Prishtina, 12 September 2012 – Power Plant “Kosova B”, according to the Minister of Economic Development, shall be revitalized through a public-private partnership, whereas, according to him, there are still open issues for the “Kosova e Re” project.

Power Plant “Kosova e Re” is in a crossroad. After removing TPP “Kosova B” from the tender package, decisions have been shifted in terms of shareholding and new power plant capacities. Moreover, it is not clear yet whether prequalified investor are still interested in this project and whether there is a need to publish the tender for the third time, said the Minister of Economic Development, Besim Beqaj, in an interview for “Koha Ditore”. In addition, minister Beqaj added that he made it clear to KEK that their aspirations to keep “Kosovo A” in operation after 2017 are impossible. In the interview, the Minister also spoke on the privatization of Distribution, PTK, as well as on the opponents of such privatizations.

Koha Ditore: How is the POE privatization process being managed?
Beqaj: The issue of privatization is one of the most demanding issues in transitional countries. As the government, we have the competencies over POEs, and this is a very sensitive process, as they are public enterprises providing services for citizens. We have started with a situation that was not fully defined, both legally as well as in terms of project development, and it took us time to clarify the legal basis for these processes. At the same time, we have established good relations between public institutions, the government and transaction advisors, which, at certain times in the past felt that they should be in the lead of activities, rather than be directly accountable to the government. We had to change such a system.

Koha Ditore: What does this change mean?
Beqaj: The change is that for any decision that we take in the privatization committee or the steering committee for “Kosova e Re”, we initially request the transaction advisor to tell us whether decisions are compliant with the laws and procedures. They have the legal responsibility, not us in the politics. Therefore, they are responsible, as they are getting paid for this. This was very concerning for them initially.

Koha Ditore: There were many reactions on the privatization of the Distribution, particularly on its value, which was said to be to low.
Beqaj: Distribution privatization process is one of the best processes in the region. Firstly, because of the exemplary procedures followed, and also because we have put only one criteria to determine the winner, namely the price. Whether the price is good or bad, it is an issue of the transaction structure. We have expected the price to be higher. We have all expected that the price should have been higher, but this is a market economy and this is the price according to regulatory parameters set by the regulator, which is accountable to the Assembly of Kosovo. Therefore, it was not a competency of the government to take regulatory parameter decisions, but rather of the Regulatory. I think that the regulator has taken responsible decisions for the future of the citizens, but also with an immediate effect.

Distribution buyer will lose ownership if it fails to meet the requirements

Koha Ditore: What were the impacting factors on the offered price?
Beqaj: We have not taken over any liability on non-collection, as the countries in region did. This enables us to force them to invest in the quality of supply, requesting a reduction of losses, without any obligations on the part of the state. This was a requirement of the Regulatory. I was not in favour of having a higher value today and impose on our consumers obligations for the upcoming 18 years in terms of higher prices for electricity. In addition, we haven’t given a dime of old debts to the investors. 110 kV assets have not been privatized, but have left them under state ownership – KOSTT, whereas Albania, for example, has also privatized this asset. In addition, we have allowed a clause in the contract that in case the company fails to meet the requirements, the Government has the right to intervene and take over the company without any compensation.

Koha Ditore: This means that ownership can be reverted?
Beqaj: Yes, it can.

Koha Ditore: For which criteria?
Beqaj: If they don’t fulfill the obligations as per the contract, such as elimination of losses, committed investments, and other aspects. This will be used as a measure to assess whether the criteria have been fulfilled.

Koha Ditore: When is the contract with “Limak” for the Distribution privatization expected to be signed?
Beqaj: I believe the contract will be signed soon, as we are already in the final phase of preparations. We have tome until mid October to sign it, but we want to do it sooner.
 
Koha Ditore: TPP “Kosova e Re” project is ongoing for many years now. Why has TPP “Kosova B” been separated from the new power plant?
Beqaj: The separation was very problematic. There are three reasons why TPP “Kosovo B” was separated from the project. Firstly, we didn’t want to enter into state obligations of up to 40 percent of the GDP for a state guarantee required. Then, in the current financial conditions, it is difficult to ensure financial support, as the project has a cost of up to 2 billion euro. In addition, this was also a requirement of investors.

Koha Ditore: How will the private capital for the revitalization of Kosovo B be included?
Beqaj: We are looking at the possibilities of treating and addressing “Kosovo B”. Assets will remain public and will be included in a public-private partnership, and its rehabilitation will be done in line with the EU standards.

Koha Ditore: What will happen with the rest of the project, the new power plant?Beqaj: Procedures for “Kosova e Re” will continue. We are already discussing with investors if they have further interest in the project in order to move forward. However, if they have no interest, we are willing to reinitiate the procedure of the call for new investors, through an investors’ conference, in order to open the way for competition in the project. This is not a classical privatization, as in the case of Kosovo B we have a public-private partnership, and in the case of Kosova e Re we are speaking of a shareholding company where the government will have its own shares?

Koha Ditore: Have your received an answer from investors on their interest in “Kosova e Re”?
Beqaj: Transaction advisors are reaffirming this with them. I believe that within this month, we will come out with our recommendation as to how we will proceed further with “Kosovo B” and the relevant timeframe. In addition, more will be known about “Kosova e Re”.

Koha Ditore: The decision of the Government of “Kosova e Re” stated that it is possible to reopen this project for new investors. Have any of the energy behemoths expressed any interest to reenter the race?
Beqaj: We look forward to any interest from companies for this project. However, if we open the prequalification procedure for new investors, we will do this through investor conferences, as we have done with PTK. We will invite all renowned companies to the conference to present them our project, and gauge their interest. However, we have be aware that a market of 1.8 million is less likely to be as attractive as the public believes. In addition, the current global financial situation is difficult, and large companies have large equity obligations.

Koha Ditore: Removing TPP “Kosovo B” from the tender package seems to have distorted many already defined parameters. Let us speak on the shares?
Beqaj: No, the issue of shares hasn’t been decided yet. We will soon have a meeting of the Project Steering Committee for the “Kosova e Re” Project and we will define new criteria, which define the state contribution vis-à-vis in shares in the company. In any circumstance, we will be shareholders in the company to be created by “Kosova e Re”, as we are also contributing natural resources. However, I cannot speak on percentages yet, as this is an issue for the experts.

Koha Ditore: We also don’t know capacity of the new power plant?
Beqaj: I would like to add that there is much wishful talking here. Earlier, there was no clear financing ideas, when then envisaged capacity was 2.000 Megawatts. In addition, it was not assessed what this investment will cost the citizens of Kosovo, as any investment will have a rate of return, in terms of the price or coming phases. The idea was that there will be a power plant of 600 MW plus; namely to start with one unit of 300 MW and then proceed chronologically. We are no discussing with KEK and KOSTT, transaction advisors and other mechanisms to define the size of the first unit, but always leaving open the legal and infrastructural possibility to seek other developments.

Koha Ditore: It was earlier said that the construction of units larger than 500 MW is economically more favorable?
Beqaj: This is why I didn’t want to discuss on the size. However, if it turns out that 500 MW is more economically viable, and if it works in our system we have to see. Therefore, we need to do a cost analysis, and to assess the functioning of such units. As soon as I get all professional opinions of relevant stakeholders, we can take a decision, if there is concordance in them.

Koha Ditore: When are the legal amendments expected to allow lignite to be used for purposes other than combustion?
Beqaj: The Law on Mines and Minerals is under amendment procedure, and this was done with the initiative of the Economic Development Committee of the Assembly of Kosovo. Either way, any decision on energy has to go through the Assembly. Our ministry has given its input to the amendments, and we asked that the law is more open for new investments, new technologies, and with simpler procedures, with the confirmation and decision of the Assembly included. In addition to combustion, amendments will likely allow lignite to be used for other purposes. We are looking in other directions, through a professional approach, responding to technological advancements in the world, not restricted only in the natural resources of Kosovo.

Koha Ditore: When will “Kosova A” be decommissioned?
Beqaj: We have a legal obligation and a national commitment to the European Union to decommission Kosovo A in 2017. This is an obligation of ours, and regardless of KEK wishes, as KEK may desire to operate for an additional 20 years, the shareholder is decisive in this, and there will be no extension. We are aware that the construction of new capacities with new technologies is a high priority for the health of the citizens, and for the environment. It is in the competency of KEK to operate with the plant until 2017, as we don’t want to intervene in its management, but we have informed KEK that by 2017 Kosovo A has to be shut down.

Macedonia – is interested to import coal from Kosovo

Koha Ditore: Why has the royalty gone up from 0.27 to 3 euro?
Beqaj: Until now, lignite was only used from one publicly owned company. As the sector may open for public-private partnerships, we have wanted to add economic value to the resources in use. It may happen that we open the market for the sale of lignite, as we have a request from Macedonia to purchase lignite from Kosovo, to supply its own power plants. Even with this price, we are still very competitive with other countries in terms of lignite.

Koha Ditore: But the cost of the royalty will be on the customers through energy tariffs?
Beqaj: Yes, it will, but imagine its impact on the price. Do not listen to KEK when they say that the increase of the royalty has increased the price. When we look at the structure of energy tariffs we can see a difference. The regulator should do its job professionally, and argue that the price of energy is real. It should do this, not the Government, not KEK. The tendencies to delay this for the future was a mistake, as in the real world, prices follow the inflation rate. Neither KEK, nor KOSTT, or the Regulator are here to make politics, as this a task of the Government and the Parliament.

Koha Ditore: The PTK privatization has failed once. Will it be privatized now?Beqaj: We have approved the tender document package. The principle of the highest price was also used here to determine the winner. We have already sent all investors calls to bid, and this will be open for two months. During this time we expect to receive comments in the documents, as well as the bids. I am fully convinced that within this year we will announce the winner.

Koha Ditore: What are the obligations of the investors in relation with the PTK buildings that have already been transferred to the Post of Kosovo?
Beqaj: All PTK assets have been transferred to the new state-owned company, the Post of Kosovo, with the exception of those related to the operations of Telecom and Vala. We will obligate the investor with the contract to enter contractual relations with the Post to use lease its buildings, and that postal services for Telecom and Vala will be provided by the Post of Kosovo. For this we have ensured over 9.2 million euro of annual revenues for the Post. Hence, will this move we have manage to ensure Post’s sustainability without any need for subsidies, accounting for a responsible and functional operation, a management that is mindful of the Kosovo standard, not only its individual issues.

Koha Ditore: There was a petition against the privatization by the trade unions and several NGOs?
Beqaj: Recent movements follow a political agenda, rather that a movement to protect the interest of employees. No union can speak on behalf of the people, as they can only speak on behalf of the employees. However, they have to be accountable to the public on the use of their funds. Therefore, no one can make a petition claiming that privatization is wrong, when this privatization was carried out with a decision of the Assembly, which represents the people. NGOs, unions cannot represent the people.

Koha Ditore: You are saying that BSPK is cooperating with opposition parties?
Beqaj: The Union has entered into a political agenda. This doesn’t go in favor of protecting employees. The Union should speak on employees’ contracts, forms of retaining the interest to the employees. BSPK is leading the petition, but I have to say that BSPK is one the greatest contributors to the privatization process, not just for POEs, but in general, as the Head of BSPK is member of the Board of the Privatization Agency, and takes decisions on privatization. If they consider privatization to be destructive, then BSPK should explain how they are part of this destruction. Particularly when we speak of the privatization of “Trepça”, as nothing has been discussed on this yet. We still do not know how this enterprise will be revitalized. They are simply using it to play with the sentiment of PTK employees.