Businesses Confirm: Suspending Hydropower Contracts Will Lead to Litigation Holta Canyon

The association of Italian entrepreneurs in Albania, Konfindustria Albania, has declared that the suspension of the hydropower plant (HPP) contracts by the Ministry of Infrastructure and Energy will lead to lawsuits against the Albanian government for breach of contract.

Yesterday, Konfindustria administrator Gjergj Buxhuku declared:

“Konfindustria considers that the decision of the Ministry of Infrastructure and Energy (MIE) to unilaterally and collectively suspend all so-called “non-operational” concessionary contracts for hydropower plants runs the risk of not only not providing a solution to the current serious problems, but will also lead to grave financial consequences for businesses, the state budget, and will be a cause for subjectivism, corruption, and an increase of the uncertainty for long-term investors.

[…]

Businesses that are currently violating their terms of contract are given the possibility to profit from the hasty actions of executive agencies to use them as legal arguments in their favor to the detriment of the public interest during possible confrontations in nationals and international courts.”

It would in fact not be the first time that the Albanian state would breach a HPP concessionary contract and pay dearly for it. For example, the Albanian state is currently involved in an international arbitrage case against the Italian businessman Francesco Becchetti, over a concessionary contract for an HPP in the Vjosa near Kalivaç. The Albanian government already spent millions of euros on lawyers, while Becchetti demands damages totalling €1.5 billion.

In fact, the Rama government used precisely this argument in order not to suspend the construction of HPPs in Valbona. In 2016, Prime Minister Edi Rama claimed that if the government suspended or canceled the contract, they would “have to pay in international arbitration much more than what you can imagine in your worst dream.”

However, the current collective suspension of “non-operational” contracts – which, as Buxhuku points out, is legally not well defined – would lead precisely to the “costly” international arbitration that Rama sought to avoid three years ago.