The Power Plant in Narta – A History of Failure

Many years ago, the European Bank for Reconstruction and Development (EBRD), the European Bank of Investment (EBI), the World Bank, and the Albanian Power Corporation (KESh), then the state company for production and distribution of electric power, jointly contributed to the building of the oil power plant with capacity of 100MW in Narta, Vlora.

The power plant would have covered the usual power shortage problems of the country during periods of drought. At the time, energy was exclusively produced by hydropower plants that had many problems during dry periods.

This project was first ordered by the government headed at the time by Fatos Nano, and was later completed in 2005 by the Berisha government.

In 2005, the contract valued at €100 million was signed by the Italian company Maire Technimont. This powerful company, specialized in the technology of power plants, was created from the merging of Fiat Engineering and Technimont, owned by Montedison group.

The contract was applauded by the government as a breakthrough on the Albanian market, while highlighting the significant role of the Italian company.

Despite the delays on the construction site and the incessant revisions of the project, today, after twelve years, the power plant built in Narta, situated on one of the most exceptional beach sites of Albania, has never produced a single kilowatt of energy power, as a result of defects identified in the cooling system.

The cooling system exit is made of glass wool with a diameter at approximately 2 meters that plunges into the sea for several meters deep, in order to absorb the necessary water to cool off the power plant; this has never worked as it was expected.

One reason was the broken and sand-clogged pipe inside the sea, which was caused by a storm in 2009.

The Italian underwater experts, contracted by the construction company to repair the connection pipe, say they have found fishing nets inside it, which seem to have been put there by someone trying to sabotage the power plant.

The power plant continues to have incessant problems with the cooling system and it hasn’t been used since, despite the reparation of the pipe.

The Albanian government decided to file a lawsuit against the company at the permanent court of arbitration because of an error in the proposal, while the company itself has abandoned the site. The government is demanding compensation from the company at value of €130 million, the total value of the investment.

In the permanent court of arbitration there is another case filed by the Albanian government against the same company. This time for failing to pay around €2 million in taxes by the Albanian branch of the Italian company.

The history of the power plant in Narta is rather complex. Certainly, the price paid per kilowatt hour energy produced by oil is much higher than a kilowatt hour energy produced by a hydropower plant, and nearly four times more that the medium price of energy power imported from neighboring countries.

And for this reason the power plant was never put into use.

While waiting for the decision reached by the permanent court of arbitration, the Albanian government will continue to pay until 2019 the contract installments it owes to the international financial institutions, for a yearly charge of €5 million.