Albania takes first step towards unbundling DSO

12 April 2018, Week 14, Issue 905

Albania has hailed the successful unbundling of its state-owned distribution system operator (DSO) OSHEE, after setting up three separate companies to manage the utility’s different business activities.

However, the Vienna-based Secretariat of the Energy Community, an EU body of which Albania is a member, has cautioned that the move marks only “a very first basic step” in the unbundling process. The Secretariat launched an infringement case against Tirana in January over its failure to spin off OSHEE’s various operations by a 2015 deadline.

In a statement on April 6, OSHEE said it had registered three separate companies on March 30, each with an initial capital of 3.5 million lek (US$23,500). One will serve as Albania’s DSO, while another will take on the role of its free market electricity supplier. The third will operate as a universal service provider.

OSHEE, which has a capital of 30 billion lek (US$287 million), will be responsible for managing the three companies.

Albania’s energy ministry this week invited expressions of interest (EoIs) for consulting services to help OSHEE manage its newly constituted subsidiaries. Bids should be submitted no later than May 22, and the contract work is due to start in the fourth quarter of 2018 and continue for 15 months.

In an interview with NewsBase Intelligence (NBI), the Energy Community Secretariat’s deputy director, Dirk Buschle, warned that the companies established by OSHEE were merely “empty shells.”

“These companies now established on paper need to take up their respective activities, for which in turn they need human resources and assets,” Buschle said. “Albania suggests this is to be done by the end of the year, but given that we are already four years behind and unbundling is key for further market development, we believe this should and can be sped up.”

In its January infringement action, the Secretariat gave Albania, along with Bosnia and Herzegovina (BiH) and Ukraine, two months either to take steps to unbundle their DSOs or justify their delay in doing so.

“BiH and Ukraine are even further behind [than Albania], as no roadmaps have been presented to us,” Buschle told NBI. The director warned in January that sanctions could be introduced to the three countries “in cases of serious and persistent breaches” of commitments.

The Energy Community was set up in 2006 to assist countries aspiring towards EU membership in adopting the bloc’s energy legislation, a cornerstone of which is the unbundling of production, supply and distribution.

Last month, Albanian Prime Minister Edi Rama said the government intended to float shares in OSHEE in an initial public offering (IPO) before the end of this year. The company has been a drag on state finances since the end of communism in Albania in 1990. Its net debt stood at 49.5 billion lek (US$473 million) as of August last year. Albania is working towards the full liberalisation of its power sector by 2025.

Joseph Murphy

Edited by

Joseph Murphy

Editor

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