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Albania Economy Briefing: Tirana-Durrës Highway: No Longer a Free Ride Marsela Musabelliu

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Albania Economy Briefing: Tirana-Durrës Highway: No Longer a Free Ride Marsela Musabelliu ISSN: 2560-1601 Vol. 18, No. 2 (Al) May 2019 Albania economy briefing: Tirana-Durrës highway: no longer a free ride Marsela Musabelliu 1052 Budapest Petőfi Sándor utca 11. +36 1 5858 690 Kiadó: Kína-KKE Intézet Nonprofit Kft. [email protected] Szerkesztésért felelős személy: Chen Xin Kiadásért felelős személy: Huang Ping china-cee.eu 2017/01 Tirana-Durrës highway: no longer a free ride Background After almost 50 years of isolation from the rest of the world, Albania began to revamp its quite primitive road infrastructure by building the first highway in Albania, SH2, and connecting so Tirana with Durrës. Since the 2000s, main roadways have drastically improved, though lacking standards in design and road safety. In the past two decades, a major road construction spree took place on the main state roads of Albania, involving the construction of new roadways, putting of contemporary signs, planting of trees, and related greening projects. Works on most highways are completed, though they remained unfinished between 2011 and 2014. At present, major cities are linked with either new single/dual carriageways or well- maintained roads. There is a dual carriageway connecting the port city of Durrës with Tirana, Vlorë and Kukës. There are three official motorway segments in Albania: Thumanë-Milot- Rrëshen-Kalimash (A1), Levan-Vlorë (A2), and partly Tirana-Elbasan (A3). All roads are property of Albanian Road Authority (Autoriteti Rrugor Shqiptar) and maintained by the State Owned NSHRR (Ndërmarrja Shtetërore Rruga-Ura). Tirana-Durrës highway Context The Government of Albania adopted the Sectorial Strategy of Transport and Action Plan 2016-2020 through the Decision of the Council of Ministers, No 811, dates 16th November 2016 “For the approval of the Transport Strategy and Action Plan 2016-2020”. The main goal of the strategy is to have an efficient transport system, integrated in the region and in the EU network, which promotes economic development and upgrades the citizens’ quality of life. The overall objective of the National Transport Strategy and Action Plan 2016-2020 is to (i) further develop Albania’s national transport system, and in addition (ii) to significantly improve its sustainability, interconnectivity, interoperability and integration with the international and European wider transport system and region. The Albanian Road Authority, in the framework of improving road safety, after an inspection conducted in 2014, has implemented a number of projects in the main axes of the country where the problem of collisions is higher, as the segments Tirana-Durrës, Kashar-Rinas, Tirana-Vora, Shkodër-Hani i Hotit, Rrogozhinë- Lushnje, Sarandë-Butrint, Rrogozhinë - Kapshticë and Fushë Krujë - Thumanë.i The SH2 highway Tirana-Durrës stretches in a length 38 km and was upgraded on the ruins of the existing road connecting the two biggest cities of Albania in 2007. It soon became 1 the most trafficked road artery of the entire country due to not only the large population of the two main cities, but also because of the enormous concentration of business in this line and the only operational Port of containers in the country - Port of Durrës. The first indications on a potential upgrade of the Tirana-Durrës highway were made public in November 2019 when the Budget Plan for 2019 was released. iiYet, it took another Minister and six months for the Rama Government to admit that the most important road of the country is to fall under the Public- Private Partnership (PPP) or in other terms, a concession. The total amount estimated for the upgrade of the existing highway and the secondary (alternative) road amounts to 280 million Euros. Official declarations however did not arrive until mid-May, when the Minister for Infrastructure admitted and confirmed the concession. Economic stakes and impact of this decision The news was officially reported from the Ministry of Infrastructure and Energy declaring that in autumn the Government plans to sign a concession contract for the segment Tirana- Durrës and one of the implications will be the establishment of a pay toll for all vehicles. The Minister stated: “We have recently been in contact with many foreign investors. The Ministry has prepared separate requests for each project to find the right partnership, even from the point of view of the experiences that foreign investors have, but also from the point of view of the development interest they have in our country. So, the Tirana-Durrës road has been handed over to some foreign investors who have shown interest as it is the main axis linking the capital to our international port. All the roads that will be considered to enter a paid concession project will constitute routes that will also offer an alternative. This means that citizens can use the alternative route free of charge. Also, what we intend in our pair-roads projects is for the builder or investor to undertake the rehabilitation of existing roads. This is a new element we are trying to put into new contracts and would normally be in favor of citizens and the Albanian state, of course.” iii There are claims that the main bidder is an Indian group with several highway concessions in Asia and the same group in represented in Albania by two well-known construction companies Albstar and Trema Engineering. The concession project foresees that the company wining the bid will have to expand the two main lanes along the main road and provide an alternative way of free passage for all vehicles. The feasibility study is not of public knowledge yet the headline is unsolicited. In many economists in Albania wonder if this concession is really necessary: there are way more urgent infrastructure issues to be addressed. The more 2 information is offered to the public the more there is a widespread consensus that this decision is unjust. Some months prior, when another important road the highway to Kosovo had the same fate, harsh clashes with the authorities by the citizens of Kukës made worldwide headlines. ivHowever, this did not stop the government on executing the toll fee from 2.5 Euros to 22.5 Euros per vehicle. Again, on bases of allegations, it is foreseen that each vehicle will have to pay from 2 to 5 Euros for each passage into Tirana-Durrës highway. v By all means this will benefit the state finances because there is an estimation of 50 thousand vehicles per day traveling this road, but how will citizens be affected? The majority of the vehicles traveling in the Tirana-Durrës highway have as destination factories, offices, headquarters, and logistics hub – basically daily trips. The high concentration of business in this road makes the route inevitable for many. There is no official data on how many businesses operate in the length of this highway, however there are estimations that 30- 35.000 out of 50.000 vehicles passing there each day are work related. In fact the first to react and oppose to this news was the business environment of Tirana and Durrës. The Chair of Konfindustra (Albanian Consortium of Industry and Business) declared that with this move the business is hit threefold by imposing a tax on such a strategic road. First, businesses are hit by a direct increase in their costs. Secondly, this tax will be channeled to consumers whom as result will have less purchasing power. Thirdly, businesses and citizens already pay a maintenance fee for this highway through the mandatory Circulation Tax for each person who lives in the area and owns a vehicle. vi The other controversial point of this situation is the fact that no international financial institution operating in Albania, such as IMF or World Bank, has endorsed this move. Usually, with amounts like the above mentioned (380 million Euros) their representatives have a say in the initiation of the process or the development; on the contrary, IMF and Bank of Albania, have warned the Government to contain the Public Private Partnerships as much as possible because in the long run those practices add to public debt. There is another very important variable that adds to the burden of drivers in the country, fuel prices. As of May 2019, Albania ranks the 13th most expensive in the world in terms of fuel prices. The data is processed by "Monitor" based on the gasoline price information provided by Global Price Petrol and the World Bank's purchasing power per capita income. The indicator measures affordability, based on the percentage of daily revenue it takes for one liter of fuel. The price of gasoline, taken for reference from Global Price Petrol, was 1.61 dollars / liter in Albania, similar to countries with a per capita income higher than Albania, such as 3 Germany, Belgium, Denmark, France, United Kingdom, Italy etc. Albanians need 5.3% of their daily income to buy one liter of fuel. Fuel prices World Top Ranking (unit US$/per Liter) Source: www.globalpetrolprices.com 4 Final considerations Tirana and Durrës, together with the highway that links them, are the locomotives of Albanian economy. The flow of goods, services and people into these two cites is what keeps a huge portion of the population livelihood; putting a financial barrier to this flow and the connection between the two would certainly cripple the income of plenty. Furthermore, there is no clear strategy what exactly will be done and how these routes will be managed – the only clear aspect is that there will be a fee. The businesses operating on this segment will charge the extra fee to their products and services to an already impoverished area. This is a clear example on how a government can deduct 100 to 250 thousand Euros per day out of thin air by just dropping the burden into its citizens.
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