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Drought-generated decline in energy production threats Albania's economic stability: ministry

TIRANA, Oct 28, 2017 (Xinhua via COMTEX) --

The prolonged drought that Albania witnessed during this year and its possible continuation for the coming year is seen as the greatest risk that threatens the fiscal and economic stability of the country for 2018, an analysis of Albanian Ministry of Finance showed Saturday.

According to this analysis, the Albanian government has reported to the Parliament that the problematic hydro situation of 2017 has led to the decline of energy production in the country, failing to provide Power Distribution Operator (OSHEE) with the necessary amount of energy.

Such situation has forced the latter to turn to energy imports at market price, logically more expensive than domestic production.

"Consequently, the fragility of the energy sector from the meteorological situation in the country is the main risk factor," the analysis said.

The Albanian government also admitted in this analysis that in case of a significant negative situation, this vulnerability would cause a domino effect on all sector operators, with a significant impact on the financial situation of each of the companies.

If such scenario happened, it would question the progress of the measures taken within the framework of the reform of energy recovery, as the analysis indicated.

Meanwhile, the disadvantageous financial situation of OSHEE during the second half of 2017, due to difficult weather conditions of the prolonged drought, may reappear during 2018, according to the ministry.

As a consequence, the unfavorable financial position of OSHEE would affect the situation of other sector companies, especially Albanian Power Corporation (KESH), due to the impossibility of collecting its liabilities from OSHEE.

Experience has shown that lack of domestic energy production has produced fiscal risks that ultimately have contributed to the overall growth of public debt and have been the cause of the chaos of the entire energy system, the ministry added.

In the meantime, only few weeks ago, Albanian government was forced to revise the 2017 budget in order to allocate more funds to the OSHEE and KESH in order to help them cope with the energy crisis and cover the energy imports.

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