Private electricity producers in Albania are facing increased expenditure after the Albanian government announced its plans to tax the huge profits they gained since the start of the Russian war in Ukraine.
These companies have apparently benefited hugely from the crisis by hiking prices up to ten times higher than before the war and without cost increases, and now the government intends to get its share.
The plan is part of the government’s draft state budget for the next year which is yet to undergo parliamentary procedures.
Albanian Ministry of Finance announced in a note sent to parliamentarians that profits made by producers of electrical power will be taxed by 33 percent, estimating the expected revenues to be around 8.3 billion leks (about 70 million euros).
However, a trader with knowledge of the matter who refused to give his name due to the sensitivity of criticizing the government in an effectively government-controlled market, said it might not yield the expected results if prices return to normal or fall next year.
The government opened the market for private-sector electricity production almost two decades ago by privatizing or handing over to the private sector dozens of small hydropower plants.
In the following years, more plants were built- including several large ones on the Devoll River -through concessionary agreements, increasing the private production of electricity from 1.6 BN kWh in 2017 to 3.6 BN kWh in 2021.
The private sector now accounts for more than 40% of Albanian electricity production while the three large plants build on the Drin River during the Communist regime are supplying the rest.
The private producers were making large profits in the past by selling their electricity to the state-owned system of distribution based on a formula based not on the cost of production but on the average regional price.
