(Adds details, minister's quotes, byline)
By Benet Koleka
TIRANA, Sept 29 (Reuters) - Italy's ENEL <ENEI.MI> and Czech
CEZ <CEZsp.PR> submitted bids to buy up to 76 percent of
Albania's power distributor while Austria's EVN <EVNV.VI> and
Energie Steirmark withdrew, officials said on Monday.
"Therefore, we have two bids to assess, one from Italy's
ENEL and another from CEZ from the Czech Republic," said Tom
Sipos, the representative of the World Bank's International
Finance Corporation (IFC) in the government commission.
Albania hopes the sale of DSO, which is the distributing arm
of cash-strapped state-owned power utility KESH, will gradually
reduce its chronic power shortages that have hurt the quality of
life and growth for a decade in one of Europe's poorest states.
The government commission, which includes representatives of
the World Bank's IFC as Albania's adviser on the sale, will
decide in the next few hours or days whether both bids meet the
mandatory technical requirements.
ENEL ended four years ago a management contract with KESH
while CEZ has taken part in power sale tenders in Albania.
Albania expects the potential buyer to reduce both technical
losses and theft in the Distribution System Operator's (DSO)
grid from 32 percent at end-2008 down to 15 percent in 2014.
Officials said that after the technical bids are valued on
pass-or-fail criteria, the commission will decide who wins by
asssessing primarily the price and management plans.
Once DSO changes hands, it will be a power distribution
monopoly catering to almost one million clients and supplying
5.3 TWH of electricity per year, which it will buy from the
state-owned KESH utility.
MARKET MODEL
Energy Minister Genc Ruli told reporters on Friday Albania
had created a market model under which KESH would bear the risk
for its failure to supply DSO with power while DSO would bear
the risk of failing to avoid losses in the network.
Albania relies 100 percent on rainfall into the basins of
its communist-era hydropwer stations for electricity to cater
for growing demand.
Lack of rain over the last years and unavailability of
sufficient imports have caused even half-day long power cuts and
blackouts throughout Albania and caused GDP to fall by half a
percentage point to 5.5 percent in 2006.
"On the other hand, the risk deriving from the losses will
befall on the distribution operator. It will be obliged to
invest and take all measures to reduce losses in an aggressive
way, be they technical or not," Ruli said.
"It will be forced to import energy to compensate for the
losses. Thus, this is a stimulation mechanism for the private
operator to get it to cut losses so it won't be forced to import
to supply power to the network," Ruli added.
He admitted the least attractive side of DSO sale -- unique
only for Albania even in the unruly Balkans -- was the fact that
35-40 percent of power got lost in DSO's grid because of
technical losses and theft. It also managed to cash in only 83
percent of the total of the power it billed to consumers now.
DSO has a 140 million euro ($218.4 million) debt, which is
from a revamp of its operations. Electricity prices will not
increase in 2008, but they are expected to go up gradually over
the ensuing five years, Ruli said.
(Reporting by Benet Koleka, editing by James Jukwey)
