From: Artan Rama
Waste Management, Government Failure, and Windfalls for Suspicious Businesses Protest against waste import in front of Parliament. Photo © Exit.

A successful failure

In April 2009, Albania submitted its official request to join the European Union. The European Commission accepted the request and sent experts to support Albania’s integration efforts. Among them was a group of experts that would design country’s waste management strategy. The assignment was completed in a few months.

The new strategy was submitted to the government and approved swiftly. The ambition shown by the authorities was buoyed by millions of dollars provided by the World Bank in support of the strategy. The enthusiasm caught the Italian and German governments. They funded several waste management projects or programs, restoring hopes for a clean Albania.

But recently, the government has commissioned a new strategy. Other experts have arrived from overseas. Dozens of Japanese, German, and Italian experts from JICA, GIZ, and KFW rolled up their sleeves up to design a national masterplan and new national programs and strategies in the field of waste management.

But the millions of dollars and all the energy spent did not solve the problems.

Over the last decade, Albania has doubled the amount of waste produced. 70% of it is buried. There is no separation at the source, and levels of recycling is low. Out of twelve planned landfills, only two have been built so far. The Sharra landfill, country’s largest site, is old, contaminated, and not properly maintained. The only “success” stories have been the successful waste of money and successful failure of authorities in managing the waste.

Hence, everything is starting over again…

Just Burn it!

Albania, an impoverished former communist country, is trying to rush its development. But economic growth has produced more urban waste. “The per capita increase of Tirana’s municipal waste is comparable, or higher, to that of other major world cities,” says a report by JICA, Japan’s International Cooperation Agency. The municipality has been sitting on the report, compiled by 11 Japanese experts, for more than 5 years. Multi-million euro studies are left to gather dust on shelves.

In the last decade, the total urban waste in Europe has dropped to 6%, but in Albania it has doubled. Caught in panic, the government decided to burn it. It approved the construction of three first incinerators in the country, in Elbasan, in Fier, and recently in Tirana. They will be all be built the government’s most fashioned way: through public–private partnerships. But what public officials consider a solution, for experts and stakeholders is simply poor and costly decision making, if not a corrupt practice. “The decision-maker has not provided any rationale or reasoning for such choice,” says environmental expert Marianthi Guri. “They have yet to reveal what studies they based their decision on.”

Albania’s National Waste Strategy was enacted in 2011. Incineration, i.e., the controlled combustion of waste, is ranked in the bottom of the waste management hierarchy, after reuse, renewal, and recycling. “They have turned the hierarchy on its head, because they want to send everything to the incinerators. There are many incinerators being built,” says Vullnet Haka, a representatives of country’s recycling industry. According to the Strategy, the investment priority is in accordance with the waste hierarchy. But due to their inability to respect the hierarchy, the officials are now changing the strategy. “Financial constraints mean that this strategy is not feasible,” says a senior official at the Ministry of the Environment. “The initial objectives were too ambitious given our conditions,” she concludes.

It is difficult to evaluate the objectives, if you never try to implement them! But despite “financial constraints,” the government has spent millions of budgets in incineration concessions. About €22 million were spent for building an incinerator in Elbasan and €27 million for another one in Fier — almost €50 million in total.

Paradoxically, the government is seeking to draft a waste management strategy after these important decisions were already made. In the offices of GIZ, a development and cooperation agency serving to the German government, new experts have just arrived. The Albanian government has commissioned a new waste management program. Paid with €330,000 by the German government, a German expert will draft up a new plan, which will be ready in March 2018. “The government has yet to inform us of what it plans to do,” says Hermann Plumm, head of the GIZ Waste Management Project.

Plumm, an well-informed expert, states that “the European directive is clear. It supports separation at the source and recycling. Incineration is implemented by industrialized nations, whose governments have strong monitoring and waste treatment capabilities.” Albania lacks capacities to implement the European directives Plumm refers to. Such weakness and a general negligence on the part of Government led to failure to achieve the planned targets. As a result, Albania lost the recycling battle and government found the easy way out: burn the waste.

The battle for the bottle

“We are being deprived of raw materials,” says Vullnet Haka from the Recyclers Association and President of EVEREST Company. “They are burning everything.”

According to data from the Organization for Economic Cooperation and Development (OECD), in 2013, Germany recycled 65% of its waste, before sending the rest to incinerators. In Germany, for any plastic material or plastic bottle recycled you can earn 25–27 cents when recycled. Albania has no waste reduction and recycling program. “The uncontrolled increase of urban waste will, inevitably, push up management costs,” admitted Guri with a feeling of resignation.

Officials from the Ministry of Environment said that Tirana residents “may pay up to €29 (VAT excluded) for every ton of waste sent to the incinerator,” after it is built. Few people know that in inside our home refrigerators we store stuff with high calorific power. The burning of plastic bottles and tin cans produces heat comparable to that produced by combustion oil. That is why the incinerators produce high energy in shorter time.

According to a study by the European Commission’s Science and Knowledge Service Research Center on Municipal Waste Management “incineration can be economically advantageous for certain waste streams that have high calorific value, but if external costs are factored in (such as environmental impact costs) recycling has a lower social cost.”

Another study by Solvey SA, one of world’s largest plastics manufacturers, used a different key indicator: the energy required to manufacture a product from recycled material inputs versus processing of raw materials from scratch. Manufacturing of a new product through recycling uses half the energy needed to produce it through processing of raw material from scratch. The study claims that production through recycling releases 39% less greenhouse gases compared to when processing raw materials from scratch. Thus recycling reduces global warming by 39%, precisely because less energy is required during manufacturing process. The study finds that positive effects of recycling to the environment extend further. The low energy spent in manufacturing through recycling protects the ozone layer and reducing in half the acid concentration in the atmosphere. The result is clear: recycling provides a cleaner environment than incineration.

But to Albanian officials this isn’t a concern.

Office 13/2

In the summer of 2014, Stela Gugallja, the founder of Albtek Energy sh.pk. took the elevator to the thirteenth floor of Sky Tower building in Tirana and registered office number 13/2 as headquarters for her newly established company. Then, she set to write a request to the government. It was an unsolicited proposal for building an incinerator in the most polluted city of Albania, Elbasan. Not much later, Albtek Energy was the winner of the tender, in which it was the only bidder, and was awarded a €22 million government contract for construction and operation of the first incinerator in Albania, near Elbasan.

The National Council on Restorations approved the project and the Ministry of Environment rushed to issue the environmental permit. Credins Bank loaned the money and less than a year from its funding, Albtek Energy was ready to start the construction of the Elbasan incinerator. It was at this time, in August 2015, when Albtek Energy formally left Office 13/2 in the Sky Tower building.

But Office 13/2 also sheltered another company, Integrated Technology Service shpk with sole owner and administrator Klodian Zoto. And Albtek and Integrated Technology were reunited a few weeks after Albtek left Office 13/2! On the same day, October 1, each of the companies registered a secondary office both located in the same address: Elbasan Waste Plant Construction Site. This happened only one week after Credins Bank had loaned Albtek the funds for building the incinerator. This makes you think that besides the offices, the companies were also sharing their businesses.

But Integrated Energy was not satisfied with sharing in the Elbasan incinerator. Like Albtek a year earlier, it submitted to the government an unsolicited proposal for building an incinerator in Fier. And in September 2016, it was the winner of a non-competitive race and was awarded the concession contracts for building and operating a €28 million incinerator in Fier. Company’s address remained at the famous Sky Tower, Office 13/2.

A few months later, in a consortium with two other partners, Integrated Technology submitted yet another unsolicited proposal for another incinerator, this time in Tirana, by far the largest city in the country. The government accepted the proposal and launched the tender procedures for building and operation of the Tirana incinerator, and awarded Integrated Technology 6 bonus points in the competition, for its contribution in preparing the feasibility study and the other specifications of the project.

Finally, a few days ago, the Public Procurement Agency announced the result of the tender. Office 13/2 was again the only bidder and naturally the winner. Integrated Technology, with two partners, will build and operate the Tirana incinerator.

In two short years, several companies, out of a small office in Tirana—Office 13/2 on the thirteenth floor of the Sky Tower—won several concessionary contracts with a total value of about €50 million, obtained the rights to incinerate the waste produced by more than half of country’s population, secured the right to to produce and sell electricity, and were granted free of any charge thousands of hectares of public land for their private businesses.

With no prior experience in waste management and with no funds of their own, within only few months of having established new firms, a small group of tightly connected people became a remarkable “success story.” We asked some of them what motivated them to move into waste management; why did they decide to risk by investing in incineration, which was not a government priority for waste management? What was their or their staff’s experience in waste management? And who were the real beneficiaries behind some shell companies involved in these investments? We did not receive any response. All we had to pursue these questions was publicly available information.

Minister of the Environment Lefter Koka stated that he did not support Integrated Technology, claiming that the government, prior to conducting the selection process for the Fier incinerator, provided a 10 points bonus to another company. He is referring to Building Construction and Green Energy shpk (BCGE). But “BCGE never submitted an offer and Integrated Technology was the only bidder for Fier incinerator concession.”

The explanation is simple: company registration data shows that before the tender Integrated Technology bought 50% of the BCGE shares. This means the minister’s claim is worthless, as Integrated Technology would have been the real winner even if the BCGE would have participated in the bid.

But there is more to the BCGE story. The company was established in October 2015 by three founding partners—one of which was ECOALB FR which obtained 50 percent of the established company by investing 25 million lekë as founding capital. ECOALB FR is owned by Sevi Zani. But Zani was a full time employee of Integrated Technology Service at the time she established ECOALB FR and BCGE, i.e. the same Integrated owned and run by Klodian Zoto. Three months after BCGE was established, Zani sold ECOALB FR and its interest in BCGE to her boss, Zoto’s Integrated Technology Service. As soon as the sale took place, BCGE made an unsolicited proposal to the government for building and operating an incinerator in Fier.

In May 2016, government opened the tender procedures and granted BCGE a 10 point bonus. But BCGE did not bid. Integrated Technology Service was the only bidder and, of course, the winner! Had BCGE made a bid, the result would have been the same, as ITS owns half of the BCGE. But one question remains: why did BCGE withdraw form the tender? Was it just to avoid the arguments that the winner was decided by the bonus awarded by the government? Indeed, the Minister of the Environment used exactly this argument. He stated that “the company that was awarded the bonus was not involved in the race.” But such justification does not hold.

To understand more, let’s go back to ECOALB FR, the company owned by Sevi Zani, who, shortly before receiving the bonus, sold the shares to Klodian Zoto, owner of Integrated Technology Service.

ECOALB FR was established in October 2015. Its address was Ap. 68 at Pallati i Agimit. But on March 26, 2016, here, at the same address, just a few weeks before the government opened the tender for the Fier incinerator, another company arrived: CGC shpk, whose owner was … can you guess? Stela Gugallja, the businesswoman who, one year ago, had won the Elbasan incinerator and was now reunited with her old partner, Klodian Zoton, who several months later was declared the winner of the second incinerator, in Fier.

Why did CGC decide to move? If we look at the documentation we will see that the old CGC address is the 13/2 office. Was ger departure from the office, now that her collaborator, Klodian Zoto, was involved in each of the companies that showed interest in the Fier incinerator, intended to weaken the relationship with the collaborator in the eyes of the public?

Several months after Integrated Technology Service was left alone in office 13/2, the company competed alone and gained the right to build the Fier incinerator. The impression that Fier had acquired another company was successful. But in essence, there was another thing: in trying to solve waste mismanagement, the government had financially supported only a narrow circle of people.

But let’s go further!

In September 2016, Integrated Technology Service  and Energy 2 SLR (a company with foreign capital) gained the right to build the incinerator of Fier.

Then, they transferred these rights to another newly established company, Integrated Technology Waste Treatment Fier shpk, which had the same address, the famous, office 13/2.

Then, Integrated Technology became a 70% shareholder of the new company, selling the remaining capital (30%) to another company for $250. The new partner was Ndërtim Montim Patos shpk, which “by chance” was the beneficiary of about 700 million lekë of state budget money, last October, when it moved the old waste of Elbasan to the new landfill, exactly at the new address that ALBTEK ENERGY and Integrated Technology had opened: Elbasan Waste Plant Construction Site.

But the success of Integrated Technology Service goes further. The company gained the right to transfer urban waste in the city of Elbasan just a few months before the operation of the new plant. It is also the same company that manages a waste transfer station in Kavaja, a city between Tirana and Elbasan.

We investigated the data published by Open Spending Albania on transactions executed by the treasury on behalf of budget institutions. The total amount ordered by the treasury for the Ministry of Environment in favor of third parties for 2016 was 2,128,364,299 lekë, so, just over two billion. Of these, 1.7 billion lekë went to favor only four companies involved in the waste management business: Integrated Technology, Ndërtim Montim Patos, ALBTEK ENERGY, and Integrated Technology Waste Treatment Fier. So, for every 100 million lekë that the Ministry of Environment had spent in 2016, 80 million lekë were spent in favor of these incinerator companies.

It is worth mentioning that the company that will build the Fier Incinerator, “Integrated Technology Waste Treatment Fier” has so far received 11 payments from the ministry environment worth over 650 million ALL, while the construction of the incinerator has not started yet, because the residents around refuse it.

Of course, the big winner was the 13/2 office. This is not just thanks to the incinerator concessions.

“Integrated Technology Service Sh.pk” was selected by the Ministry of Environment for the implementation of two other public works: “Construction of Ishëm River Cleaning Plants” and “Construction of Shkumbin River Cleaning Plants”.

So, in a few months, thanks to financial operations and trics, sometimes opened and sometimes hidden, a very small group of people in office 13/2 of the “Sky Tower” benefited from large sums of public funds and reached the real skies of success.

The failure of waste management from several governments in succession, turned into a financial success for shareholders and partners of 13/2.

The cherry on the cake

The Tirana incinerator is the third incinerator approved by the Albanian government and the largest. Again, Office 13/2 is part of this success. Integrated Energy BV, a company established last year in Amsterdam, was declared a winner in a race without competition and backed up by an 8 point bonus. Vincent van Gerven Oei, an independent Dutch journalist and publicist, discovered that Klodian Zoto, owner of Integrated Technology Service shpk, was one of the three founders. In one of the writings at Exit.al, he explained that the board of Integrated Energy BV included Dutch experts specializing in the creation of financial structures that could be used for tax evasion.

We called the company Integrated Energy BV in Amsterdam and talked to Hans Wallage, one of these appointed directors who explained that although the company had no experience in waste management, Tirana’s tender was seen as an opportunity for good business by the company’s shareholders. But he did not explain how they were familiar with this opportunity. He also did not answer the question who was the real owner of this company. But he confirmed that he knew Klodian Zoto. Dutch law allows concealment of company owners, even when they own only 1% of the shares.

However, we have to wait for January 2018 when the Dutch government, under pressure from the EU, has promised to publish the names of the owners of financial companies registered in the Netherlands. Although not completely, but at least, those who own more than 25%. Let’s wait! But our research shows that the circle behind Integrated Energy BV includes the same people. And Klodian Zoto is not the only one.

Ernesto Granelli, the designer of Elbasan Incenerator, is one of the founders of Integrated Energy BV. But Granelli and ALBTEK ENERGY CEO Stela Gugallja are already partners. Without the procedures for winning the Tirana incinerator being completed, they both two founded a joint venture company E.R. One Albania shpk on March 25, 2016.

As the number of projected incinerators increases, the links between a few people who manage them are increasing!

Battle for Sharra

Diego Testi, one of the successful waste management inspectors of the Municipality of Verona is the positive character that Erion Veliaj, the mayor of Tirana, has chosen to improve the damaged image of Tirana, since the dramatic death of a teenager, last year, at the dump site in Sharra. Having arrived here several months ago, the Italian who runs Eco Tirana, an Albanian public company founded by municipality, is trying to manage the unmanageable waste of the capital.

Although the National Waste Management Plan suggested the collection separated into four streams: paper, metal, plastic, and glass, the new administrator quickly adapted to the local tradition, collecting them together. “Here the residue has become a problem, but it should be seen as a source of income,” says the Italian administrator in his modest office in the center of the capital.

Thanks to the promises of Eco Tirana for waste separation, the hopes of recyclers for raw materials increased. “A new waste separation plant will be set up soon in Sharra,” says Bardhyl Balza, President of the Albanian Recyclers Association. “We seek to be part of this process, we seek to cooperate with Eco Tirana to supply our businesses.”

But Albanian recyclers are not part of municipality’s plans. They have never been! “In Albania, there are many small initiatives that manage recycling,” explains Diego Testi, “but none of what I have seen has the idea of modern waste processing,” he concludes.

Eco Tirana has another plan. We discovered that a few weeks ago that Eco Recycling shpk was founded in Tirana, a business entity with the activity of processing and selection of urban waste. Eco Recycling is a union of Eco Tirana and Meg Albania. Despite the name, Meg Albania is an Italian capital company that, although administered by an Albanian, was founded in Verona in 2005 and belongs to a family business and a small number of employees.

However, through a simple scheme, allowing Eco Tirana the control over the package of 51% of the capital, Meg Albania is gaining, without competition, a new market for its business. “A new waste separation plant will be set up at Sharra. Will be managed by a private company, but will be under public control, ” explains Diego Testi, without mentioning the company’s name.

But the trust that Eco Tirana shows toward a small Veronese company is inexplicable in relation to the hundreds of millions dollars of recycling industry in Albania. Meanwhile the official activities of Eco Recycling have been expanded unexpectedly including “waste analysis, plant discharge control, and land reclamation and rehabilitation.” With the project of the new incinerator in the horizon, the future is also promising for the Veronese Meg Albania. But the model for transforming waste issues into favored businesses is also extending to local government!

We are burning!

Ervin Goci, a lecturer at the Faculty of Journalism, is traveling to Elbasan. There, in Fushë-Mbret, near the polluted Shkumbin River, the incinerator is working at full capacity. “Residents are complaining of the bad smell. We are going to ask them,” he says. Along with him, in a small car, there are two other activists.

In Tirana, AKIP activists, a civic initiative against the import of waste are rushing to inform the public. The government plans to build more incinerators. In Shijak, in a small town near Tirana, residents clashed with private company administrators who asked for permission to burn urban waste at a plant near the city center. In the streets of the capital, we asked dozens of people what they thought about cleaning, waste bins, and incineration. The answers were clear and the results easily understood: Albanians seek a clean environment. They spoke against incinerators and in favor of recycling. Thus, for every five people asked, four were against incineration and, likewise, against the import of waste.

But one of the results was not very motivating. The remains were not separated at the source, ended in any of the painted bins by the municipality, regardless of their content. “But I would do it,” said a young woman, “if the municipality would offer enough bins, but I know that two bins are not enough.”

“These increasing number of incinerators will certainly need more raw material that the government can only provide by legalizing the import of waste,” says Goci. “We must react, while it’s not yet to late.”

“We do not understand what’s going on,” Balza comments. “De facto, this is a bankruptcy. It’s better to leave for Macedonia or Serbia, we can move our recycling facilities there. ” In Fier people rebelled. The authorities have withdrawn and the incinerator has not yet begun to be built. Of course, temporarily. In Elbasan, in Fushë-Mbret, where the furnaces work 24 hours a day, residents are beginning to raise their voice about the bad smell and white smoke.

People need to be heard.

This report was produced under the Reporting Crisis in SEE Project, implemented by the South Eastern Europe Network for Professionalization of Media (SEENPM), with funding from the National Endowment for Democracy. The content of the report is the sole responsibility of the author. The title of the report is by Exit.al.