Italian Company, as a compensation for the delays and the violation of the agreement. The Italians have their own claims that reach several millions, transmits Serbia-energy.eu