The relevant Law for PPPs is the Law no. 125/2013 “On Concessions and Public Private Partnerships”, as amended by Law no. 88/2014 and Law no. 77/2015 (the “Law”). An amendment to the Law is currently pending in parliament.
The Law “On Public Procurement” (“PP Law”) No. 9643 dated 20.11.2006, last amended by Law no. 182/2014, applies in general when awarding PPPs or concessions, unless otherwise explicitly provided for in the Law. Albania has no sectorial, regional or municipal Law regulating non-concession or concession PPPs, except the Decision of the Council of Ministers no. 576/2013 on hydropower plants which contains additional provisions for the procedure of identification, evaluation and granting concessions (but not non-concession PPPs). For all other matters concerning concession PPP awards and the award of non-concession PPPs in other sectors, the PP law applies.
The Law allows a large variety of models and many derived forms of BOT. Depending on the means of remuneration and the allocation of key inherent risks, a PPP can be realised as (i) a public works concession, (ii) a public service concession, (iii) a public works contract or (iv) a public services contract. The definitions set out in the Law are based on the EU Law definitions.
In general, the Albanian legal framework on PPPs has a medium to high compliance with the European standards and a high compliance with the standards and best practices assessed in this report throughout all five chapters of the checklist. The Law requires the contracting authority to select Private Parties through a competitive (transparent, non-discriminatory, objective) tender process. The winning bidder is selected by a committee, which bases its decision on pre-determined selection and award criteria. In order to comply with the transparency and non-discrimination standards, the initiation of every award procedure needs to be publicly announced via an electronic notification (i.e. Public Procurement Bulletin).
“Compliant with EU standards, but details missing”
The Law remains silent on the possibility of awarding PPPs in the course of a competitive dialogue, as Article 22.3 only states that the contracting authority may use an open procedure, a limited procedure or a negotiation procedure, along with the preliminary announcement of the contract award notice.
Flexibility is provided by making most of the terms of the project agreement negotiable. This flexibility extends to the possibility of amending the project agreement during its execution and its termination. Also relevant for amendments to the project agreement or its termination is the fact that the Law allows disputes to be settled by international arbitration (e.g. the UN Convention is applicable, Albania is a member state of the ICSID).
“High effectiveness and many awards despite weak business environment”
The effectiveness of Albania’s framework is clearly above average; it is only the business environment that lets it down. The main reason seems to be the banking and finance sector and the capital market.
Albania has awarded more than 20 PPPs. Some of the most significant projects are: (i) the Albanian National Airport (concession agreement); (ii) the Hydropower plants in Devoll River (BOOT); and (iii) the National Road “Rruga e Kombit” (concession agreement). Overall the legal as well as policy framework in place for non-concession and concession PPPs demonstrates a high compliance and effectiveness.
With regard to the bankability of non-concession or concession projects, it has to be noted that there is no capital/bond market in Albania. The Tirana stock exchange does not function in an official capacity and the businesses or the investors sell shares in the informal market. Thus, the capital market is regarded as the most undeveloped sector, which is the main reason why the business environment has a very low effectiveness level (24%).
No red flag issues were found.
The country has a comprehensive PPP policy and the government is committed to developing PPP projects as a priority. Key measures that should be taken to facilitate PPP in the country are standards, templates, explanatory guidelines and the training of public officials.