Prime Minister’s message to all Albanians on energy crisis

Dear fellow citizens,

The shock wave of another natural disaster, this time coupled with geopolitical factors and trade manoeuvres, is heading towards Albania again.

It is neither an earthquake, nor a virus, nor is a flood and, thanks God, it is not life-threatening, yet, in socio-economic terms it has a negative energy that can trigger shocking effects on the lives of households, businesses and the society.

This is the unprecedented energy crisis, which has just begun to show its extremely disturbing signs in the major world markets, from China and South Korea, to America, to Great Britain and to the space of the European Union and to neighbouring countries, such as Italy and Greece.

The temperature of this crisis is soaring everywhere, now on an hour to hour basis not day to day, while the dropping weather temperatures are approaching along with winter and the growing need for heating.

Just when the hopes of a return to normalcy, after the tragedy caused by the pandemic, to which mankind is paying the cost of fatalities comparable to a world war, have risen thanks to the mass vaccine rollout and high rates of economic recovery, this new crisis forces us to take certain steps in the face of a new challenge, which is as strong as the earthquake and the pandemic in economic and social terms.

The phenomenon of mind-boggling gas and carbon soaring prices in all international markets, as well as the strong upward trend in oil prices, coupled with a general spike in prices of daily consumer goods, looms large today over all countries like the silhouettes of an enemy army on the horizon of a challenging winter the world is about to face.

The exponential growth in consumer demand, after the reopening of economy due to successful management of pandemics, has exponentially spurred the demand of manufacturing industries for energy, challenging even the world’s economic powers, from China, where the tight energy supplies threaten nearly half of the country’s industrial capacity, to Europe, where the high demand and insufficient gas supply have forced governments to cope with soaring prices and even warn and hint at electricity supply cuts.

The high rates of post-pandemic recovery and the exceptionally high growing need for energy have driven the price of gas up by about 250%, that of carbon by about 80%, while the price of oil has jumped up from about $60 per barrel in August 2021 to around $80 right now and, according to current projections, the price could skyrocket well over $100 per barrel by the end of the year.
For Albania, the average annual purchase price of imported electricity has almost tripled compared to last year.

At HUPX Power Exchange, the electricity was traded at an average of 39 euros/MWh last year, while the electricity price has jumped to 110 euros / MWh this year, registering an increase of 182%.
For many financial research analysts, this energy crisis is different from others. It is mainly related to climate change and efforts to curb it, but also to a combination of other factors.

A series of extreme weather events, with unusual seasonal features, have impacted both gas supply and demand. The extremely cold winter at the beginning of the year in the northern hemisphere, Asia, or the extreme freezing temperatures in the United States, contributed to the drastic fall in liquefied gas exports during February.

The cold spring and floods in Europe automatically increased the demand for gas for heating.

Similarly, the extreme summer heat waves in China, Europe and the US drove up the demand for gas for cooling.

Electricity generation from alternative sources has decreased, while wind farms in Europe have produced less energy than their average annual levels.

Consequently, the shortage of alternative energy output has led to an increasing demand and soaring prices of gas and coal.

Phasing-out three nuclear power plants as part of the program to stop the production of nuclear energy in Germany has driven a growing demand for energy from non-renewable natural resources.

The post-pandemic economic recovery has been strong both in Europe and Asia, increasing the demand for energy from household consumers, plants and enterprises in general.
Despite the souring demand and the 250% rise in base prices in the markets, Russia has not increased its supply to the European Union, restricting itself only to meeting long-term contractual obligations.

The recent policies designed to address climate change have indirectly impacted the price hike.

Around 15 million households in Great Britain are expected to be negatively affected by the electricity price increase.

The Italian government has notified its citizens for a 40% increase in their gas and electricity bills in the next months.

Likewise, electricity price rose 72% to 133 euros/MW hour since start of the year in Bulgaria.

This whole picture on the energy situation, naming only a few of the many examples that can be found far or very close to us geographically, suffices to create an overall idea about this crisis, where like it or not, Albania like all other countries, is involved and forced to cope with it, totally unable to shun this global storm.

Experts find that in spite of the potential systemic implications that the extraordinary energy crisis could trigger on all countries, the final battle will take place and be decided by the end of the first half of next year.

The responsibility and main duty of the Albanian government is to protect at all costs and as much as possible the vulnerable social categories, household consumers, as well as small business from the impact of this new disaster.

I now believe that all of you, dear fellow citizens, have witnessed that we neither fall nor give up in the face of any force majeure.

Be fully confident, just as I have unwavering confidence, that just like we handled the impact of devastating earthquake and pandemic, so will we overcome this challenge posed by energy crisis, and rest assured that just like the ruins of earthquake couldn’t succumb and overwhelm us and just like the attack of the “invisible enemy” did not catch us off guard, neither will this unprecedented energy crisis find us unprepared.

Unfortunately and regardless of our desire or will, the past years have been like the saying has it: “from war to war.” Yet, just like we emerged stronger from the earthquake, and a just like we are emerging stronger from the pandemic, as the new kindergartens, schools, homes, new residential neighbourhoods under reconstruction are showing, as the highest economic recovery rates in the region are signalling after the dramatic closure of the economy, so we will emerge from this new natural disaster combined with factors geopolitics and trade manoeuvres that do not depend on us.
No fear of whatsoever, no uncertainty, but determination, patience and confidence only, because the best will be done and Albania will continue to aim high to reach the target we have set for ourselves together along this challenging journey of this new decade we have just entered in.

Thank you!

 

Prime Minister Edi Rama’s press statement after extraordinary cabinet meeting on declaring the state of emergency in the energy sector
Thank you! Today we held an extraordinary cabinet meeting, outside of the regular weekly calendar, to make a decision and declare a state of emergency in the energy sector and the electricity supply. The decision on declaring the state of emergency was made due to an overall situation following a skyrocketing electricity price surge in the international markets and the decision allows the government to intervene either through financial tools or instruments of administrative nature. This way, through today’s decision we clear the way also towards implementation of the specific plan to tackle the situation and the plan will be announced to the public tomorrow.

In the meantime, we can’t help but refer to the experts’ analysis and the analysis being carried out by the governments of various countries. It is a similar situation in terms of the blow we sustained because of the pandemic, in the sense that every country has been affected. Of course, unlike the pandemic, various countries also have different characteristics, but they are all mulling ways to deal with this situation.

Experts believe that the crisis will go on and it is likely to reach its height by mid next year and, at the same time, they even think that once the peak of the crisis is overcome, prices will not return to the pre-crisis level. However, this remains to be seen. What we have to do is to protect our customers, certainly under a bottom-up set of priorities, considering first those most in need and then moving up further, through small business and further up, the higher income earners. The order of priorities will start from the weakest to the strongest and not the other way around.

In the meantime, it is worth drawing attention to the fact that the only electricity price hike during our terms in office took place back in 2015, when we launched the energy reform. In that case too, the electricity price was set at a rate that fails to cover the cost, but it helps to protect the residential and small business consumers. On the other hand, to put it clearly, the difference – and this is very important – the difference between the previous electricity price rate and the new one at that time for around 200,000 households and individuals is covered by the state. So, the electricity price for the retired people, the families under the social welfare benefits scheme is covered by the state budget through an amount of around $30 million a year, as a compensation for the price increase. Do the math. These are things that normally people tend to forget and it would be good to recall them.

First of all, this is not the primary thing worrying each citizen. This is what worries us and the citizens all together. If the solution was to be found at the electricity price hike, then we would have not been doing what every citizen would do for his or herself. We are here to embody the citizens’ concerns and you should know that because of my duty I sleep less than any citizen, exactly because I feel this concern of every citizen.

This is a global situation, but it is impossible for me to think that I can run together with the rushing energy prices. I agree. However, on the other side, it would be best that those worried about this and who rightly express it, when they are told the nonsense, suggesting that Albania is rich in water and therefore Albania doesn’t depend and is not affected by the global crisis, because Albania generates electricity itself, Albania produces oil itself, but this situation is a result of wrongdoings. These should all be left aside, so that we can better understand each other what we are talking about.

First, Albania doesn’t generate – and this is a fact – the whole amount of electricity it needs.

Second, Albania certainly sells electricity, but why do we do so?

Because, in the event of abundant rains, the country faces two options; either to sell electricity, or discharge the huge water inflows due to the heavy rainfall. And not just discharge water, but flood huge areas. Then it has no other choice, but to sell it. Of course, when the weather is rainy, the electricity price is lower and you are forced to sell electricity at a time when the demand in the countries around you is not high. Albania is forced to import and purchase electricity in the event of prolonged drought, because an economy 100% dependent on the rainfall has its good side, as it generates clean green energy, but it also has its negative side, because it lacks sources to objectively plan them and when it sells it does so at cheaper prices, just because the demand for electricity is lower. When the country purchases electricity, at the height of drought and hot weather, it buys it at a very high price, because the demand is much higher and it is not Albania the one to set the market prices, but the demand and supply.

Those who claim that the electricity price is that high, while the wages and salaries are that low, I can tell them that it is not Albania to decide, and the market doesn’t care what your name is when you address the market to purchase electricity. The market doesn’t care whether you are called Germany or Albania. In this sense, we draw attention to the fact that this is a global crisis. We can’t draw comparisons between Germany’s purchasing power and that of Albania, but we say that it is precisely because of this that the crisis is more challenging for us, is way too difficult and it is more challenging and much difficult for the citizens alone, but it is so also for the government, because, after all, it is the government that helps citizens by using its financial capacities, which are created through the contribution of all citizens, and are not opportunities created by rain.

These are things we need to understand in order to clearly know what we are talking about. Of course, the bottom line is that the government has to protect consumers and this is unquestionable. If we were here just to announce that the prices are increased and therefore you have to pay, we would then just be doing the role of the transmission lime and the role of news announcers. We are not here to do so. We are here to raise a dam between the storm coming from the international market and the door of the home of every Albanian citizen. This is why we are here and just like we didn’t let people on the street when their roofs collapsed due to the earthquake, just like we didn’t let them on the streets when the invisible enemy showed up, of course we won’t let them alone now too. There is no doubt about it, but things can’t be done in the blink of an eye, or at the press of a button, they can be done through proposals or ideas unfounded on facts and figures.
Experts today say that the crisis will have a peak, which might last until mid next year, but they also acknowledge they don’t forecast the prices to return to the pre-crisis rates. It all remains to be seen how accurate this forecast is, and how much the electricity prices would fall.

As far as other products prices are concerned, we should all clearly know this is the system we have chosen 30 years ago. We can no longer discuss what would happen with prices of other products. If we consider the bread price since’90s onward, you would see that the bread price has kept increasing and the increase reflects the market, the demand and supply ratio. No bread would be produced, if it was to stockpile in warehouses or bakeries. It is the market that determines prices, and not the governments. The state used to dictate prices under the communist regime, but we have closed that chapter 30 years ago.

On the other hand, the question and the request that since the prices rose, you should increase salaries, it doesn’t work this way, because the salaries can’t be increased when I want to do so. I have repeatedly stated that there is no prime minister who wouldn’t wish to increase salaries and pensions immediately when people would call for the government to do so. It is like the case of a small family, who might ask why don’t you give children more money? Where am I supposed to find it?

You can find it either through work, or borrow it. If you would borrow money to spend more than you can afford at home, you would one day end up putting your own house up for sale.

These are balances and if it was the case that you can increase wages at will of everyone, why Germany or France are not increasing wages to 20,000 euros per person? Why don’t these countries announce pension hikes to 10.000 euros per person? Why other countries in the region haven’t done this?

The wages are increased based on the economic capacities of the country. The country’s economic capacities increase the entire chain of value and generate more revenues. The revenues are distributed in the form of salaries and pensions. In order for us to boost the country’s economic capacities, we have to work a lot harder and move forward more patiently and in a more determined way. But having said that, we can’t shun any pledge we have made. We have pledged that the minimum wage will increase year after year and it will surge to 320,000 lek starting January 2022. Our goal is to increase the minimum wage to 380,000 to 400,000 within this term in office. We have promised this and we will deliver. We will also increase the wages of teachers, medical workers and the public administration employees each year. The private sector will definitely do the same thing.

It is all about money the state budget is denied, but how the government is then supposed to provide support to people, if we are to remove all the financial opportunities that are created by the citizens’ contributions. We talk about Germany, France, Italy and other rich countries, but do the math and calculate how much citizens do pay from their salaries in contribution to these states? The state budget revenues are created thanks to the contributions. How much do they pay in social insurance contributions so that they can receive higher pension payments when they retire in these countries? How much people there pay in health insurance contributions so that better health care is provided? All these services are made possible through the contributions. You can draw comparisons.

In terms of defence tools, we are very clear about what we are going to do, and the demands to make the state coffers run dry are Sude and Vehbi-era atavisms.
We are the party and the government of neither Sude nor Vehbi.

The reason why we have been working around the clock by analysing the issue from all sides and why I insist that when we address the concern we are in our absolute right, because after all every citizen at the moment he sees he is facing a danger for his own household financial, he would certainly voice his concern and will ask the government to act, because this is why the government is there and this why it has been voted for. But in the event of a crisis like this it is important that every citizen is open to listen to the arguments so that then we figure out what we can do, how we will do it and for how long we will have to face a looming crisis. So, in this respect, such an approach is important, just as our goal is to protect the consumer right now, but we cannot totally undermine the further economic growth plans.

The economy cannot grow through subsidies. It can’t grow through indulgences. The economy grows when productivity as a whole grows and of course the economy grows with the boost of investments. Therefore, we don’t want to threaten any of these two. We did the same thing in the wake of the earthquake and the pandemic and that’s why the country’s economy grew 18 %, the strongest in the region, in the second quarter of this year. To those who ironically laugh at this, I tell them that 18% growth is not an 18% economic growth more than it the pre-pandemic growth, but it is an economic growth that is recovering strongly after it shrank due the pandemic. The double-digit growth is being recorded in many countries, not only in Albania, but the double-digit growth is not a natural one, yet it is a growth resulting after the reaction to the crisis.

Economy has recovered. The employment rate is now higher than the pre-pandemic rate. So, the number of registered employees is higher than their pre-pandemic number. The economy has recovered and we need to maintain this upward trend. We shouldn’t stop the growth trend – through the planned investments, the planned wage hike – by plunging into this crisis and dealing with only, because we have a lot of other things to deal with.

It would be the easiest thing to do and decide to eliminate any tax and tariff. But the VAT rate cut or elimination has historically shown it is an effective move, just like it is the case with the agricultural inputs, which serves as a lesson for everyone to realize that it fails to reduce prices, because prices are dictated by the market, while in a capitalist market economy the government has no power to force private companies how much they should sell their product.

When it comes to the electricity, the government’s capacity in Albania is a result of the fact that we can exercise a certain control over the price, not a full control, but a certain one, because the state operates both as electricity generator and distributor, because if we were to find ourselves in same conditions like some other countries – Spain for example has no support of whatsoever regarding the electricity generation as the sector is totally controlled by the private companies and therefore the authorities there have to negotiate with them. In Great Britain there is even a greater problem, because you all know that the electricity supply is like the telephone card that you have to recharge and nobody is held responsible whether one has electricity in his or her home or not. This is the fact. We don’t face such maximum capitalist savageness, because we can’t afford it and the market liberalization, which is the best thing to be done, has been a very carefully conducted process and I am pleased for not going further than that, as many suggested us when the situation was favourable, but there comes the day like now and if the market was fully liberalized then we would all have been under the mercy of the fate and we would be able to do nothing, just like we can do nothing to prevent the oil and gasoline price increase.

The state currently applies a preferential and controlled electricity price for the bakeries. This is how far the state can go. The overall price hike is an unstoppable process since the ‘90s, when we entered this system. Prices go up and down depending on the demand and supply ratio. They are all goods produced by the free market and sold and purchased in a free market and the question we need to ask ourselves is that the purchase power of Albanian consumers is seemingly higher than what they say, because otherwise no goods would have been sold.

What you are refusing to realize in this case too is that you, the journalists, stand between us and the public, because citizens find themselves in a different position and it is their right not to pay much attention to our arguments amid the fear and anxiety over the surging energy prices. The argument is that the electricity is sold at a cheap price, because we export electricity when the market demand is low and we are forced to sell it because we can’t stop generating electricity at our hydropower plants as otherwise we would be forced to flood huge swathes of land. Will you understand this? What are the reasons we sell electricity? Why are we building the Skavica hydropower plant today? Skavica HPP will serve as the reservoir to balance the inflows and would allow us that the unnecessary water inflows for a certain moment are not discharged, but be reserved instead.

As soon as the Skavica HPP is built and becomes operational then we will be playing completely differently in terms of playing the market, because we will be powerful enough to dictate when we will decide to sell, and this won’t be dictated by our inability to reserve the water inflows, as we currently face two options only, either sell energy or discharge the water inflows. Which one would you prefer? There is no third way. Work on construction of Skavica HPP has just kicked off and we will build the plant within this term in office, hopefully, if unpredicted things do not happen. Construction of this HPP will allow us to keep huge water reserves. On the other hand, it is true what I have said, just like it is true what I am saying today. There is no evidence showing that consumers would benefit from tax cuts. This was the case with the agricultural inputs, with the ones to benefit being the sellers of these inputs. Who benefited from the tax cut on the agricultural inputs? The ones to take advantage were merchants and retailers, because this is the market.

As for France, I would invite you not to confuse things by citing the case of France, because France enjoys a completely different position as it runs nuclear power plants. France has not been hit by this crisis of today, because France makes the nuclear power plants operational and increases production. And France is doing none of the things you claim.

Germany has been hit by the crisis after the country shut down its nuclear power plants and after lowering predictability by creating higher dependency on the Russian gas and all of these developments influence Albania for a simple reason and this is because Albania is part of the whole. As long as everyone accesses the market to purchase electricity, the market doesn’t care whether your name is Muhamed Veliu or Edi Rama. Do you wish to buy a new jacket? The jacket’s price tag is this.

Again, the comparison I highlighted was a very simple one. Today, people complain that the oil price has increased beyond any limit, but one shouldn’t forget that the oil price was higher in 2013.
It is not the government to decide the retail oil price at the filling stations. One should clearly know this. The price tag is set by the market. We have chosen this system since when you were just born or you were about to be born, as many of you here are younger than the democracy in this country. It is not the government to decide prices. One complains that the oil price has gone up immensely. No, this is not true. Oil price used to be higher than today. That’s it. Your father used to pay more to buy a litre of oil, because you hadn’t a driving license back then. It is as simple as that. I am talking about the oil price. I invited you to verify my remarks. It seems you have made such a verification since yesterday and it turns out I am telling the truth. The oil and gasoline prices used to be higher in 2013. Whether this was because of the stock market or not, this is something else. Although the current oil price includes two additional components, namely the circulation tax and the carbon tax, the oil price is still cheaper than it used to be in 2013. This is a fact.

The carbon tax won’t be removed, because the retired people, you are talking about, are not the environment polluters, but consumers of the air that they don’t pollute. How the government is supposed to provide more support to the retired people, social needy categories? Is it going to do so thanks to the rainfall? The rainfall helps us to generate electricity, whereas the support for these categories can be made available through the contributions everyone pays. So, he who pollutes more, he would definitely pay more in taxes and contributions. I am not denying this, but what I am saying is that the oil price is lower today than in 2013. We need to draw factual comparisons about the reality.

While the stock market price is something else that has nothing to do with the topic we are talking about. This is all about a totally private sector. Some claim that Albania produces sufficient oil and the country doesn’t need to import fuels.

I don’t understand what all is about. First of all, Albania doesn’t produce sufficient oil to meet its needs. Second, the oil Albania produces is crude oil grade, highly viscous and with high sulfur content, which is exported, because its producers are international companies from all over the world. Albanian oil is mainly sold for its industrial by-products, including bitumen and so on and so forth. It is not exported to refill Mercedes or Alpha Romeo cars, but it is exported for its by-products. Albania imports around 600,000 tonnes of oil from the international market each year. And by Albania, I mean the private companies that import oil, just like it is the case in every other country in the democratic world. As far as I know, there is no democratic country, where the state produces oil and offers it up for sale at the refilling stations. This is the system we have chosen. I don’t think we should question the system, but I think we should discuss the divided responsibilities and the government has to become a sort of dam to defend those who are unable to deal with this storm.

The government is not here to relieve and decrease the stress level of those, who enjoy all the opportunities to withstand this situation or even more severe situations, or to relieve stress of those who own two cars and raise the voice more than anyone else. No, the government is here to help the social categories, which are most vulnerable to the crisis and they are primarily the residential and small business consumers.

Small business and the household consumers should benefit support. This is the path to tackle the crisis.

We are on the right track and we will keep moving forward no matter how painful and the sacrifices it would take. If all the things this government is doing over the past eight years were to be done since 1991, we would be discussing other issues today. But nothing was done. On the contrary, the energy sector was on the edge of an abyss. We lifted it from the abyss, but it has yet to become a sovereign sector as it all depends on other factors. We need to make the energy sector a sovereign one so that Albania dictates the electricity market prices. And this could be achieved by investing in the Skavica HPP, investing in a programmable energy source. We lack the programmable sources, but we have a source totally dependent on the weather conditions at a time when the climate change is increasingly becoming a serious problem.

A programmable source is the liquefied natural gas, we will introduce through the U.S. government support. Work is underway by investing in the solar energy with some early investment projects being implemented. The same goes for the wind energy. Today we would have been discussing other issues if all of these were to be done earlier. However, we can’t discuss other issues today.
If the citizens were to experience power outages during winter, I would have made it short, telling people to prepare for such a scenario. We are talking about ways to protect consumers, not about possible power outages. It would be easy enough if it was the case for possible power outages. But we are not here to cut the things short. Great Britain is warning today of a power outages plan. Someone of you here cited the case of Italy, but he was wrong. Italy has increased the electricity bill by 40%. Mario Draghi said this is not the real electricity price, because it is not. The government subsidizes a part of it. Do you have any family member living in Italy? Ask them how pleased they are with their wages, pension payments and the overall situation and the severe crisis. No shops to offer bread for free to citizens have been opened in Albania or in Tirana. This has actually happened in Milan during the COVID-19 pandemic. This is something you have reported on your TV channels. It has happened in Milan, with people waiting on long queues to receive bread for free.

Let’s be realistic and not forget that a good part of those complaining most are mainly individuals with higher incomes than they declare. Let’s not forget this fact too, because otherwise, if we are to trust them for the income they declare only, then not everything would go as smooth as it is actually going. Verify this too. Albania has the highest amount of small bank deposits and I am not talking about the bank deposits of the wealthy people. Does such amount of bank deposits show that the situation is alarming or stable?

Albania has reached the highest export levels ever. Who stays behind the increased exports? Do we stand behind the exports? No. We export just words, while you import statements and sell them on TV. Exports are created by hard-working people.

All this should make us realize where we are currently and where are we seeking to go, and not lose our edge. Let everyone know, as long as I am here, there is nothing possible that can be done for those in need and that we will not do.

 

Government plan to protect Albanian families from storm of energy crisis

Address by Prime Minister Edi Rama:

Dear fellow citizens,

Few days ago, I shared a direct message with you over an emerging fierce energy crisis because of the skyrocketing electricity price in the international markets.
I stand before you today to tell you what we, your government, will do to deal with this crisis that poses a serious threat to the household budget, the budget of our power distribution utility, as well as to the stability of the Albanian energy system.

I have been listening to you very carefully and I think it is indispensable for us to listen to one another and agree on considering the real facts when confronting our opinions. Otherwise, we won’t understand each other.

You should all clearly know that there is no prime minister, even the worst one in the world, and there is no government in office, even the world’s worst, first and foremost not wanting to increase the wages and salaries as much as its citizens would wish for. But it is only the bad governments and the undeserving prime ministers and unworthy of the trust of their people who announce wages and pensions hike regardless of the serious consequences of such an increase, which is not based on the facts of the country’s economic and financial reality, but on their desire and on politics only.

Increasing wages and salaries or cutting taxes and contributions to an extent beyond capacities of the state coffers, it means governing the country by applying Ponzi schemes and not on consciousness and self-awareness, it means killing the future by walking blindly in the present.

Someone is saying we used to have the highest salaries in the region eight years ago and we now rank bottom regionally, because no salary hikes have been made in the last eight years.
But facts are not opinions and the salary table, but the salary table shows otherwise.

This was our position eight years ago, with us ranking bottom and with a dramatic difference.

Here you can see the increase in wages in the region over this period, when the gap has narrowed significantly with other countries, but where some others of course haven’t stayed in place, waiting for us to top the ranking.

Others claim we have abandoned the needy people, starting with the retired people, while increasing the electricity price higher than in any other country across Europe.

But again, facts are not opinions and let’s start with the latter.

This is the electricity price for the household consumers in Albania compared to many European countries.

Yes, someone else says, but the citizens in European countries receive much higher salaries and pension payments. This is true. This is very true! That’s why the electricity price currently in place in Albania doesn’t represent the real price of the electricity we purchase, but it is a state-controlled price aimed at protecting the consumer and, second, the government has also placed a shield to protect the neediest social categories and the pensioners.

What is this protection shield?

Again facts and not claims help us to explain what this shield is, but, first of all, let’s see what the official data show about what is continuously claimed for years now that we have increased the electricity price.

This is the chart.

During the time when one half used to steal the other half and the debt hole in our power sector became a precipice, which threatened to take the state down just like it happened back in 1997, Albanian consumers were divided into two segments.

A price of 13.5 lek per KWH was set for the upper segment, namely the middle and high income families, while a price of 7.7 lek was set for the low income families that theoretically consumed less than 300 KWH a month.

The energy reform we implemented lowered the electricity price to 9.5 lek per KWH for all residential consumers since 2015 and the electricity price has remained unchanged since then. This is a price below the production cost, which has been kept unchanged, precisely not to hurt any family.

On the other hand, this consumer segmentation was removed, as it had already become a marsh of unprecedented corruption and abuse, with factories or families owning seven-storey villas used to pay as if they were families benefiting from payments under the social welfare scheme.

However, we didn’t put them all inside the same sack, as the saying has it, and under a government decision in 2015, we actually created a protective shield for the really needy families and the state budget covers the electricity price difference since 2015; meaning that these families receive the compensation included in their economic assistance or pension payment since 2015.
This is the chart showing the funding provided by the state budget as provided by the treasury.

Later on you will see the total amount the state budget provides in direct payments to compensate for the difference in the electricity bill, after the price was changed in 2015. This is the total sum.
But, this government didn’t stop there and, again by referring to facts and figures and not words, the government has added an addition payment as part of the social protective shield for the retired elderly living alone or those living with low-income families and this sum adds up to an overall amount of compensation granted to all retired people and this table shows data on compensation for electricity price for all retired people.

The annual amount of subsidy for the electricity price, benefiting a considerable number of families, and the total amount of direct payment to 187 669 families is estimated at $126 million a year, or around $1 billion since 2015.

It is a significant amount, isn’t it, if we are to take into consideration the fact that this is the Albanian state emerging from the financial collapse of the energy sector, and not only, in 2013.
One might claim, well, there is nothing new as long as pensions are not increased significantly. Some even dare say that the government should lift the minimum pension payment to 300 euros and the minimum wage to 500 euros a month.

But I tell them that if we were to increase the minimum pension to 300,000 lek, not 300 euros, we will have to stop public investments by end of next year and we would experience the state’s tragic bankruptcy within two years, with the state unable not only being unable to pay pensions, but for first time we would actually be witnessing what it does really mean to starve for first time since Skanderbeg era.

If we were to lift the minimum wage to 500,000 in the blink of an eye we would then see the first famine crisis in 500 years of history.

Put differently, for everyone to know clearly, increasing the wages and pensions in the country is like increasing the household income and there is no parent in the world who wouldn’t have wished to grant as much as he could to his kids, but there could also be no responsible parent in the world who would give today his kids everything he is supposed to provide for them in the future and let them his children die of hunger.

Pensions are funded by the social insurances, or the contributions provided by workers over the years.

Without going over details of the history of abuse and collapse of the social insurance fund, which we are helping to recover year after year, let’s see how much we pay in social insurance contributions compared to other countries, which are randomly cited as an example for the higher pension payments.

Under the current level of social and health insurance contributions, we wouldn’t be able to pay even half of the pension payments.

This means we haven’t forced people to cover the missing part of the contributions, but this difference has been covered by the state budget, allocating an amount of around $450 million each year. This is nothing else but the amount of the revenues collected in taxes on the economic activities and personal income of employed people. The chart clearly shows the relation between us and many other countries in the region and beyond.

On the other hand, although we use around half a billion of dollars in taxpayers’ money to cover the pension deficit each year, we have significantly reduced the personal income tax rate for around 97% of Albanian citizens since 2014. Since 2014, all Albanians earning less than 150,000 lek a month now pay less in personal income taxes than they used to pay until then. This means that thanks to this tax cut policy we have saved Albanian workers around 1.2 billion dollars in the last eight years, an amount which otherwise would have ended up in the state coffers as it was the case under the previous taxation system applied until 2013.

Likewise, small businesses with an annual turnover of up to $140,000 pay zero profit tax rates. Small businesses with an annual turnover of up to $100 are also exempted from having to pay VAT, while small business entities with annual turnover of up to $20,000 used to pay a 10% tax rate.

These are all facts and every nurse, teacher, and policemen, just like every water, cook or private sector employee used to pay a 10% income tax rate and what I am saying is easily verifiable and normally everyone knows it well. Just like every entrepreneur of small business knows that Albania is the only country in Europe imposing no taxes on agriculture, but on the contrary provides subsidies to the agricultural sector, just like Albania is the country with the highest number of categories exempted from having to pay a standard 20% VAT rate, which has actually failed to yield the desired effects, despite the fact that these measures have been put in place for a good reason to support the country’s productivity.

The simple question one should ask today is as following:

What else except through hard work and patience and more productivity and less non-productive state budget spending for VAT exclusion we can further increase revenues so that we can afford redistributing a lot more in wages and pensions?

If we wish to really be like the countries that have more than us and therefore redistribute more than we do, we must never forget the simple truth, that in order to reach to the height they stand today, they have worked hard, they have worked hard, they have endured a lot, they have significantly grown productivity of their societies, paying a lot for their state.

We lagged a lot behind them 30 years ago, but the difference has been narrowed now.

Let’s never forget this, if we don’t want to drown in the sea separating us from them, but instead cross this sea as well, as we crossed the ocean.

We chose this system 30 years ago, with the state not being the God reigning over the earth, but with the individual taking the responsibility for himself. It was the first time in our history we chose such a system on our will and not let others choose on our behalf, just like it had been the case for over 500 years. And of course we did the right thing and that’s why we have today a lot more that we used to have 30 years ago, but of course we still have much less than we should have and, in my opinion, much less than we could have today, if many things that we started doing properly just a few years ago were to be done many years ago. However, this is another story.

The question today is how we will reach the height this country deserves to be and our children deserve to be in the future, while dealing with not only with the challenges we have chosen to face, but also challenges that pick us without our consent, like the earthquake, the pandemic and the latest energy crisis and the soaring electricity prices.

Shall we cope with these challenges by forgetting the choice we have already made 30 years ago and ask the government to provide us wages and pensions much higher than the state can really afford, asking the government to determine the market prices, remove any tax rate and deliver any public service for free?

Shall we deal with the crisis by asking the government and the Prime Minister to think for now only? Just like a good guy told me last night, suggesting that with the upcoming rainy winter season, the country will generate sufficient low-cost power and therefore we shouldn’t even think about what is happening with the electricity price in the international markets?

Shall will deal with it by speaking up without listening to others, without reading and confronting opinions with facts and persuade ourselves that Albania is rich both in water and oil and therefore the country should have the lowest electricity and oil prices, but it is the thieves in the government who are preventing us from enjoying the energy paradise that God has gifted us with?

Shall we deal with the crisis by reckoning without the host and by saying it would suffice not to increase wages of the government officials and increase taxes on wealthy people and this way we would be able to lift the minimum wage to 500 euros and the minimum pension to 300 euros, or will we do what the countries we envy today have done in the past when they dealt with the past and the wounds of their backwardness?

By the way, since you elected me to enter this very building, the wages of cabinet members and lawmakers have never increased, while the tax rate on their wages has increased!

Because when I climbed the steps to enter the Prime Minister’s office, I was taxed less than the salary of the sanitary workers of this building.

In 2014, we cut the small business taxes in 2014, while increasing the big business taxes, because a bakery used to pay more than a big business in taxes.

But the taxation policies on the wealthy people must also be carefully thought, because, first of all, they are the most powerful engine of the economy and the largest employers in this country, and if taxes become an obstacle for them and further growth of their economic activity, they will be unable to increase neither the revenues for the state budget from those taxes, nor the salaries of their employees, nor the employment itself in this country, let alone the productivity. But let’s return to the energy crisis again.

Dear fellow citizens,

We need to pay more heed to each other’s words and you all should know and understand I am here neither to make your life more difficult, nor tell you we can do nothing to deal with the earthquake effects, because it went out of our financial plan, we can do nothing to cope with the aftermath of the pandemic, because we lack the capacities of the United States or Germany, we can’t do anything in the wake of the rising energy price in the international stock market. No. I am also not here to tell you that we chose capitalism 30 years ago, so whoever can afford it lets pay for it, and who can’t, should have the power cut and live in darkness. I will never do so!

However, I am not here to ruin the state coffers so that everyone is happy today without caring at all about the future, just like it has been the case in the past after the today’s opposition once in power told people that capitalism was all plain sailing, so that you just throw your money to build anywhere you want, throw your money away into fraudulent schemes, graduate children from any so-called private universities, steal electricity and don’t pay electricity bills, do whatever you wish to do because capitalism is there to resolve for you.

I am not here to be silent, when you tell me that Albania generates the whole amount of power it needs, but we sell it cheap so that we can purchase it again at a much higher price so that we can steal. Because this is not true as Albania doesn’t generate sufficient electricity to meet its domestic needs.

And we sell electricity at a cheap price when the countries in the region don’t desperately need energy and we are forced to sell it so that we don’t discharge water from our dams and flood whole agricultural areas by doing so. On the other hand we purchase electricity at an expensive price as we are forced to access the international market when the need for electricity is alarming, because of prolonged drought.

That’s why we are building Skavica HPP, a project used to remain in the drawer for over 50 years, so that we can build a huge water catchment over Drin River cascade, reserving the abundant water inflows due to the rainfall for use later during the dry summer season.

I am also in office not to pretend as if being deaf when hearing individuals claiming that Albania produces sufficient oil supplies to meet its domestic demand and therefore Albania should have the lowest oil price in the world and not the highest one in the region; because indeed we don’t produce enough oil for our cars, because the oil we produce is very heavy crude oil, which is exported for its by-products, mainly for bitumen, while Albania imports 600,000 tonnes of diesel and gasoline each year.

And by the way, the diesel and gasoline prices, yes, are the highest in the region, because – how many times I have to repeat it – the oil price when you refill your cars includes the circulation tax, which is paid separately in other countries. The oil price also includes the carbon tax, because the environment is not polluted neither by retired people, nor by people with disabilities, or those treated with social assistance or children, but the cars and to return again to the support we provide for these social categories, I would say it is very kind of you to speak about their plight, but you won’t help by telling them to ask from the government to address their plight and by stating you won’t pay anything for them. How on earth is the government supposed to support these categories if nobody agrees to pay and contribute more? Those who pollute the environment more should definitely pay more.

However, this is a chart to show that anyone complaining over the increased oil price beyond any imagination can look at the facts that speak for themselves and clearly show that the diesel and gasoline prices are lower than in 2013.

This chart doesn’t actually show whether the previous government was a bad one and our government is a good one, because everyone knows it, but it shows that the market has its own rules and nobody can do anything to change the market prices and it is of course the right of everyone to complain, but if you don’t forget the fact of the past, then you will be able to fairly judge the today’s facts.

However, having said all these, I don’t cross my mind to tell everyone that since we chose the capitalist market economy instead of the centralized communist economy 30 years ago, now be the masters of yourselves and pay the increased energy prices.

Because, at least as far as I understand the state office in this system, where state is not God and where every individual should become his own master, our duty as this state’s government is among others to be the best friend in difficult times for all of those who, not because of their own fault, are incapable of facing life challenges, let alone the effects of such crisis.

But, by flatly refusing any claim or idea that this serious crisis doesn’t exist and that this crisis has no impact of whatsoever on Albania, and telling everyone that the ongoing crisis could be equally challenging like the pandemic was in financial terms, even with graver monetary effects on the country if we fail to react by employing all our strength and forces, not only as a government, but also as a community of self-aware citizens, I can confirm that our plan doesn’t project any electricity price hike both for residential and small business consumers. The plan also doesn’t include any scheduled power outage across the country.

The storm of this crisis – and it is again the time for us to pay heed to one another – according to the international experts, as well as according to the conclusions drawn by several friendly governments we have been consulting with to explore ways how to tackle the crisis, is expected to have its aggressive phase until early next summer. Of course, these are projections as it may end sooner, or it could even last longer.

However, our plan covers precisely this period, while the government is also making preparations for a national consultation process with each and every one of you within this year, where we will ask for your approval regarding this issue and not only on this issue indeed.

We need to pay attention to each other a lot and let’s do it by resorting to all means, because after all we are here to help each other, we share common goals for this country, although our opinions on how to achieve these goals may differ considerably.

But I believe it is time for us to turn the big difference between the politicians’ opinions and the contradictory opinions among ordinary people into a national advantage in the country’s best interest by transforming the clash among different opinions into a fresh precious source of national energies feeding the government’s difficult decisions. It is true that the government emerges as a representative of the winning side between two racing sides in elections, but it is in a four-year term in office to side with Albania and the national interest of the entire Albanian people regardless of the political differences and affiliations among Albanians.

Our action plan to tackle the energy crisis contains three points:
First, ensuring uninterrupted power supply to all consumers, coupled with a number of detailed measures;
Second, protecting residential and small business consumers;
Third, providing required liquid funding for the interaction with the energy market along with detailed instruments of the renewable sovereign guarantee fund at an amount of 100 million euros for the power distribution company until the end of this year and an amount of another 100 million euros by early next year to ensure full implementation of the first two points.

Dear fellow citizens,

When the British prime minister was asked what he was afraid of, he replied: I am afraid only of events, given precisely the fact that life is what happens to us while we might be busy making other plans.

Over the past few years, the life of everyone of us, and for that matter, life for the government and for me, has been mostly defined by what has been happening to us rather than our plans; namely the earthquake, the pandemic and not this storm of rising the most delicate price in our daily life. I know best that all these leave marks on minds and soul, but concluding I would like to tell you the following:

First of all, feel all good that we have succeeded and be confident that we will succeed again. And second, do your best not to forget that what we sow today through our attitudes and decisions, our children shall reap its harvest inevitably in the future. And for today’s children not to be so unlucky like the children in the ‘90s were as they harvested what inappropriately was sown back then, we should always refrain from seeking shortest of routes which always turn out to be the longest ones.

Thank you very much.