Who Is Paying for Tirana’s Waste? – Exit Explains

Recently, the Dutch postbox company Integrated Energy BV became the only candidate and winner of a tender to build a waste incinerator in Tirana and provide a host of other services, including the construction and managements of new landfills and water filtration plant, under the project name Tirana Waste Treatment Areas (TWTA).

According to the report accompanying the Decision of the Council of Ministers (VKM) from December 7, 2016, the project for the waste incinerator was supposed to have no effect on the state budget:

The implementation of of the draft decision as not accompanied by financial expenses for the state budget […]. The concession procedure, if it will have a winning offer and a signed contract, will not have an additional effect on the state budget, because we are dealing completely with a private investment, whereas the concessionary fee that the subject is obliged to pay will be added to the state budget.

In other words, the report suggests that the state will even make money off of the concession, which is for the duration of 30 years.

The reality, however, is very different.

According to the feasibility study of the project, citing numbers from the Ministry of Transport and Infrastructure, waste production in the Tirana district in 2014 was 0.9 kg per person per day. With 778,338 inhabitants, this about 700 tons of household waste per day, amounting to a total of 246,800 tons/year.

The TWTA, which includes the processing plant, will be able to treat right from the first concession year 550–800 tons/day.

The waste processing plant itself will consist of four processing lines, with a capacity of 230 tons/day each and a total capacity of 920 tons/day. The first line will be operational after 18 months, the second after 36 months, the third after 50 months, and the fourth line will be constructed before 72 months after the beginning of the concession. It will therefore take 6 years of a total of 30 concession years to become fully operational.

According to the feasibility study, the municipality will be charged €29.05/ton excl. VAT. This amounts to €7,169,540 for the 246,800 tons of household waste produced by Tirana each year and processed in the TWTA.

The calculation of this price per ton is based on the assumption that the electricity produced by the waste processing plant, which has an electrical output of 3.85 MWe per line for a total of 15.4 MWe, is sold back to the Albanian government for €133,546,693 over 30 years, or €4,451,556 per year. This is, of course, assuming a very high energy price of €70/MWh. By comparison, during the current energy crisis the government was forced to buy energy on the international market at the rate of €57.4/MWh late June, and €68.2/MWh in July. In other words, the price proposed by Integrated Energy is even higher than the price paid by the government for energy in an emergency situation.

But let’s assume that the state indeed pays this high, fixed price, arguing that the waste processing plant produces “environmentally friendly” energy, in a country that runs nearly 100% on hydropower (if it rains).

In that case, Integrated Energy asks in year 1 €6,422,275 from the state budget, which slowly drops to €2,303,775 in year 30 of the concession, while the fees paid by the Municipality of Tirana will be €1,000,000 in year 1 and €5,118,500 in year 30. The payments by the municipality are supposed to be covered by the cleaning tax imposed on all of Tirana’s citizens through the water bill. But remember that only 23% of Tirana citizens pays their water bills, and thus their cleaning taxes. Where this money is supposed to come from (little alone increase with a factor 5 over 30 years) is therefore still a mystery.

Then, let’s remind ourselves that the VKM explicitly stated that “the concession procedure […] will not have an additional effect on the state budget, because we are dealing completely with a private investment.” But the feasibility study says something different:

Costs of 29.5 euro/ton waste will be covered by Municipality’s budget mainly of Tirana Municipality. The latter has undertaken to, based in the following table, carry out financing from its own funds, while the remaining part will be financed to Tirana Municipality from Central Government.

What does it mean? It means that we are dealing with a completely private investment for the construction and operation of the plant during all contract’s period, so for all 30 years. The company which will be awarded for the construction of the plants, closure and rehabilitation of existing plants of landfills, administration of waste management complex, will do it with its own funds, an investment of 128.000.000 Euro. Complete private capital.

Yes, “complete private capital” if the government is willing to subsidize the fees that Tirana cannot pay to Integrated Energy! Certainly, the government is not paying Integrated Energy directly, but the concession certainly has “an additional effect” on the state budget – of a total of €130,883,750.

In other words, the “additional effect” on the state budget of the TWTA concession for Integrated Energy is larger than the “private” investment of €128,000,000, not even counting the fees paid by the municipality and the energy sold back to government for a very high rate.

And then, is Integrated Energy seriously proposing not to change the price of €29.05 per ton for 30 years? Not even index it according to the inflation?

Once again, the government, and therefore the citizens of Albania, are the losing end of the financial deal. When will this government learn how to use a calculator?