Chapter 4: Leading Sectors For U

Chapter 4: Leading Sectors for U.S. Export and Investment

 Agricultural Sector

Commercial Sectors

 Energy  TES: Telecommunications Services  OGS: Mining and Minerals  TRA: Travel/Tourism Services  TRN: Transportation Services  AVS: Aviation Services  Construction

11/25/2017 Energy

Overview Return to top

2002 2003 2004 (estimated) Total Market Size Mtoe 2.1 2.17 2.3 Total Local Production GWh 3,179 4,900 5,492 Total Exports 0 0 0 Total Imports GWh 2,226 900 567 Imports from the U.S. 0 0 0

Supply of Energy

During its transition from a centrally planned to a market economy, Albania, like most transitional economies of eastern and central Europe, experienced deterioration in a number of sectors, including energy.

Energy supplies declined from a peak of 2.75 Mtoe* in 1991 to 1.49 Mtoe in 2001, and then increased slightly over the past couple of years. Energy from coal and natural gas experienced the biggest declines. Supply and use of coal has declined from approximately 64.5 ktoe, or 22%, of total energy supply in 1990 to 20.7 ktoe, or 1.11%, in 2001. The main reason for this decline is outdated technology and equipment.

Currently, electricity is generated mainly from hydropower plants (HPPs). Of a total installed power generation capacity of 1659 MW, hydropower plants produce more than 1446 MW.

Energy from natural gas followed a similar trend with production declining from 206 ktoe in 1990 to 7.8 ktoe in 2001. Natural gas contributed only 0.3% of total energy produced in 2001 compared to 10% in 1990.

The contribution of oil as an energy source has also dropped. Albania contains considerable quantities of heavy grade oil but advanced technologies are needed for extraction.

*(Million tons of oil equivalent. 1 Mtoe equals 39.7 x 10,000,000 BTU. A Ktoe is a thousand tons of oil equivalent)

Best Products/Services Return to top

Hydrocarbons

The three main players in the hydrocarbon sector are Albpetrol, which handles oil extraction, Servcom, which is responsible for services and, ARMO, which manages refining and marketing. The transport network infrastructure is equipped with pipelines, tankers, pumping stations and control equipment. The crude oil transport system has

11/25/2017 been developed as a unique network that connects each oilfield with gathering stations and refineries. The network has a capacity of 7000 tons per day (2.5 million tons per year).

Albanian oil fields have good potential. Currently, there are 12 oil fields administrated by Albpetrol. Total reserves are more than 450 Mtoe. Sandstone reserves hold more than 340 Mtoe while limestone reserves have around 110 Mtoe. More than 60% of total reserves are concentrated in two main areas: Driza and Kucova. Total production of Albpetrol for 2003 was 370,000 tons of crude oil out of which ARMO produced approx. 120,000 tons of gasoline fuel.

Foreign companies have been exploring and producing oil in Albania for more than 12 years. During this period, 10 wells have been drilled (6 offshore) and 13,000 km of new seismic profiles have been completed. Among the companies that have been present in Albania are Occidental Petroleum (US), Coparex (France), OMV (Austria), Premier Oil, (UK), Ina Naftaplin (Croatia), Hellenic Petroleum (Greece), Lundin Petroleum (Sweden), and Saxon International Energy (Canada). Investments by these companies are expected to amount to roughly USD 20 million for 2004.

Opportunities Return to top

The Government of Albania's strategy for the energy sector addresses development in power generation, transmission and distribution.

In generation, the strategy requires meeting additional demand by reducing the high level of imports and by identifying new potential HPPs and Thermal Power Plants (TPPs) with minimal costs and minimal impact on the environment. A 125MW TPP, using funding from World Bank, EBRD and other is currently being tendered. A second phase TPP, of approximately 200 MW, is expected to be built under a concessionary BOOT arrangement.

Albania is known for its huge hydropower potential. So far, the country has exploited only 35% of this. Average output from hydropower is 4169 GWh. Total hydropower reserves are estimated at around 3,000 MW. Potential annual generation may reach up to 10 TWh. New plants in the southern part of Albania (Vjosa and Devoll) have been successful in exploiting nearby rivers.

A World Bank study emphasized the need of new HPPs. The most appropriate candidates are:

a. Bushati (84MW) b. Dragot–Tepelena (130 MW) c. Kaludha (75MW) d. Bratila (115MW) e. Banja (80MW)

As for transmission, the strategy includes the development of a high voltage grid of 400 KV, 220 kV and 110 kV with resulting reductions of transmission losses. In the 400 and 200 kV systems, the following investments need to take place:

11/25/2017 a. A new interconnection line 400kV Podgorice-Kashar-Elbasan forecasted to be constructed in 2005. b. A new substation 400\220 kV in Kashar equipped with two 300 MVA transformers and forecasted to be constructed in 2005. c. Construction of a double line Fier–Vlore (TEC). This investment includes a new 220\110 kV substation forecasted to be constructed in 2005. d. 700 MVA of VHV\100 kV transformers should be added to the transforming capacity in addition to 444 km of lines of an 110kV network to be added to the existing system.

Total investments in transmission are estimated at USD 204 million.

For distribution, the aim is the rehabilitation of the existing system as well as adding new capacities. The 2002-2015 strategy consists of two stages:

First Stage Installation of energy meters. Estimated time of completion is end of 2004. Technical distribution losses will be reduced to 5% compared to 15.8% in 2001.

Second Stage Expanding and strengthening of the network. Approximately 6800 transformers will be placed in rural zones to reduce technical losses from 9.8% to 7.3%.

Total investments for 2002-2005 are estimated at USD 60.93 million while 2006-2015 investments are estimated at USD 290.14 million.

Currently, all activities of the Albanian power control system are performed manually. The establishment of a new National Dispatching Center (NDC) is vital for the optimal technical and economic use of the system. Total investments to establish an NDC are estimated at around USD 19 million. An Italian project has allocated an amount of approximately euro 555,000 to study and design the new Center.

Solar energy is a new and promising investment opportunity for Albania. The Ministry of Energy aims to install enough solar panels to provide 62.9 ktoe of energy by 2015. The total investment cost is estimated at USD 79 million. Investment costs are to be shared between the state budget and private investors.

Wind energy is another potential. It is estimated that 20 windmills could be put up in Albania contributing another 400 GWh\year to the energy balance of the country

One of the major investment opportunities in the energy sector is the 1600 acre Vlora Energy Park (VEP). VEP is expected to attract important investments to Albania with the main investments being a TPP (to be built in phases); the AMBO Pipeline project; storage facilities for hydrocarbons, a refinery; and industrial processing units.

Total investments for the VEP TPP are estimated at USD 112.6 million. Several international financial institutions are expected to support this project such as the World Bank and EBRD. The construction of the Vlora TPP is expected to start in 2005. Estimated time of construction is 20-24 months.

11/25/2017 Based on a study financed by the USTDA, Ascot Onyx has proposed to the Government of Albania the construction of a second TPP in VEP. The second plant will be composed of two units with 200 MW each. Estimated cost of investment is around USD 217 million. Construction period is estimated at 24 months from the date of signing the Power Purchase Agreement (PPA). The price required by the investor is 4.7 cent\kWh with an annual increase of 3%. The main advantages of this proposal are:

a) The proposed technology is among the best. b) A capacity of 400 MW will fulfill the energy demand for Albania until 2015.

The AMBO Pipeline project is of special importance to Albania. In December of 2004, Albania, Macedonia and Bulgaria signed a tripartite agreement to permit the construction of a trans-Balkan oil pipeline. The pipeline will connect Burgas, on the Bulgarian Black Sea, to the Albanian Port of Vlora and will have a total length of 913 km. Total cost of investment is estimated at USD 1.13 billion. Once in operation, the pipeline will have a capacity of 750,000 barrels per day bringing Russian and Caspian Sea region oil to Europe.

The construction of depots and lines for the delivery and transportation of hydrocarbons and liquid gas along the coastline is expected to begin soon. Construction will be done via concessions with a cost estimated at USD 40 million.

Albania is estimated to have reserves of about 550 million tons of oil. The Government of Albania has constantly promoted foreign investments in oil exploration and various international oil companies have shown interest in onshore and offshore exploration.

Gas capacity is estimated to be approximately 69 million cubic meters. However, demand is mostly met through imports. In 1998, a Canadian corporation, Grande Portage Resources, entered into a joint operation with Albpetrol for the development of the Delvina gas field.

Additionally, Albania is the only country in Europe not to be connected to an international gas pipeline. Currently, the government is discussing several alternatives to address this issue. Potential links with Italy, Greece or Macedonia are being considered.

The domestic market for LPG is under development. LPG comprises 2.5% or 12 kg per capita of final energy consumption, foreseen to increase to 5% or 50kg per capita by 2015. There are tax incentives to increase its use.

The Government of Albania has drafted a detailed program for the privatization of the oil sector. The process began with the liquidation of APC, which will pave the way for the separation of the companies operating in different sectors and their eventual privatization. Servcom and ARMO privatization is expected soon. It will take longer to privatize Albpetrol. Ballsh and Fier are the only refineries but currently utilize only 30% of capacity. Ballsh is in need of a total rehabilitation due to heavy depreciation.

Coal is one of the largest potential energy sources in Albania. Reserves are estimated at 226.9 Mtoe.

11/25/2017 Resources Return to top http://www.acit-al.org

11/25/2017 Telecommunications Services

The Information and Communication Technology (ICT) sector in Albania experienced remarkable growth during the past 10 years. There are many small local companies operating in this sector as well as a local land-line giant and two cellular operators.

Best Prospects/Services Return to top

Products and players include:

Voice Telephony

The number of fixed lines in use has increased from 87,000 lines in 1997 to approximately 262,000 lines at present, making for 6.8 telephones per 100 inhabitants, one of the lowest densities in Europe.

The main player in this market segment is Albtelecom, a state owned company. Albtelecom is expected to be privatized in the first half of 2005.

Mobile Telephony

Mobile services are another area that experienced astonishing growth during the last 8 years. Two main operators dominate the market. The first is Albanian Mobile Communication (AMC), a state owned company that was sold in 1999 to a joint-venture partnership between COSMOTE (Greece) and TELENOR (Norway). The second license was granted in 2001 to a consortium of Vodafone (UK) and Panafon (Greece). A third mobile license was granted in March, 2004 to Albtelecom.

In 1996, only 2,300 subscribers had mobile service. By the end of 2004, the two mobile operators had over 1.5 million costumers between them.

Rural Telecommunication

The market for rural telecommunication was liberalized in 2000. Since then, the state telecom regulator (ERT) has approved approximately 38 licenses to rural operators of which only 5 can be counted as major operators, serving a total of 12,000 subscribers.

Internet Service Providers (ISPs)

The law governing operations of ISPs went into effect in 1997 and the first license was issued that year. Currently, there are 35 licensed ISP providers, with 5 major ones.

11/25/2017 All ISPs operating in Albania use VSAT technology for their international connections. ISPs provide both limited and unlimited services, 24 hours a day. The number of internet users at present is estimated at around 25,000.

Albtelecom has invested in setting up a national internet backbone which enables ISP-s to establish points of presence throughout Albania, in addition to Tirana.

Value Added Services

Value added services are new to the market. ERT has issued four licenses so far and all license recipients are operational.

Prepaid Card Services

Prepaid services were introduced two years ago. Currently, 45% of the population is using the services one of the four prepaid card providers.

Computer Hardware

The number of PCs in country is estimated at 85,000 with 40-50% of these used by businesses and public administration. The number of PCs per 100 inhabitants is approximately 2.3.

The privatization of Albtelecom will mark the beginning of a new and more advanced era for ICT in Albania. A liberalized and competitive ICT sector will have a positive impact on the development of ICT infrastructure and related services in voice and data communication. It will increase quality, reduce access costs and have a direct effect on the economic development of Albania.

The privatization of Albtelecom is an investment opportunity for an investor with a track record in ICT who is looking to establish a presence in a promising emerging market at the heart of Europe. In addition to fixed telephony, Albtelecom also serves as an ISP. It offers access in 8 main regions in Albania: Tirana, Durres, Fier, Vlora, Korce, Shkodra, Elbasan and Gjirokastra. According to its published records, the company claims the following annual income and profits:

1999 2000 2001 2002 2003 2004 E Income USD/millions 115 101 134 138 125 135 Gross Profit USD/millions 45 38 27 7.3 9.9 20

Second Operator License

11/25/2017 Albtelecom will retain its monopoly in fixed telephony until the end of 2004. After that, a second PSTN provider may be licensed. Foreign investors may apply for such a license to operate in the Albanian market. The average tele-density for Eastern European countries is 30 phone lines per 100 inhabitants. Albania is currently at a density level of 6.8 per 100.

Rural Services

The Government’s rural telecom plan is mainly based on a private sector approach. The number of inhabitants living in rural areas is approximately 1.7 million while the number of inhabitants in the rural areas that currently have a telephone line at home is around 25,000. Private rural operators lack the necessary capital, technology and interconnectivity to fully service this market segment. Noteworthy is the fact that after 2004, private companies will not be obliged to ask for connectivity via Albtelecom.

Mobile / GSM Services

AMC and Vodafone dominate the market. Currently, around 80% of the Albanian territory is covered with GSM services. This corresponds to 90% of the total population. However, the mobile tariffs in Albania are still high compared to other European rates. Additional investments in this area will lower tariffs and improve service quality.

IT Opportunities

Several investment opportunities are present in IT. These include:

a. The development of high-speed bandwidth infrastructure for commercial use.

b. Foreign investors can act as catalysts for mergers between local ISPs, telecom and IT companies, helping them overcome size constraints and achieve economies of scale. Even though the price of internet access has slightly decreased recently, it is still high by European standards. Transmission is not adequate, with low quality connectivity.

c. Foreign investors can address capital requirement needs such as lack of access to equity for start-up firms, working capital and expansion needs for ongoing enterprises.

d. There is an increasing demand for physical facilities that meet the expansion needs of the ICT industry in Albania such as private sector-led ICT parks and incubator programs.

e. Although Albania's ICT strategy does not directly address hardware issues, its implementation may work in favor of attracting foreign investments and improving the overall climate for hardware manufacturing, which is currently underdeveloped. Investors can take advantage of a skilled, low cost workforce that is in close proximity to European markets.

f. Albanian IT firms can serve the software development needs of western clients as their competitive advantages include the availability of good "raw

11/25/2017 talent," use of the latest software development tools and time zone advantages relative to the U.S. and E.U.

Resources Return to top http://www.amc.al http://www.vodafone.al http://www.atnet.com.al

11/25/2017 Mining and Mineral

2002 2003 2004 (estimated) Total Market Size NA NA NA Total Local Production NA NA NA Total Exports 40 61.5 NA USD million Total Imports 328 397 NA USD million Imports from the U.S. NA NA NA

Albania is a country rich in mineral resources. During the last fifty years, Albanian mineral deposits were subject to considerable exploration activity. Extraction focused on expanding production capacities without reliance on technology upgrades. The mining sector has been going through drastic changes since the mid-1990s when the Government approved the “Albanian mining law” and the law on concessions. Major privatization efforts started in 1999.

Exploration, extraction and processing of minerals are significant activities in the Albanian economy. The country’s main products and their estimated reserves are as follows:

Description Reserves in million tons Chrome 23.7 Cooper 44.9 Iron Nickel 266 Nickel Silicate 102 Coal 712 Peat 156 Bituminous Sands 247 Limestone unlimited Olivine 59 Basalt rocks Unlimited

There are also deposits of bauxite and phosphorite yet to be utilized. Deposits of dolomite, gypsum, salt stone, clays, volcanic glass and marble are also present.

In particular, Albania is distinguished for its high chromium-bearing potential. It ranks among the main producers and exporters of chromium ore. It was third-ranked world producer in the 1980s. The country’s main deposits and largest concentrations are located in the north. Overall, the three main chromium-bearing regions are:

11/25/2017 -Northern Region: Tropoja and Kukes -Central Region: Bulqiza -Southeastern: Shebenik and Pogradec

Total geological copper reserves are estimated at 44.9 million tons. Approximately, 80% of total geological reserves are actually being exploited.

Iron-nickel is another of Albania’s main minerals. Reserves are estimated at 266.6 million tons. Deposits are concentrated in three main regions:

-Northern Region: Kukes -Central Region: Librazhd and Pogradec -South Region: Bitincke and Korce

Gypsum reserves are estimated at about 10 million tons. The reserves are of a good quality and can be used for the cement industry. Gypsum alabaster reserves are estimated at 11.6 million tons and are used so far for decorative items.

The mining & minerals industry was state-owned until late 1990s, when a gradual reconstruction of the industry started. A main goal of this effort was to involve the private sector as much as possible.

Private investments, both local and foreign, have focused on chromium and copper, with three main concessions in place. Small and medium size investments have also taken place in areas related to construction material. Construction materials account for around 10% of Albania’s exports, most of it to neighboring countries.

It is estimated that during 2000-2004, local private investments have totaled USD 38.21 million while foreign investments for the same period have been around USD 23.81 million.

It should be noted that Albania is a cement producer, with two cement factories in Fushe Kruje and Elbasan operating with foreign investments. Albania is also a cement importer. Annual cement needs are estimated around 800,000 to 1 million tons.

Chrome

The main ferro-chromium plants in Elbasan and in Prrenjas and Pojske were given under a concession agreement to an Italian firm, Darfo, in 2000. This company is also operating a mine and an enrichment plant in Bulqiza and Burrel. In general, about 100 licenses have been issued to private sector operators in the chromium industry that cover mines in Bater, Ternove, Klose and Kam in Tropoja.

11/25/2017 However, chrome mines in Kalimash, Kukes Vlahna and Perollaj represent investment opportunities.

The Kalimashi chromium mine is a complex composed of 5 mines connected with each other via the galleries of an enrichment plant, which has a production capacity of 200,000 tons per year. The mine has not been operational since 2000. Geological reserves in Kalimash are calculated at 2.67 million tons. A chrome ore concentrator with an annual capacity of 160,000 tons was built nearby. This concentrator has not been operational since 1999. The Government is willing to reopen the mines once an investor has been identified.

The Vlahna mine, in the Has district, has geological deposits estimated at 2.57 million tons of chrome. This mine will also be reopened once an investor has been identified.

Copper

The biggest investor in this sector is Ber-Oner, a Turkish company that has taken under concession the copper mine in Munelle. It is also working on the rehabilitation of an enrichment plant in Fush Arrez.

However, the copper mine in South Perlat represents an investment opportunity. The mine has reserves estimated at 1.5 million tons. A total amount of USD 1.5 million has been already invested in the mine. An additional investment of USD 1 million is needed to bring the mine to full operational capacity. An enrichment plant is located about 25 km away.

Nickel

The nickel silicate mine of Bitincka has not received any usage permits so far. The mine is about 25 km away from the city of Korca and has total reserve of around 52 million tons.

Along with coal, a considerable quantity of peat has been discovered in the areas of Korca and Saranda. Estimated reserves are at 156 million m3 and 1.3 million m3 respectively. Fertile wheat fields cover the peat with a thickness that ranges from several centimeters and up to 3 meters.

Olivine mines in the northern part of Albania (Kukes) hold potential, as extraction costs are low.

An additional advantage to investing in Albania’s mining & minerals sector is that it places investors in a favorable position to exploit the mineral resources of Kosovo in the future.

Resources Return to top http://www.acit-al.org

11/25/2017 Tourism

Albania is in the heart of Europe. It is Europe’s last tourism “secret.” It is a country rich in tourist resources, including mountains, valleys, forests, rivers and lakes. Traditional villages, ancient castles and a beautiful coastline are part of its heritage.

The GoA considers tourism a key strategic economic sector, viewing its potential to act as a catalyst for the development of the rest of the country.

Albania surprises visitors with the diversity of its landscapes, which can change quickly and dramatically. Landscapes range from typical Mediterranean in the west and southwest, to mixed landscapes in the central areas, to steep mountains in the inner part of country. Its coasts are endowed with beaches composed of light sand or, depending on the location, small pebbles. There are many scenic inland lakes, natural lagoons, reserves, hunting grounds and spas.

Albania’s coastline is one of the greatest assets of the country. It stretches for about 450 km from north to south, most of it clean by Mediterranean standards.

There are two distinct coastal zones: the Adriatic and the Ionian. The Adriatic is shallow with much of its coastal area composed of pine forest with lagoons, offering great potential for ecotourism, nature lovers and bird watching. The main sandy beaches of the Adriatic coast are Velipoja (Shkodra district), Shen Gjin (Lezha District), Durres beach and Golem (Kavaja District), Divjaka (Lushnja District), and Vlora. One of the Adriatics more scenic lagoons is Karavasta, located in Lushnja District and declared a National Park. It is the most western nesting site for Dalmatian Pelicans (Pelicanus Crispus) in Europe. The lagoon of Karavasta is under the protection of the Ramsar Convention.

The southern Ionian coast is rugged and dramatic with steep backdrops and smooth pebble beaches. The Ionian is known for its small, isolated beaches and its deep waters. It is the preferred destination of young people, honeymooners, water activity enthusiasts and offers a good environment for diving. The main beaches on the Ionian coast are Dhermi, Jali, Himara, Qeparoi, Borshi, Saranda and Ksamili.

Albania has many big and small lakes. Lake Ohrid is located in southeastern part of Albania. There are several tourist areas around the lakeshore such as Lini, Pojska, the town of Pogradec, Tushemisht and Drilon.

Lake Shkodra is the biggest in Albania. The two tourist areas on its shores are Shiroka and Zogaj with many small restaurants serving delicious carp from the lake. Lake Prespa is situated in the southeastern part of the country. It is distinguished for its peaceful and

11/25/2017 beautiful landscapes. Finally, the Lura lakes are a complex of 12 glacial lakes in the Dibra region. With cool, pristine waters, the lakes are surrounded by old beech and pine forests.

Albania is also rich in mountainous areas, which are widely spread on its territory. Dajti, Llogara, Dardha, Bozdovec, Valbona and Thethi are the most famous. They offer great opportunities to practice different activities such as trekking, cross-country skiing and mountain climbing.

To demonstrate commitment to providing badly needed infrastructure support for new hotel and resort projects, the GoA put in motion a “Tourism Development Strategy 2002- 2012,” which aims to establish Albania as a recognized tourist destination within the Mediterranean.

Tourism is the only sector with a positive trade balance. Albania has approximately 200 hotels with approximately 8,000 beds. In 2003, total number of arrivals (note: visitors + tourist) amounted to 300,000 and grew to 370,000 in 2004. Revenues from this sector amounted to USD 486 million for 2002 and USD 522 million for 2003. Foreign tourists mainly come from Kosovo and Macedonia.

By 2012, GoA estimates put the number of arrivals with overnight stays at 1.25 million persons, while the number of nights stayed is expected to increase to 6.4 million. Employment in the sector is estimated to top 100,000 by that year.

Some of the major investments that have been completed or are under final stages of construction are:

. Reconstruction of Tirana International Hotel. . The Rogner Hotel in Tirana. . The Sheraton Hotel in Tirana. . Construction of tourist facilities in Linza and Golem. . Construction of the yacht port in Orikum.

In July 2004, the GoA approved a law for the restitution and compensation of property whose positive effects are expected to fall mainly on the tourist industry because it will help resolve many ownership disputes concerning title to property in southern coastal areas.

Existing tourist zone hotels in Albania offer limited capacities of up to 20 rooms or so. Hotels of this size are not able to work with bigger tourist groups organized in package tours by western operators. The opportunity exists for an investor with a track record in

11/25/2017 the management and marketing of small size hotels, to link and operate several of these small hotels under one brand name, offering low-cost packages to visitors.

Since 2001, tourist firms have been expressing interest in investing in Albanian tourist locales. This interest has been matched by an increase in the number of tourists, particularly to the southern part of Albania’s coast, stretching form Vlora to Dhermi, Himara and Saranda.

Because ofr this interest, the GoA is granting “Stimulated Person” status to tourism investments in the following areas:

a. Golem – Kavaje b. Kavaja Rock – Durres c. Ksamili – Sarande

Another area offering good potential for tourism development is the lake Ohrid area. The GoA is taking steps towards improving the infrastructure and facilities in support of tourism investments there.

Cross-border joint tourism is also on the rise. Many visitors cross from the Greek Island of Corfu to visit Butrint, Gjrokastra and Saranda.

Apart from its natural assets, Albania offers treasures of cultural heritage and eco tourism opportunities. Apollonia, Berat, Butrint, Durres and Gjirokastra are some of the areas with well-known archaeological sites dating back to pre-Roman, Roman and Greek days and up to medieval times. Amphitheatres, castles, Roman cities, monasteries and old churches, are among the archeological points of interest that Albania has to offer, some of which are UNESCO protected sites.

Resources Return to top http://www.mfa.gov.al/ http://www.albaniantourism.com/default2.asp

11/25/2017 Transportation

2002 2003 2004 (estimated) Total Market Size 432.14 574.4 814 USD million Total Local Production NA NA NA Total Exports NA NA NA Total Imports NA NA NA Imports from the U.S. NA NA NA (Insert footnote information here)

Albania’s geography enables it to function as an effective transport connection in Southeastern Europe. A mere 100 km (60 miles) from Italy across the Adriatic, Albania has the potential to further develop its road, rail, air and sea transport networks to become a leading facilitator of trade in the region. The country has gained importance as a transit route. Albania is a key part of one of the Pan-European Transportation Corridors, Corridor 8.

Development of the transportation sector is expected to contribute positively to the elevation of living standards, to support economic growth, to lead to more efficient operation of a market economy, to encourage regional cooperation, and to facilitate Albania’s integration into Europe.

Albania inherited a poor road and highway system from its communist era. The country has some 18,000 km of road, of which 7,450 km compose the main network. The inadequacy of the road system is holding back economic growth. Albania has also a 447- kilometre railway network in poor condition.

Several international initiatives are underway to facilitate regional integration and transportation sector development. Noteworthy is a World Bank project which involves modernization of customs administration, upgrading of information systems, improvement to border crossing infrastructure and equipment and technical assistance for trade facilitation. The project involves Albania, Bosnia and Herzegovina, Bulgaria, Croatia, and FYR Macedonia.

The GoA has been working on the development of a multimodal transport infrastructure network to meet expected long-term requirements. The main objectives for transportation sector development include:

11/25/2017 1. the establishment of a modern transportation infrastructure; 2. reducing the demand on the state budget; 3. streamlining of transport operations with an aim of increasing economic efficiency, safety and environment protection; and, 4. promoting cooperation with the private sector.

The GoA has embarked on a major program of road rehabilitation and construction. Recent achievements include the Tirana-Durres highway and improved roads connecting Tirana with Shkodra and Montenegro, Durres with Lushnja and Korce and Gjirokastra with the Greek border.

Recent achievements in th erailway sector include the completion in March 2003 of an 8- mile link to Montenegro, which links the Albanian rail system to the international one and the 2-mile link of port of Durres with main station. Additionally, GE Transportation Systems has signed an MOU with the Government of Albania to develop a project to modernize 7 stations between Durres and Tirana and install fiber optic cables for data transmission along the railroad.

Albania has five ports that are open to international traffic: Durres, Vlora, Saranda, Shengjin and Himara. Durres Port is Albania’s main port. It offers ferry facilities and handles around 65% of Albania’s trade.

Development of Durres Port includes construction of a container terminal, improvement of efficiency and capacity, establishment of an autonomous port authority, privatizing port operations, improving customs procedures, and rehabilitating infrastructure in anticipation of increased traffic demand, especially transit.

The European Investment Bank has allocated USD 17 million for Durres Port’s master development plan, which consists of 11 projects involving infrastructure, privatization, staff training and equipment purchasing. In 2005, the GoA plans to invest about Euro 22 million in a new passengers terminal in the port of Durres. The new terminal will expand the port’s current capacity to 700,000 passengers a year and will raise safety standards.

Vlora Port is a strategic point for the future development of the Albanian maritime industry. Saranda Port has a passenger and a light freight service to Italy and Greece.

To achieve transportation sector development objectives, the GoA has planned a number of improvements, including: rehabilitation and construction of the East-West and North- South corridors and branches; improving the urban and rural road infrastructure; developing the Durres-Kukes-Morina highway (the border point on the road to Kosovo) and the Tirana-Klos-Peshkopi-Bllate roads; and, construction of the Vlora-Saranda tourism road.

The east-west corridor, or Corridor 8, has recently gained in importance. Corridor 8 links Western Europe with Asia via Albania, Macedonia, and Bulgaria. It is intended to

11/25/2017 be part of the trans-European transport network involving road, rail and pipelines. Once completed, this project will give Durres and Vlora the opportunity to become a regional port serving Southeastern Europe.

The Durres-Kukes-Morina highway entails the construction of 180 kilometers of roadway. The World Bank financed a feasibility study, completed in July 2003, for the construction of this road. Construction is expected to cost between USD 75-300 million.

Improvement of the railway transport system includes completion the reconstruction of the Tirana-Durres railway line and a new railway link to Macedonia. A new line is planned which would link Tirana and Durres with Mother Theresa International Airport. Negotiations are underway for this project with the American company General Electric Transportation Systems.

Additionally, the renovation of the Durres to Pogradec rail link with a new extension to the Macedonian border is under consideration. The GoA estimates the project's cost at USD 240 million.

There are plans to build a line from Rreshen to Kosovo and another line from Pogradec to Thessalonica, Greece, which would provide an important outlet for central Albania’s mines.

Improvement of the maritime transport system. This includes completing the development of Durres Port, Port of Vlora, and the development of Saranda's and Shengjin's Ports.

Durres Port handles about 90% of Albania’s maritime cargo and efforts are under way to rehabilitate its quays, piers and wharves. Port efficiency and rail and road connections can be improved. Durres can be developed as a gateway to Kosovo as well as Albania.

The US Trade and Development Agency (USTDA) is financing a feasibility study on the expansion and modernization of the Port of Vlora. The study, scheduled to be completed in the first half of 2005, will focus on:

1. Local infrastructure needs arising from the construction of the thermal power plant in the Vlora Energy Park such as upgrading of the port’s fuel import capacity and the construction of fuel storage facilities.

2. The construction of a passenger service terminal.

3. Addressing issues pertaining to the expansion of its commercial trade facilities such as inspection stations, cranes and container transport equipment.

11/25/2017 It is estimated that the expansion and modernization of the Port of Vlora will cost around USD 90 million. The GoA is looking for creative approaches to finance this project and see it through.

Tourism development in Albania also necessitates yacht harbor facilities serving the tourist industry at all ports.

International donors involved in the rehabilitation of Albania’s transport network include the European Union, EBRD, the World Bank, the Central European Initiative, the Italian, American and Greek Governments and the European Investment Bank.

Resources Return to top http://www.mtt.gov.al/

11/25/2017 Aviation Services

Tirana’s Mother Theresa International Airport is a 30-minute drive from the capital. It is the only international airport in Albania.

Foreign airlines operating in Albania include Adria, Alitalia, Austrian, Malev, Olympic and Turkish Airlines. The Government of Albania has also approved a request from Delta Airlines to code share on Alitalia flights from Rome and Milan to Tirana as of May 1, 2004.

Siemens of Germany has carried out a project of USD 26.5 million to rebuild the runway, lights and boundary fence. Plans have been approved for a new passenger and cargo terminal. Airport Partners (a consortium of U.S. and German companies, including Hochtief) recently won the tender to have in concession for the next 20 years Tirana International Airport. The concessionaire will build a new passenger terminal, establish modern support facilities, lengthen the airport’s runaway and introduce new safety operations.

The Ministry of Transport has recently set up a civil aviation committee to lead efforts for increasing air safety and air security. The committee’s main objectives will be to control and guide the implementation of the recommendations from the International Civil Aviation Organization and the European Civil Aviation Conference.

GOA is planning to extend civil aviation services to domestic flights. Kukes Airport in the north of the country is under construction. There are already plans for the construction of two smaller airports in the south mainly for the purpose of bringing tourists -- one near Vlora and another near Saranda.

The number of passengers flying to Albania during totaled 631,000, an increase of 13% over the previous year. Recent improvements in safety standards are considered a major factor in the increased number of international flights to and from the airport and over Albanian territory.

Albania’s only major international airport is Mother Theresa International Airport. It has outgrown its terminal and a BOOT contract has been awarded for the construction of a new terminal to the German-American group Airport Partners, which includes Hochtief and the Albanian American Enterprise Fund. The 82 million Euro project is part of a 20

11/25/2017 year concessionary agreement. The first phase is scheduled for completion in 3 years. Once completed, the terminal will be able to handle up to 850,000 passengers per year.

Lockheed Martin completed the first of two phases of a USD 33 million project to modernize the air traffic control system. Recently, Lockheed Martin installed a Skyline air traffic system aimed at developing Albania’s traffic system and assuring safety and security standards.

U.S. companies will have opportunities in the areas of: construction equipment and materials, electronic data processing equipment, traffic monitoring, project management services and telecommunications equipment.

Resources Return to top http://www.mott.gov.al

11/25/2017 Construction

2002 2003 2004 (estimated) Total Market Size 378 522.3 736.5 USD million Total Local Production NA NA NA Total Exports 1.9 2.1 NA USD million Total Imports 58.1 68.9 NA USD million Imports from the U.S. NA NA NA (Insert footnote information here)

The construction industry has experienced rapid growth over the past several years, fueled mainly by the extremely poor conditions of housing prior to the fall of communism in 1991. The sector constitutes almost 10% of the GDP and has grown, on average, 10 percent per year for the three years. This extraordinary rate of growth declined, however, in 2004.

Currently, Albania imports large quantities of construction materials, mostly from Turkey and Greece. Buildings in Albania are made of concrete and are energy inefficient -- insulation is rarely used. Wood and steel frame buildings are almost unknown, though builders in Albania are starting to examine American-style platform-frame wood construction.

The domestic market in Albania consists of materials such as: cement and cement products, and gypsum products. Albania produces 200,000 tons of cement annually but imports an additional 500-600,000 tons. Albania also exports some of its domestic construction materials (approximately 9.1 percent of all exports come from this sector) -- mainly to Kosovo.

This demand for construction materials offers opportunities to promote high-tech American building materials based on advanced U.S. technology. U.S. value-added building products that may have very good market prospects include: wood and vinyl windows, doors, flooring and kitchen cabinets, suspended ceilings, insulation, adhesives, cements, roofing shingles, heating and ventilation equipment, air conditioning, refrigeration and cooling systems, steel buildings and fabrications

11/25/2017 Although U.S. products are higher priced due to transportation costs and customs duties and taxes, there are both export and investment opportunities available for U.S. companies in the construction and building materials sector.

Resources Return to top http://www.minek.gov.al/ http://www.acit-al.org

11/25/2017 Agricultural Sectors Return to top

Overview

Albania is a relatively small country with a population of about 3.1 million. It has a total area of 28,750 square kilometers, 24% of which is considered agricultural land, 36% forests and 15% pastures. The rural population is estimated at about 55% of the total and nearly 60% of the labor force works, directly or indirectly, in agriculture. Traditionally the leading sector, agriculture has lost its dominant role in Albania’s domestic production. Today it contributes to only 24% to the country’s GDP. Real GDP growth for the agriculture sector was 2.7% in 2002 and 3% in 2004.

Important Sub-Sectors

a. Milk Processing

Currently, there are around 374 milk processing enterprises employing around 1,400 workers. They comprise 19% of the total number of agro processors in Albania. Yogurt and cheese production figures for 2002 were 4,804 tons and 6,531 tons, respectively.

b. Fisheries

The fish processing industry has grown significantly since it first started in 1994. There are some 27 enterprises and 5 fish canning operations in Albania. Due to modern technology and high product standards, products are almost exclusively for the export market.

Sea fishing accounts for about 70 to 80 per cent of total production. Fish and shellfish farms exist.

c. Grain and Flour

The Albanian market consumes about 800,000 tons of grain per year, most of which is imported. The processing capacities of the local industry are about 250,000 tons of grain per year and almost all of it is supplied by imports. Small mills scattered throughout the country are processing grain produced locally. A good part of market demand for high quality flour is also supplied by import.

d. Edible Oils

Annual consumption of vegetable oil in Albania is in the range of 40,000 to 45,000 tons. A few Albanian and foreign companies operating in the country have been involved in the refining and bottling of imported crude vegetable oil, which captures most of market demand.

11/25/2017 Olive oil presents a large potential for agro processing due to the presence of vast numbers of olive trees. Olive plantations in Albania cover an area of about 110,000 acres with some 5 million olive trees, or about 12 per cent of agricultural land. Of these, about 3.2 million trees, or 64 per cent, are still yielding. Annual consumption of olive oil in Albania is around 70,000 tones. A good deal is produced locally but production suffers from small capacity and outdated technology.

e. Vegetables and Fruits

Noteworthy is the cultivation and production of vegetables in greenhouses with a total area of about 1100 acres and is on the increase. Of these, about 400 acres are made of glass, out of which 29 have central heating. The main vegetables produced are cucumber and tomato, which constitute more than 80 per cent of total vegetable production. Winter season vegetables cultivated include lettuce, spinach, carrot and cauliflower.

Fruit figures stand at around 4.9 million roots, including citrus, grape and cherry plums. Most of the production goes for agro processing. Main products include jams, marinated vegetables and stewed fruits.

f. Medicinal Herbs

Albania has always been a significant producer of herbs and spices, with considerable exports. Some Albanian products such as sage enjoy an excellent reputation in the international market. There is no domestic processing or packaging capacity.

g. Honey

Albania has substantial forests with just over 2.5 million acres, with the lower forests used for bee keeping. Honey in Albania is 100% organic. It has a distinct taste, smell and color due to the diversity of the Albanian flora. Exports are limited due to the lack of processing facilities. Export figures for 2003 stood at 390 tons.

Additionally, processing investments have been made in refreshments. Both Coca Cola and Pepsi Cola have invested in bottling plants. The beer industry is thriving.

Processed foods are dominated by two major sectors: semi finished (e.g. frozen, dried and concentrate); and, finished products (i.e. canned and preserved). Processed food and beverages account for about 10% of Albania’s exports. Albania exports to Italy, Greece, Germany, France and the US. 2002 export figures in USD for select items were as follows:

 Medicinal Plans $10.4 million  Tobacco $4.4 million  Raw hides and skins $4.25 million

11/25/2017  Vegetables (fresh, chilled, frozen) $1.53 million  Shellfish (2001 figures) $5.13 million

Albanian producers can compete in international markets only after they pass a test on quality control. Land O’Lakes is working with meat and dairy processors on quality stamps. Another USAID funded project is working to enable exports. Additionally, Albania is a member of the WTO and to be competitive in both the domestic and export markets, Albanian products need to meet EU and other quality standards.

Finally, Albania has abundant water resources that include rainfall, surface and ground water. Surface water resources flow in eight main river basins with an annual average run-off of 25.7 billion cubic meters. There are more than 650 small reservoirs constructed for irrigation purposes with a total storage capacity of about 560 million cubic meters. Some 450 million cubic meters may be diverted from run-of-river schemes. There are several large dams used for hydro power generation with a capacity of 3.25 billion cubic meters.

Investment Opportunity

The GoA aims to increase agricultural production, with an average annual increase of 5%, and to modernize agro processing through private investment. The Government hopes that the resulting increase in the competitiveness of agribusiness products would alleviate the trade deficit of the country. A special emphasis is on the establishment of a strategy for organic production and processing. Many international initiatives are underway to promote agricultural development including projects by the World Bank, USAID, UN, IFAD, EU-Phare and the Japanese Government.

Opportunities are available for foreign investors in the production and processing of high value crops and well as in some niche segments. Investors who can address issues pertaining to lack of marketing and distribution facilities, refrigeration and storage, quality control, lack of vertical integration, lack of capital, and processing and packaging requirements will be able to take advantage of preferential trade agreements with the European Union to increase exports.

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11/25/2017