Albania from a long period is moving forward
to aligning its legislation with the EU acquis in the field of energy. The previous law no. 9072, date 22.5.2003 “On power
sector” has been revised more then 13 time in order to be further aligned with
the EU general principles and the acquis on energy sector. However, attracting of the investment and
entering of a private parties, rationale behind many of above measures and
actions taken, the outcome has remained far below the levels hoped.

Then, on 30th April 2015 was enacted
the new Law on the Electricity Sector no. 43 “On the Power Sector” which aim
the full compliance with the Third Energy Package of European Union and in
specific with the Directive 2009/72/EC dated 13 July 2009 “On common rules for the internal market in
electricity”. The new law foresee by first the restructure of the institutional
relationship between the three public power companies responsible for
generation, transmission and distribution (KESH, OST and OSHEE).

Specifically, regard the vertical unbundling of DSO, the new law
establish that the distribution system operator shall be unbundle and
independent from other activities not relating to the distribution of
electricity. Regard the timeline, the distribution system operator who carries
out this function before the entry into force of this law, shall fulfil the
obligation of separation not later than 31 December 2017.

In meanwhile in order to prove the separate
legal organization and operation from other activities, it shall maintain a
trade name and trademark, different from other names and trademarks of other
activities not related to the distribution of electricity. Then, the
distribution system operator must take measures to avoid creating uncertainty
amongst stakeholders regarding the name and trademark to use, in order to
demonstrate its unique identity, first of all in relation to the supply

In same time, where the distribution system
operator in order to be independent in terms of organization and decision
making from other activities not related to distribution of electric power, shall
apply the conditions that the persons responsible for the management of the
distribution system operator must not participate in responsible structures of
the integrated electricity company, directly or indirectly, for the day-to-day
operation of the generation, transmission and supply of electricity.

In regard, appropriate measures must be taken
to ensure that the professional interests and skills of the persons responsible
for the management of the distribution system operator are taken into
consideration, ensuring that they are capable of acting independently in order
to fulfil the company’s tasks and objectives. Even the financial treatment of
the persons responsible for management and those responsible for oversight
bodies of the DSO controlled by the state will be adopted by the CoM. In more,
the activities of the distribution system operator shall be monitored by ERE,
which in cooperation with the competition authority shall mitigate potential
benefits the operator may acquire by distorting competition.

The all is complete by the general provisions
regard horizontal unbundling of the activity non relate with the energy sector.
The prevision on accounts unbundling state that any licensee shall, in their
internal accounting, keep separate accounts for each of the exercised licensed
activity, and for any other activity not related to energy sector, with a view
to avoiding discrimination, cross-subsidization and jeopardising of
competition. These accounts may be presented as consolidated, apart from cases
when carried activities relate to energy distribution or transmission.

In more revenues licensee obtains from any
right over the transmission or distribution system shall be specified in the
accounts of the licensee. Any licensee shall draw up, submit to audit and
publish their annual accounts in accordance with the effective legislation on
accounting and financial statements and the international accounting standards.
The audit shall, in particular, verify that the obligation to avoid
cross-subsidies among the licensed activities is respected.

Regard the operating of the grid of the distribution
of electric power, to the Distribution System Operator is assigned the owns of the
high, medium and low voltage electricity, for the purpose of allocating it to
its clients, with the division line from the transmission system. Among other is
state that the distribution system operator is responsible for the maintenance
and operation of safe system of electricity distribution in its licensed area.

In regard of the TPA is required that the
distribution system operator provide non-discriminatory electricity
distribution services to all electricity distribution network users, ensuring
the access to and use of the distribution networks of all applicants that meet
the requirements of the law. The distribution system operator monitors how
performance indicators in respect to the quality of the services and request
provided by technical regulations in force are observed.

To make the here above prevision effective in
attracting the investors, a sets of schedule action relate more specifically
with the reality of Albania are putted in place. The above measure are seeing
by October 2014, a launched of very important campaign to enforce criminal
penalties for electricity theft and disconnect service for non-payment of
bills. The criminal code has been revised to make power theft and damages to
the electricity system infrastructure punishable by imprisonment rather than
just an administrative offence. As a result, there were able to reduce electricity
distribution losses in October 2014 to 35%, compared with 45 percent in October

For 2014 as a whole, the distribution losses
amount to averaged 38 percent. The OSSHE aim to further reducing distribution
losses by about 5 percentage points per year, to 15 percent by 2019. The level
of distribution losses is monitored as an indicative target under the GoA
program with the IMF. Even the improving of collection rate bills that amounts
to 83.4 percent in January-October 2014 to 93 percent in 2019. The efforts in
this area are supported by a WB project that is financing a targeted
investments in priority areas to accelerate cash collection and reduce losses,
including metering, grid infrastructure, and upgrades to the commercial billing
and collection system.

The government also aim to ensure that
budgetary, no budgetary, and local government institutions make timely payment
of electricity bills. These efforts will be supported by a restructuring of the
state electricity companies with a view to improving efficiency. In specific,
the distribution company will have very shortly a performance management
contract. It is currently working with qualified expertise and is expect a
contract to be signed in mid-2015.

During the 2015-2017 period, will continue
the implementation of the program for development of the National Energy
strategy for the period 2015-2030. The priorities of the 2015-2017 period as
part of the long-term priorities of the government for the development of the
energy sector are connected to the developing a master plan for this sector.
This project is finance by a loan of USD 150 million from the WB, of which USD
93 million will be invested to strengthen the distribution network and several
substations, as well as supplement with electricity meters of customers, where
OSHEE Jsc will co-finance about USD 45.3 million for this project, as part of
the obligations arising from the loan agreement.

notwithstanding, the new law on the
electricity sector approved, constitutes a decisive step forward, it is only
the first one on a long path of the energy reforms in Albania. The adoption of
this law, it will open the road towards other legal acts, as in particular the
preparation of the new design of the Electricity Market and the further
liberalisation, with the aim to achieve an efficient and a well-balanced and
competitive market opening.
However, the liberalization of the energy
market and the introduction of private operators in the market is one of the
main challenges of the energy sector under European Union directives.

The here communication came within the framework of
the preparation of the analytic report, about Energy Market and Investments
Opportunities in Albania and WBs, to be release in shortly upcoming period by
ACERC. In cases of interest to the directly cooperation as author with analyses
or for any kind of involvement or support as well as a partner, contact us at
the For more keep update with the EU & WBs / Albania Energy
Investments Updates

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