Law on Concessions and Public–Private Partnerships
More resultsIntroduction
In 2013, Albania adopted Law no. 125/2013 on Concessions and Public–Private Partnerships (PPP). Article 7 of the law allowed a bonus of up to 10 per cent in the tendering process for unsolicited proposals for concessions in the energy sector. In 2015, an amendment (Law no. 77/2015, Official Gazette no. 132/2015) to the law expanded the bonus for unsolicited proposals from the energy sector to all areas subject to the law on concessions and PPPs. While the bonus was previously limited to concessions, the amendment included the same bonus for PPP contracts.
- Country
- Albania
- Sector
- Public contracting
Description of the law
In 2013, Albania adopted Law no. 125/2013 on Concessions and Public–Private Partnerships (PPP). Article 7 of the law allowed a bonus of up to 10 per cent in the tendering process for unsolicited proposals for concessions in the energy sector. In 2015, an amendment (Law no. 77/2015, Official Gazette no. 132/2015) to the law expanded the bonus for unsolicited proposals from the energy sector to all areas subject to the law on concessions and PPPs. While the bonus was previously limited to concessions, the amendment included the same bonus for PPP contracts.
This development triggered a boom of PPPs and concessions in Albania awarded to companies that submitted unsolicited proposals after the amendment in 2015. However, many contracts have been reported as highly suspicious. Concerns have been voiced over a lack of transparency and assessment of unsolicited proposals for PPPs and concessions. Although a legal requirement, value-for-money analyses of submitted proposals widely fail to be implemented (see here, here, here, here and here).
The media have revealed that corruption may have occurred in many of the concession and PPP projects approved under this law in sectors such as healthcare (see here, here and here) and road infrastructure (see here, here, here, here and here). A scheme has been detected in which numerous PPPs were awarded to newly established companies with ties to politics. An expert analysis found that in 2012 nearly 30 per cent of public tenders were awarded to new companies. In 2017, this figure had increased to 70 per cent, which shows the extensive links between politics and private companies (see here, here and here). The media have raised concerns about a number of companies that may have benefitted from these practices, including Fusha SHPK (a national theatre PPP), Evita SHPK (healthcare PPPs) and Investital LLC (the owner is linked to the former health minister Ilir Beqaj).
On 18 July 2019, Parliament adopted Law no. 50/2019, amending the law on concessions and PPPs again by limiting the scope of its applicability. The amendment removed the “up to 10 per cent bonus” in the tendering process and restricted the applicability of unsolicited proposals to the areas of ports, airports, electricity, heat and natural gas supply (see here and here). Albanian President Ilir Meta refused to sign the law and returned it to Parliament on 5 August 2019. However, Parliament repealed the president’s decree on 12 September 2019, rendering the amendment effective.
Full Law Name
Law no. 125/2013 on Concessions and Public–Private Partnerships (Official Gazette no. 76, 10 May 2020)
Type of law
Act of Parliament
Scope of application
Substantive: concessions and PPPs awarded to companies for unsolicited proposals (see here)
Personal: private companies (for example, construction and waste management)
Territorial: national
Temporal: until abrogated
Time of adoption and entering to force
The law has been in effect since 24 May 2013 (see here).
Who drafted it
Ministry of Finance and Economy
Who submitted it to Parliament or to another collective body
Council of Ministers
Relevant developments in the process of adoption that show signs it’s tailor-made
The law on concessions and PPPs in Albania has been criticised for its content and implementation. European Commission reports considered the 2013 law a significant step forward, given that it regulated concessions and PPPs through the public procurement system. The 2013 law had foreseen unsolicited proposals as an option and offered an “up to 10 per cent bonus” of points in the tendering process for unsolicited proposals in the area of energy (hydropower plants). The 2015 amendment of the law extended the “up to 10 per cent bonus” for unsolicited proposals to all areas that were subject to the law including PPPs. This step was considered a serious setback by the 2015 European Commission report for Albania. In the following years, the Commission constantly asked Albania to align the law with EU acquis (specifically the “up to 10 per cent bonus”).
Concerns over the implementation of concessions and PPPs stem from the lack of value-for-money analysis, which is a legal requirement but is not strictly implemented. The 2018 commission report states that “by the end of 2017 around 200 public–private partnerships (PPPs), mostly concessions, have been signed. Although required by law, value-for-money analysis is still not systematically carried out before approval of all PPPs. Furthermore, there is no regular report on PPPs. The technical skills and capacity to design and assess concessions and PPP projects need to be further improved” (see here and here).
Media have raised concerns about the Milot-Balldren PPP (awarded to ANK company) and other PPP contracts in the road construction industry. It has been said that many PPPs in construction and waste management have been selected due to the “up to 10 per cent bonus” in the tendering process.
The World Bank has drawn the Government of Albania’s attention to the risks of public debt stemming from PPPs, including the lack of transparency and clear monitoring. It advises Albania to increase transparency for concessions and improve the selection and management processes for such projects.
Who adopted it
Parliament
Enforcement
Yes
Initiatives to challenge it and their outcomes
While there have been no national initiatives to challenge the law, the European Commission has highlighted concerns over fiscal risks and a lack of competition in procurement.
The 2019 European Commission Report for Albania suggests that “the increasing reliance on PPPs generates contingent liabilities and therefore fiscal risks” (p. 47). It argues that “state involvement and public subsidies remained overall low in the Albanian economy, but the increased reliance on PPPs raises the potential of state influence in certain markets [...]” (p. 47). Furthermore, most of the PPP contracts were selected based on unsolicited proposals, which reduces competition in procurement. By the end of 2018, the concessions registry contained information on 218 PPPs, six of which were signed in 2018. Although a value-for-money analysis is required by law, it is still not systematically carried out before approval of all PPPs, the report maintains.
The commission report concludes that “the Law on concessions and public-private partnerships is partly aligned with the Directive on the award of concession contracts. All legal and financial instruments used in the area of public procurement and concessions, including inter-governmental agreements concluded with third countries for the implementation of joint projects, should comply with the principles of transparency, competition, equal treatment and non-discrimination” (p. 59).
Affected sector
Public contracting
Direct beneficiaries and related networks
Some PPP contracts in Albania are adopted through special laws. According to Article 22 of Law 55/2015 on Strategic Investments, this is allowed on request of an approved strategic investor and if the government considers it acceptable. However, this makes it impossible to question these PPPs in court or to prosecute cases of highly suspicious PPPs as they are individually adopted as special laws by the government and Parliament and so cannot be challenged as unlawful.
The bidding process is often restrictive and speaks of already “captured” tenders. In the case of the PPP concession procedure for the yacht port Marina Rodon, the bidding process was open for just one month during the summer holidays (6 August to 6 September). For a demanding PPP such as a yacht port, which will be awarded to a private company for a period of 35 years, a one-month application period (the minimum legal requirement by the law) is very short to prepare all the documents for the bid (see here and here).
The same restrictive measures were observed in the case of the Marina Limioni port in Saranda. The call for tenders was published from 1 August 2019 to 30 August 2019, and then extended to 2 September 2019. The contract was awarded to the sole bidder: a joint company established by Edil AL SHPK – whose company Concord Investment SHPK already owned the port under a 20-year concession awarded in 2018 – and Kastrati SHA.
Direct victims
Taxpayers, public finances
Socio-economic impact
European Commission reports have raised concerns over a lack of transparency and compromised competition for some PPPs.
Impact on rule of law
Investigations have raised serious concerns of clientelism, particularly in PPPs in the waste management and healthcare sector. One example is a contract for sterilisation of medical instruments awarded to Sani Service, which is owned by Ilir Rrapaj, a businessman with close ties to former health minister Ilir Beqja and prime minister Rama. In another example, an investigative report raised concerns of clientelism in concessions to build waste incinerators, which were awarded in the absence of a bidding procedure to a network of companies linked to the same owner (Klodian Zoto). Klodian Zoto is also associated with a recent scandal in Zimbabwe.
Every effort has been made to verify the accuracy of the information contained in this database. All information is believed to be correct as of December 2020. Nevertheless, Transparency International cannot accept responsibility for the consequences of its use for other purposes or in other contexts.
