The Energy System Has Emerged from Collapse

The energy sector seems to have emerged once and for all from collapse and bankruptcy risk as a result of deep restructuring and reforms undertaken in recent years. Although 2017 was a difficult year due to the unfavorable hydric situation that led to the increase of imports, the administrator of the Electricity Distribution Operator (OSHEE) Adrian Cela argues that this strong test was passed and although it impacted Euros 100 million in the company’s finances, the operator again managed to profit. OSHEE is already is in the concluding phase of the splitting in three companies that are expected to start their activity in 2019. OSHEE has received an external Consultant and the division will not have any negative impact on the consolidated performance of the company, Cela said interviewed by Monitor magazine.

-What has been the performance of OSHEE in 2017 and the first part of this year?

First, I would like to emphasize the fact that the essential reforms of the Government in the energy sector,
that OSHEE is part of, has given tremendous results, transforming this sector once and for all from a collapse and bankruptcy risk, in a sector which in recent years has had extraordinary contributions both in the positive performance of the economy and in revenues in the state budget.
As far as 2017 is concerned, I can say that this year was the strongest test that OSHEE has passed since 2014, due to a very difficult hydric situation, as a result of the worst drought in the last 20 years. Albania is a country with high dependence on hydro springs, and OSHEE suffered this dependency during 2017, which forced it to secure energy not from domestic sources such as KESH or private hydro power plants but from import with almost twice the price compared to the previous years. This drought caused OSHEE’s negative impact of over 100m Euros in its finances. Despite the above mentioned difficulties, OSHEE continued to record positive results for 2017:
-OSHEE financial results for 2017 were at a net profit of ALL 1.83 billion.
-Losses of energy dropped to the historical level of 26.41%; the lowest ever achieved in the history of the energy sector in Albania.
– Energy sales exceeded the expectations in the Recovery Plan by 2.13%, delivering 97.13% of the planned 95%.
Regarding the losses, we emphasize that they continue to decrease further, and 2018 is expected to go up to 24.5%; which means: further savings of OSHEE in energy purchase costs.
Also, we can say that as a result of consistent OSHEE measures over the last 3 years, consumer behavior has become much more responsive in terms of timely energy payments. The level of collections reached 101.6%, the highest ever achieved over a 6-month period.
OSHEE has prepared a detailed investment plan for the upcoming 4-year period, with the aim of reducing losses at acceptable regional levels by about 16.5%; this is a very difficult challenge, but it is expected to be achieved – always with the support of the government.
-OSHEE has now been split in three parts. In what stages are you now and how is expected this division to affect the company’s performance?
The process of splitting the company under the Law on Energy is at its concluding stage and with the approval of the ERE for the transfer of the respective licenses, as well as some decisions expected to be taken by the Ministry of Energy, the new companies are expected to start the activity in 2019.
Currently, ERE has just approved the License of one of the companies, that of the FMS’ (Free Market Suppliers), meanwhile it is also expected for the approval of the transfer of licenses for the other two operators to go through, the Distribution Service and Universal Service.
-What are the company’s investment plans in the future, within the framework of the energy strategy?
Considering already overcome the Society Recovery situation, OSHEE has prepared a 4-year Business Plan in coordination with the World Bank to take the company on another level, in being a corporation that is compared to other countries of the region, even at some points with better quality than them.
For the realization of this important step, which is considered a new challenge for OSHEE after that of 2015, a detailed action Plan accompanied by Core Investments in the Distribution Network has been prepared, which are considered very important for the successful realization of this change.
We mention the fact that the Investment Plan for 2018-2021 is a Comprehensive Plan, in line with every aspect of Albania’s developments.
-Since the beginning of 2013, when the distribution operator again passed under state’s power, how did the company’s performance change?
Since 2017, OSHEE makes no comparisons with 2013 or earlier, but only compares to itself, meaning years 2015, 2016 because it is clear that OSHEE no longer has any connection with that period.
Here are a few significant facts, such as:
Loss levels in 2013 of 44.7%, while in 2018 they are expected to be 24.5%.
The level of gaining, which in 2013 was ALL 38 billion, where the real gains of 2017 were ALL 64 billion.
Payments to main suppliers KESH and OST in 2013 were 50%, while from 2015 up to now, the payments to them are at the level of 102%, avoiding the creation of new debts, even reducing them.
The financial result of 2013 was with a Loss of ALL -27 billion, while for the third consecutive year, OSHEE records profits including the drought year in 2017, with an average profit of 3 years with ALL 12 billion per year.
The capital of the company by ALL -66 billion in 2013, has improved to -33 billion in 2017.
In addition to the above mentioned financial indicators, many other indicators have changed drastically, such as:
The quality of power supply, which cannot be compared to the first year 2013, as a result of the extraordinary investments carried out during 2015 – 2018;
Outages and their duration which is significantly reduced in any weather situation;
Customer service, which has been accelerated and upgraded by informing it in real time and on various communication channels.
But as mentioned above, OSHEE is already way past the 2013 situation, and is working to further improve and modernize its activity to catch up as soon as possible with the distribution companies’ levels in the most developed countries of the region such as Croatia, Serbia, Greece, etc.
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