US group nears $3.7 bln Albania power deal

By Benet Koleka

TIRANA, Nov 20 (Albanian Times) - Swiss-based consortium ASG Power is close to clinching a deal to build a gas-fired power plant, a power line and a gas pipeline between Albania and Italy, ending decades of shortages in the Balkan country, its CEO said.
The scheme involves importing liquefied natural gas (LNG) by ship to Albania and using some to supply local needs for electricity and eventually for gas, while exporting most of it to Italy in the form of gas and power.

Chief Executive Officer Agim Gjinali said that ASG -- made up of public utility AET from Switzerland's Ticino canton, with Swiss and U.S. partners -- had obtained one of the permits needed for a 2.5 billion euro ($3.66 billion) "Adriatic Gas and Power" project.
"If we receive the two last permits in 2007, we plan to start building in June next year," Gjinali said, referring to the permits needed to build interconnection lines to the national grid.
"It will take us three years to finish. The secret and the potential of our project consists in offering Albania the electricity it needs to make up for its shortages," he told Reuters in a telephone interview late on Monday.
Albania's creaking power sector has attracted no investment since communism fell in 1990, and still relies on communist-era hydropower plants that are frequent victims of drought and poor maintenance.
A surge in demand due to booming business and private consumption has further burdened the network and power cuts of 15 hours a day are not rare, leaving most Albanians to rely on generators.
Gjinali said the project would see some 100 shipments of LNG from Qatar, Oman and Egypt arrive to a plant in Seman, southern Albania, every year.
It would be re-gasified and used to fire a plant with a planned capacity of 1,200 megawatts.
UNDERSEA LINKS
The project would also include building a 340 km undersea power line across the Adriatic, linking Seman and Foggia in Italy, as well as a 116-km gas pipeline to the port of Brindisi in southern Italy.

Of the total forecast amount of 10 billion cubic metres of gas a year, two billion will go to supplying the Seman power plant and a future domestic market.
"The natural gas market does not yet exist in Albania, but two power stations, various factories and industrial and energy parks could mean there is demand, and Albania could gradually build a (gas) network," Gjinali said.
The remaining eight billion cubic metres would go to Italy through the undersea pipeline.

On electricity sales, the consortium aimed to offer Albanian business and state electricity firm KESH the first 200 megawatts of capacity at cost price, the rest at regional market prices.

Export targets were mainly Italy and the wider Balkan market -- Greece, Macedonia, Kosovo and Montenegro, said Gjinali, who declined to name the U.S. partners in the project until all the necessary permits had been obtained.
He said that potential consumers in Europe had been enthusiastic about the project at the first approach, seeing it as another route to a stable, diversified supply.
"Our project diversifies gas sources and eases dependence on Russian and Algerian gas," Gjinali said, "and Europe has a big need for gas right now." (Editing by Ellie Tzortzi and Anthony Barker) (Guardian, Reuters)