Cost of Milot–Balldre Highway Doubles within Months

The concession for the construction and maintenance of the Milot-Balldre highway will cost Albanian taxpayers twice the amount initially predicted by the government. The construction and maintenance of the 17.2 km long highway, estimated to cost €114 million in December 2017, will now cost approximately €216 million.

That is the price set by the winner of the 13-year long concessionary contract, the company A.N.K.. shpk, owned by Agim Kola.

Below, find a summary of how the cost of this highway doubled suddenly with no explanation whatsoever given by the government.

A timeline of the Milot-Balldre highway concession

In December 2017, the government published the official 2018 state budget, that included a summary of the concessions planned for the year. The budgetary fund for the construction and maintenance of the 17.2 km long Milot-Balldre highway, was planned to be 14.3 billion lekë, that is, €114 million.

During the first few months of 2018, the company A.N.K.. shpk, owned by Agim Kola, made the government an unsolicited proposal for the construction of this highway. On June 28, 2018, the government approved granting a 8.5% bonus to this company and announced that it would soon begin concession procedures, in which other companies could also compete for the tender.

On July 23, 2018, the Ministry of Energy and Infrastructure opened the tender for the 13-year long construction and maintenance of the road. In the tender’s official announcement, the limit fund had increased to 120.8 billion lekë (€162 million), a €50 million hike from the initial state budget figure. The reason given for this increase was the need for street signs and a lighting system for the road.

On October 2018, the Ministry of Energy and Infrastructure announced A.N.K.. shpk as the winner of the concession, with a limit fund of €162 million, or €9 million per kilometer. The construction work is predicted to include 15.6 km of 6-lane highway, a 850m long tunnel, and two bridges, a 620m long one over Mat, and a 223m long one over Drin.

Following the construction, A.N.K.. shpk will be responsible for the maintenance of the road for 13 years.

During these 13 years, the government will pay back the cost of the road, plus interest. Taking into account that interest, the government is set to pay A.N.K.. shpk approximately 27 billion lekë, that is, €216 million. This amounts to almost double the initial predicted cost, calculated less than a year ago.

The “one billion euro” plan

This project is part of the “one billion euro” in public-private partnership (PPP) investments plan. It came fourth in the plan’s list of projects, following the Rruga e Arbrit highway, the Thumanë–Kashar highway, and the Orikum-Dukat highway.

The Rruga e Arbrit highway will be constructed by Gjoka shpk for €240 million, Thumanë–Kashar will be constructed by Gener 2 shpk for €225.8 million, and the 15 km long Orikum-Dukat road will be constructed by Gjikuria shpk for €58 million.

All of these contracts derived from “unsolicited offers” and all the concession winners consisted in the companies who made those offers in the first place.

This public-private partnership based investment plan has been criticized by the IMF, the World Bank, and the US State Department, out of concern that PPPs not only fail to be transparent and restrict competition, but also contribute significantly to the country’s public debt, putting Albania’s economy at risk.