The International Monetary Fund (IMF) judged the Albanian government's administrative capacity in assessing investment projects to be inadequate and, for this reason, urged the current government not to sign any new concession contracts.
The "1 billion" project of the Rama government
The "1 billion" project put forward by the Albanian government is aimed at financing the construction of large public works according to the formula of public private partnership (PPP).
In an interview with the Albanian TV station "Top Channel", the director of the IMF office in Tirana Jens Reinke he stated that "The institutional framework for the management of concessions is not suitable. Building the necessary institutions and strengthening management capacities takes some time, so we advised the government to pause and suspend future concessions ", which in his opinion are decided "Without a clear analysis between costs and profits"
A polite way to say that the IMF does not appreciate the work of the Albanian government because it believes it is incapable of correctly calculating the risks and costs of such contracts for the country's finances.
But there is also another aspect of the problem according to the IMF: use contrary to any economic and legal logic of the mechanism known as'unsolicited proposal'.
What is the unsolicited proposal
The current public-private partnership law (PPP) recognizes two mechanisms for concessions. The first in which through tenders based on clear principles the government accepts the best offer according to its needs. An example: there is a tender for a hydroelectric plant, the government entrusts it to the company that agrees to resell electricity in the future at the lowest possible price.
The other mechanism, however, is that of the unsolicited proposal. A company or any person who claims to have found an idea that the state had not thought of, for example by discovering a river that can produce electricity in Albania. The government evaluates the proposal and in the event of a positive response it also offers the proposer a bonus. This method clearly does not allow a 'competition' between companies but it is a competition in which the winner is already known.
Because IMF is against the unsolicited proposal
In the past, especially with regard to hydroelectric power plants, the Albanian government has entrusted hundreds of concessions with this method.
The culmination was the assignment of the concessions of the Skavica and Pocite plants: in both cases the concessions were entrusted to companies that had not participated in the competition announcement, thus going beyond the limits of the not-requested proposal. It could not be, in fact, innovative ideas that motivated the mechanism since the two plants were designed by the state at the beginning of the '70.
This explains the criticism of the IMF, which is not against public-private partnerships, but in the case of Albania it openly claims that the government does not have the capacity to distinguish economic benefits for the country.
The current government over the past few months has planned a new series of concessions (the Tirana-Diber motorway, the Fier hospital and some schools in Tirana), a plan that from the economic point of view amounts to one billion euros and that drew the attention of the IMF in its annual report. Despite this, however, the government has not yet implemented any reserve plan.
Follow Albania News on Google News