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Private Sector Participation in Albanian Electricity Company KESH, Albania
Private Sector Participation in Albanian Electricity Company KESH, Albania

CATEGORY: Environment, Environmental Policy & Institution, Energy & Climate Change, Impact Assessment

LOCATION: Albania

START/END: 2007-2008

CLIENT: International Finance Corporation (IFC)

STAFF PROVIDED: International Fi

Private Sector Participation in Albanian Electricity Company KESH, Albania

Type of Services

Services provided by LDK include included the identification and analysis of all main technical issues pertinent to the separation of KESH's activities and their organization into independent companies, as well as provision of all necessary technical advice for the establishment of a new distribution company. In particular, the main activities performed for the environmental part of the project were:

  • the identification of the degree of compliance of the distribution operations with national and EU environmental standards concerning aspects such as emissions etc.;
  • the identification of the main environmental liabilities associated with the distribution network/operations and prepare a preliminary estimate of the remediation costs of these liabilities;
  • the preparation of a preliminary estimate of the capital investments required to improve existing operations to compliance with national and EU standards;
  • the proposal of a preliminary plan/timetable for the remediation of existing liabilities and for achieving relevant environmental standards, including a proposed allocation of costs and responsibilities between the company being privatised and the Government;
  • the provision of assistance in the compilation of additional data/information for the Data Room, based on the analysis of available data/information reviewed;
  • the establishment of a baseline of past pollution, forecast remediation costs, and allocation of costs between the company being privatized and the Government;
  • the provision of support to the IFC team and the legal consultants in drafting the environmental aspects of the bidding documents and contracts;
  • the provision of assistance to GoA and IFC in responding to environmental issues and queries raised by pre-qualified bidders during the process, and in modifying those aspects in the final bidding documents (if necessary).

 

Description

Many reforms have been initiated in the Albanian power sector in recent years. KESH has been partly unbundled recently with the creation of a transmission system operator (OST). The separations of transmission and distribution assets have been completed. However, KESH still owns generation and distribution assets and the extent of internal separation between the activities is not clear so far. The next stage of unbundling should thus lead to complete separation of generation and distribution activities as well.

The International Finance Corporation (IFC) Private Enterprise Partnership for South-east Europe Infrastructure (PEP-SEI) program has been appointed by the Ministry of Economy Trade and Energy (METE) of the Government of Albania (GoA) to act as Lead Advisor in this project. As part of this advisory assignment, IFC wishes to recruit a Technical Consultant to assist the IFC team in all three phases.

The scope of this assignment was the provision of advisory services aiming at accelerating private sector participation in Albania's power sector, particularly in:

  • unbundling of Albanian Electricity Company (KESH) distribution business' assets from other activities and assets of KESH;
  • structuring of a PSP transaction that will be conducive to private sector interest and participation;
  • executing an open, transparent and competitive tender to attract the optimal private partner to operate and develop the entity.

The technical & environmental consultant was responsible for pro-actively identifying and analysing all main technical issues pertinent to the separation of KESH's activities and their organization into independent companies. The consultant also provided the IFC and KESH with all necessary technical input for the establishment of the new proposed company.

The main tasks of the consultant included:

  • Phase I: Restructuring/unbundling of KESH;
  • Phase II: Privatization of distribution activities, including (a) Transaction Structuring & Preparation, (b) Transaction Implementation, and (c) Environmental compliance.

 

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