Towards a More Resilient Energy Model in Albania, Thanks to Financial Support from AFD
published on 12 November 2021
A public policy loan of 50 million euros was signed on November 12 between the Republic of Albania and the Agence Française de Développement (AFD). This first agreement between the two parties materializes AFD's desire to support Albania towards a model of sustainable development in line with European Union standards. In partnership with KfW, the program supports sector reform. It will improve the sustainability of the electric utility.
Albania has a high potential in renewable resources (solar, wind and geothermal energies), that is currently scarcely exploited, the electricity mix is 100 % dependent on hydropower. The current energy crisis highlights the country's vulnerability: forced, in a period of low-water flow, to supply itself on the international market at soaring prices, at the moment the state is absorbing the shocks by subsidizing the sector.
The significant financial support for the Albanian government, by the collaborative efforts of AFD and KfW since 2019, brings together several objectives, such as improving the financial sustainability of operators in the sector, setting up an electricity market and a gradual tariff deregulation process as well as the diversification of the electricity mix through the development of renewable energies.
AFD financed substantial technical assistance for an amount of €1,4 M and Expertise France was deployed to support the Albanian government in the development of a new pricing model. Modeling tools were made available to the sector and a study on the impact of the reform on vulnerable populations will support decision-makers.
Reducing energy consumption and waste, by improving the efficiency of electricity distribution and energy efficiency, is also a significant avenue for ensuring sector sustainability.
Delina Ibrahimaj, Minister of Finance and Economy of the Republic of Albania, stated that “following the realization of the first stages of the program, KfW has already disbursed € 100 M. This new commitment encourages the pursuit of reforms. Our collaboration with AFD in the energy sector should be strengthened very soon by the funding of € 50 M linked to a second phase of the program”
Cécile Couprie, AFD Regional Director for Eurasia, was delighted with “the signing of this important program, which is the result of a fruitful strategic and operational dialogue established with the Ministry of Infrastructure and Energy. This initiative demonstrates AFD's ability to provide concrete and adapted support to Albania to accelerate its integration agenda with the EU and promote a development trajectory compatible with the sustainable development goals and the Paris Agreement. We will continue to support the efforts of the Albanian government on these key issues, through all the technical and financial tools offered by the AFD Group.”
Elisabeth Barsacq, Ambassador of France in Albania underlines that: “The program is a fine example of Franco-Albanian cooperation, since it was an opportunity to set up exchanges between ERE, the Albanian energy regulator and its French counterpart (CRE). The creation of a transparent energy market, as supported by the reform, will spur the country's economic growth, and encourage private sector investment in this market."
Arben Ahmetaj, Deputy Prime Minister of the Republic of Albania, expressed his satisfaction of participating in “this event which is of particular importance, since it is the first program signed with the Agence Française de Développement. The involvement of financial instruments and French expertise to face the challenges of the Albanian government contributes to the intensification of political and economic relations between France and Albania."
Press contact: afdbalkans@afd.fr
