European union – albania stabilisation and association committee 11 March 2015 table of contents political criteria 3
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6.6 TRANSPORT, ENVIRONMENT, ENERGY AND REGIONAL DEVELOPMENTFollow-up of the 2014 Progress Report and the conclusions of the May 2014 Subcommittee meeting with focus on:For a detailed presentation of the progress achieved addressing the 2014 Progress Report and Subcommittee meeting, please see the Report to the EU – Albania Subcommittee on Transport, Energy, Environment and Regional Development, submitted to EC services on 27 February 2015. Energy strategy The work group set up under the Order of Minister of Energy and Industry No 29 of 17.01.2014 is preparing the draft National Energy Strategy, scheduled to be finalised in the first half of 2015. The new Strategy aims to define the main challenges, goals and actions for the period 2015 – 2030, determining:
Opening of the market Concerning the recommendation of the 2014 Subcommittee on transport, energy, environment and regional development (2014 TEERD Subcommittee) that Albania should effectively open the market by abandoning the single buyer model as well as excessive price regulation, the draft power sector law, as agreed with the Energy Community Secretariat, includes a schedule for the progressive opening and liberalisation of the electricity market. Currently, around 10 – 12% of the retail market in Albania is liberalised, mainly supply to big consumers who are connected to over 110 kV network, or which consume over 50 million kWh of electricity per year. Likewise, the wholesale market is completely liberalised with a big number of operative active in the market. It is anticipated that supply to consumers connected to the 35 kV network will be liberalised in the near future, to be followed by the supply to consumers connected to 20, 10 and 6 kV. About 40% of the electricity market is expected to be liberalised by 2018. Electricity generation is being liberalised progressively, with the privatisation or entry into production of HPPs under concession. Allocation of interconnection capacity with neighbouring countries is fully liberalised. Hence, KESH and OSHEE are stripped of their privilege to reserved capacities; now, they must enter a bid on equal terms for capacity allocation. This will foster competition, reduce prices and guarantee security of supply to consumers. Reduction of energy losses and increase of bill collection rates The dispute between the Albanian government and CEZ was settled through negotiations. The Agreement between the Albanian government and CEZ was ratified with the Law No 114/2014 of 31.07.2014 “On the approval of the settlement agreement between the Republic of Albania and CEZ, A.S.” transferring the shares of CEZ Shpërndarje S.A. to the Albanian Government. Currently, the Albanian Government owns 100% of the shares of this company. Under these circumstances, the Board of Commissioners of Albanian Power Regulator (ERE) adopted its Decision No 98 of 27.10.2014 repealing its Decision No 5 of 21.01.2013 and terminating the temporary administration of the Electricity Distribution System Operator (OSHEE) company, licensing it to carry out its activity as distribution and retail public supplier. The Distribution System Operator (OSHEE) implemented the following measures:
OSHEE was supported in its activities by the State Police, Public Prosecutor and the Ministry of Justice. Preliminary data on the level of losses and bill collection show reduction on the level of losses and an increase in the collection rate. The bill collection rate, as reported by OSHEE increased to 92.6% in 2014, compared to 83% in 2013. In total, in 2014, OSHEE S.A. billed approximately 386.211 MWh, or around 9.8% more than in 2013. In total, in 2014, OSHEE S.A. cashed 49.1 billion ALL compared to just 38.4 billion ALL cashed in 2013. The increase in collection of power bills was mostly due to improved performance in bill collection in the fourth quarter of 2014, and especially in December 2014. Total losses for OSHEE were reduced to 37.81%, or 7% lower compared to 2013 (45.04%). The largest reduction was registered primarily in the fourth quarter of 2014, and particularly in December 2014. For 2015, it is foreseen that OSHEE S.A. will collect around 53.8 billion ALL, or about 5 billion ALL more than in 2014. Losses will be reduced even further to 31.8%, or about 6% less than in 2014. Detailed information on the bill collection and reduction of losses during the 2014, were presented in the Albanian Report to the EU – Albania Subcommittee on Transport, Energy, Environment and Regional Development, submitted to EC services on 27 February 2015. Electricity prices Referring to the recommendation of the 2014 Subcommittee on transport, energy, environment and regional development that Albania electricity prices will be gradually brought to cost-recovery levels, with accompanying measures to address protection of vulnerable customers, Board of Commissioners of ERE adopted its Decision No 148 of 26.12.2014 “On deciding the retail prices of electricity for tariff consummators, for 2015”. ERE decided that the price for household customers starting from 1 January 2015 would be 9.5 ALL/kWh. In terms of establishing optimum report between the prices and tariffs of different customer categories, the retail prices of the tariff customers are differentiated according to the voltage network, where they are connected and measured as shown in the following table.
Source: Albanian Power Regulator (ERE) For the category of vulnerable customers which are defined based on the criteria set by the Ministry of Social Welfare and Youth, the difference in price set in 2015 for the first block of consumption (300 kWh) compared to the previous decision of ERE for setting tariff and prices, is covered by the state budget. Requirements on unbundling of Albpetrol The final proposal on the unbundling of gas activities carried out by Albpetrol is being discussed. The Ministry of Energy and Industry in cooperation with the Ministry of Economic Development, Tourism, Trade and Entrepreneurship, together with the Supervisory Board of Albpetrol, are considering the set up of a new company dedicated to gas transmission and distribution. The final decision will be taken in the first quarter of 2014. After the final decision, MEI will inform the European Commission and the Energy Community Secretariat on the decision. Safety oil reserves The Oil Stock obligation is regulated by the Article 9 of Law No 8450 of 24.02.1999 “On the processing, transport and trade of oil, gas and their byproducts”, as amended. Currently, the oil refineries and wholesale trade companies (oil and their byproducts) are obliged to keep in Oil Stocks (safety reserves) a quantity of oil and byproducts equal to average 90 selling days of the previous year. In the framework of the transposition of the EU acquis and based on the conclusions of the last Oil Forum of the Energy Community held in Belgrade, Serbia on 30 September 2014, Albania is obliged to transpose the Council Directive 2009/119/EC of 14 September 2009 imposing an obligation on Member States to maintain minimum stocks of crude oil and/or petroleum products. In this respect, the Work Group established by the Order of Prime Minister No 233 of 2.12.2013 “On establishing an inter-institutional work group for the review of the legal and institutional framework on keeping and managing the emergency oil stocks and their byproducts” is cooperating with the experts of the Energy Community Secretariat to transpose the abovementioned Directive. The Work Group is analysing the Croatian, Kosovo and Macedonian model on emergency oil stocks. The Albanian National Nuclear Agency, in order to perform the correct follow up of the already conducted Analysis of Energy Supply Options for Albania until 2040, will carry implement the following measures:
Transport Strategic Planning and infrastructure development plans The ToRs for drafting the National Transport Sectoral Strategy are being prepared by the Ministry of Transport and Infrastructure (MTI). The Minister of Transport and Infrastructure issued Order No 21 of 12.02.2015 “On the set up of the technical working group which will draft the Terms of References for Transport Sectoral Strategy”. The working group is led by the Deputy Minister of Transport and Infrastructure. The Strategy will provide a framework for a sector-wide programming approach and will give a new vision for development priorities for the future, for all transport sectors. The transport sector will be financed under IPA II (approx. 700,000 Euro) for the Reviewing of the Albanian National Transport Plan, under the instrument “EU Integration Facility”, which will be managed by Ministry of European Integration. Ministry of Transport and Infrastructure is preparing the drafting of the Sector Planning Document, as the basic document, defining the priorities of the sector and the future EU financial support. Albania aims to increase foreign investments in road construction, by improving policy coordination and planning, and promotion of transport projects (national or regional) to private investors. To this purpose, the Ministry of Transport and Infrastructure has prepared a list of priority projects which is published at its website. The prioritization of projects is done based on their economic, social and regional importance. Transport Infrastructure Maintenance In reference to the 2014 TEERD Subcommittee recommendation Albania will step up its efforts in improving the maintenance of the transport infrastructure, including ensuring adequate funding with possible participation of the private sector, the Albanian Government with the assistance of the World Bank is launching the “Results-based Road Maintenance and Safety Project (RRMSP)” (2015 – 2019). Under this project, five-year performance based maintenance contracts will be signed with the private contractors for the periodic and routine maintenance of 1,335 km of primary roads of the national road network. The results based approach is consistent with the Government’s ongoing strategy to grant concessions for the operation and maintenance of a number of highways. Specifically, the Project consists of the following components: 1. Maintenance Works including monitoring a) Carrying out periodic and routine maintenance of Primary-Secondary roads within the national network. b) Carrying out activities to monitor roads maintenance and ensure that the defined levels of service are complied with, including: (i) carrying out initial road safety audits; (ii) conducting periodic International Road Safety Assessment Program (IRAP) Surveys to ensure that identified additional road safety black-spots and required safety enhancements are incorporated in the maintenance Works for the relevant roads; and developing the Social Transparency System. 2. Institutional Reform 3. Sector Reform and Monitoring Activities 4. Project Management and Audit Support The World Bank will support the abovementioned activities including sector reforms and technical and advisory assistance to GoA to finalise the Transport Sector Strategy and its implementation plan. Ministry of Transport and Infrastructure is assisted by two other projects, supported by European Bank for Reconstruction and Development (EBRD):
Port Infrastructure Construction Concerning the EC recommendation of 2014 TEERD Subcommittee, that Albania will improve co-ordination of construction of port infrastructure, including dredging works and development of hinterland connections, MTI is working towards the rehabilitation and expansion of port infrastructure and superstructure (the ports of Durres, Vlora, Saranda and Shëngjini), in order to increase capacity and standards of operation, service effectiveness and tourism development. The first multimodal terminal in Albania in Durrësi Port Authority is now operational. Based on the Albanian National Transport Plan, for the development of ports, roads within the port area are rehabilitated. The access the port directly from the Tirana – Durrësi motorway is operational. The main developments in the Albanian Ports are as follows:
Implementation of acquis on driving licenses and road safety measures Law No 175/2014 of 18.12.2014 “On some amendments and addenda to Law No 8378 of 22.07.1998 “Road Code of the Republic of Albania” was adopted. The amendments introduced aim to:
The following legal acts were approved as well:
Albanian became a member of European Treaties on Information Exchange on drivers and vehicles (EUCARIS). The Law No 145/2014 of 23.10.2014 “On the adherence on the Treaty concerning the European vehicle and driving license information system (EUCARIS)” was adopted. The treaty foresees mutual exchange of vehicle data and driving licenses between EU member states and other countries for the purposes of vehicle registration and other services related to driving licenses and registration of vehicle authorities. As a result of implementing the package of measures for road safety road accidents the fatalities decreased from 295 in year 2013 to 264 in year 2014, serious injured from 478 to 361 and the light injured from 2025 to 1992. Along with legislation initiatives, the following measures were implemented:
The IT system for the Certificate of Professional Ability for drivers of commercial vehicles and paper certificates is being procured by General Directorate of Road Transport Services. Rail Transport Sector Referring to 2014 TEERD recommendations on the rail sector, MTI aims to revive the sector, initially by taking some internal measures, aiming to increase the working volumes, mainly from the Port of Durrësi railway connection. Improving the links with our neighbours (such as FYROM and Montenegro), improving Tirana – Rinasi – Durrësi, etc, will be the main directions of our work in the future. With the support of EBRD, the project detailed design for the reconstruction of Tirana – Durrësi railway line and for the construction of the new railway line Tirana – Rinasi (branch) will be finalised in 2015. The draft Law on the Railway is prepared and scheduled to be adopted in the first half of 2015. Within 2015, three other implementing legal acts will be prepared and approved on infrastructure management, railway undertakings and the set up of the Railway Security Authority. If the implementing regulations mentioned above will be approved as foreseen by the third quarter of 2015, the new railway administration will be functional by the end of 2015 or the beginning of 2016. Air Transport Sector Implementing the EC recommendation of the last TEERD Subcommittee that Albania will continue its efforts to develop own capacity for safety oversight in the Civil Aviation Authority, building on the assistance provided by the second twinning project, the following measures are implemented:
The IPA 2013 Twining Project “Strengthening of the Albanian Civil Aviation Authority” is contributing to enhance the capacities of ACAA for safety oversight. Training/ on job trainings and study visits were added to the ACAA training plan. Until now the following activities have been performed:
In 2015, ACAA will carry out the Certification Process of Tirana International Airport, based on own oversight capacities. In the meantime, the Air Navigation Service Provider was certified in 2013 and is being continuously oversighted by ACAA inspectors. Albania, through the Albanian Civil Aviation Authority, is part of the Joint Service Provision Area - (JSPA) Initiative, which aims to enhance the cooperation between competent authorities through sharing of expertise and human resources and through training activities such as auditing courses and multilateral seminars. Concerning the EC recommendation that Albania will finalise on-going efforts in completing phase 1 of the European Common Aviation Area Agreement, the Law No 168/2014 of 11.12.2014 “On some amendments and addenda to Law 10233 of 11.2.2010 “On Civil Aviation Authority” was adopted. The amendments primarily aim to give more functional independence to Albanian Civil Aviation Authority (ACAA) and to promote the strengthening of the capacities for the safety oversight in civil aviation. According to these amendments, the director of ACCA is empowered:
Amendments to Law No 10040 of 22.12.2008 “The Air Code of Republic of Albania”, as amended, are being prepared aiming to further approximate it with the EU acquis and its implementing measures that altogether serve to fulfil Phase I requirements (legislative requirements). The following legal acts were adopted during the reporting period, aiming to align the Albanian legislation with EU acquis:
Maritime Transport Sector Concerning the 2014 TEERD recommendation, Albania will take measures to further improve maritime transport safety and flag and port state control, particularly in the light of growing maritime traffic in the Adriatic Sea, and the following legal acts were approved:
Since 1 January 2014 until mid-February 2015, there were carried out 20 inspections of ships with the Albanian flag in the Ports of the Paris MoU member states. The only one ship was detained in January 2014. Implementing the 2014 EC recommendation that encouraged Albania to apply for membership in the Paris MoU, we can mention that since July 2014, the Albanian Fleet due to the reforms carried out, is now in the Grey List of the Paris MoU. The Ministry of Transport and Infrastructure in cooperation and coordination with Ministry of Foreign Affairs have started the procedures for the membership of Albania in the Paris Memorandum of Understanding. Regarding the recommendation of the 2014 Subcommittee on Transport, Environment, Energy and Regional Development that Albania will provide organigram and information regarding the structures and institutional set-up in the field of environment policy, upon the entry into force of the Law No 10431 of 9.06.2011 “On Environmental Protection”, the former Agency of Environment and Forestry was reorganised as the National Environmental Agency (NEA). The number of staff was increased from 42 to 62 employees. The Agency carries out some additional functions:
According to Decision of Council of Ministers No 47 of 29.01.2014 “On the rules and procedures for the organisation and functioning of NEA and Regional Environmental Directories”, the 12 Regional Environmental Directories are subordinated to NEA and will operate and coordinate their work and functions with those of NEA from local to national level. For the implementation of the Decision of Council of Ministers No 46 of 29.01.2014 “On the set up and functioning of the State Inspectorate of Environment, Forestry and Water (SIEFW)”, the Prime Minister has issued:
On February 2015, the Council of Ministers approved the Decision No 103 of 4.02.2015 “On the set up and functioning of the State Inspectorate of Environment and Forestry (SIEW)”, after the passage of the Water Inspectorate depending on the Minister of Agriculture, Rural Development and Water Administration. SIEFW is a public institution, financed by the state budget, under the Minister of Environment. Its mission is to guarantee and enforce the legislation in the field of environment, forestry and water. Also, the number of inspectors was increased, as well as several investments are done in order to improve its capacities. According to the Prime Minister Order No 218 of 15.09.2014 “On amendments to the Order No 58 of 13.02.2014 ‘On Approval of the Organizational Structure of the Ministry of Environment”, the MoE has 107 employees, deployed in two General Directorates (General Directorate of Environmental Policies & Implementation Priorities, as well as the General Directorate of Support Services) and three other directorates (Directorate of EU Integration and Coordination of Projects, Directorate of Finance and the Directorate of Environmental Audit). As a result of the change of the area of state responsibility of the MoE and the Ministry of Agriculture, Rural Development and Water Administration (MoARDWA), as well as pursuant to the Decision of Council of Ministers No 92 of 4.02.2015 “On determining the area of state responsibility of the MoE, amended”, the Directorate of Water Resources Policies, has passed under the administration of the MoARDWA, together with the local authorities (6 WBA) and the State Inspectorate of Water. The main purpose of this change is related with the re-organization of the institutions responsible for water management in order to increase the performance of the sector. This change is reflected in the composition of the General Directorate of Environmental Policies & Implementation Priorities at the MoE, which from five directorates, will have only four. In total, the number of employees that are transferred to the MoARDWM, is 8. This has decrease the number of employees of the MoE to 99 employees. Being aware that the Legal Sector at the MoE has lack of capacities to properly fulfil the large number of tasks for which this sector is responsible (1 Head of Sector and 2 experts), in the new structure of the MoE is proposed the addition of a new sector for the drafting of legislation, which will be composed of one head of sector and two experts. With the addition of this new sector, the Legal, Communication and Procurement Directorate in the MoE will be composed of four sectors, namely Sector of Transparency and Communication, Sector of Procurement and Concessions Treatment, Legal Sector and Sector for Drafting of Legislation. Also, pursuant to the decision of the Interministerial Committee for European Integration (ICEI), to reflect the proposals of foreign experts in the naming of the Directorates of European Integration, as well as their composition with sectors that will carry out unified and coordinated functions in the framework of integration process and programming of IPA funds and other donors in all the line ministries, is proposed that at the new structure of the MoE, the Directorate of EU Integration and Coordination of Projects to be composed by the Sector of EU Integration and International Cooperation, as well as by the Sector of Programming of IPA Funds and other donors. In conclusion, with the proposed changes, the total number of employees of the MoE will be 102 employees. The new structure of the MoE is sent for approval to the Council of Ministers Based on the Decision of Council of Ministers No 230 of 23.04.2014 ‟On composition, organization and operation of Technical Secretariat of the National Water Council”, was set up the Technical Secretariat of the National Water Council (TSNWC). TSNWC is the executive body of the National Water Council (NWC). TSNWC has 23 employees in total, and is organized as follows:
The main objective of the TSNWC is the design and establishment of an integrated system of governance and management of water resources, in order to totally satisfy the living needs, the usage competitiveness and prioritization of economic profits, keeping in mind the sustainability of ecosystems. It aims the re-organization of the entire water sector through a clear definition of responsibilities, objectives and tasks of all institutions related to water management in order to achieve integrated management of water. The re-organized water sector should produce a possible financial system, taking into account the principles of 'cost recovery' and 'polluter pays' as its main pillars. The mandate of the TSNWC is to coordinate and supervise the work of local bodies in the water management process and monitor the water sector operational work. Having regards that water is one of the governmental priorities, by March 2015, the Integrated Policy Management Group IPMG-IWM will be established. The existing NWC will play the role of IPMG-IWM, whereas the existing TSNWC will play the role of its secretariat. IPMG-IWM (NWC) will be responsible for the supervision and the coordination of the work for development of the National Sector Program (NSP) and the Sector Support Program (SSP). National Sector Programme (NSP) will be based on the governmental objectives and will be in line with the National Plan for European Integration. Sector Support Programme (SSP) as an integral part of the NSP, will outline the externally funded instruments to be used to support the implementation of different measures. The Organizational Structure of the Technical Secretariat of the National Water Council is shown below 
In February 2015, the National Agency of Protected Areas (NAPA) was created, which was approved by Decision of Council of Ministers No 102 of 4.02.2015 “On the establishment and organization of the function of National Agency of Protected Areas and Regional Administrations Protected Areas”. This Agency aims to nature conservation and of biodiversity care, through the management of protected areas network with national and international interest, collection and share the information, environmental education and public awareness of protected areas and the support of economic sustainable activities within these areas. Based on the Law No 8102 of 28.03.1996 ‟On the regulatory framework of the sector of water supply and wastewater disposal and treatment”, as amended, Water Regulatory Authority (WRA) was set up. WRA is a public and independent regulatory authority, responsible for regulating the sector of water supply and wastewater disposal and treatment in Albania. The objectives of WRA are as follows:
Regarding the recommendation of the 2014 Subcommittee on Transport, Environment, Energy and Regional Development that Albania is strongly encouraged to start developing IPA II project pipeline, in particular in the heavy investment sectors such as waste management and water, in the “Climate Change and Environment Fact Finding Fiche” are defined the pipeline priority projects to be financed under IPA II in waste management and water sector, as follow:
Regarding the recommendation of the 2014 Subcommittee on Transport, Environment, Energy and Regional Development that Albania will present its national intended contributions to the 2015 international climate agreement in the climate sections of the Environmental Cross-Cutting Strategy and the Strategy for Development and Integration to be adopted by the end of 2014, based on the Greenhouse Gas (GHG) scenarios from the Second National Communication (2009), the climate section of the Environmental Cross-Cutting Strategy and the Strategy for Development and Integration are prepared. It highlights the reduction of GHG emission by 8% in 2020, as compared to the baseline scenario. Present projection of GHG emissions for 2020 is 18,000 Gg CO2 eq. This projection will be revised during 2014/2015 in the framework of the Third National Communication (TNC) of the United Nations Framework Convention on Climate Change (UNFCCC). In case of mobilization of the international funding for NAMAs, GHG emission reduction can be increased to 16% compared to baseline scenario. The national intended contributions (INDC) to the 2015 international climate agreement will be developed under IPA 2013 project, based as well on the TNC scenarios. IPA 2013 project is expected to start by January 2015. During February 2015, the following activities were held:
Regarding the recommendation of the 2014 Subcommittee on Transport, Environment, Energy and Regional Development that Albania will develop and share its plan to strengthen its administrative capacity in the area of climate action by September 2014, no change is expected in the administrative structure dealing with climate change. In this regard, the Order of Prime Minister No 155 of 25.4.2014 “On establishing and functioning of inter-ministerial working group (IWG) on climate change” was issued. The first meeting of the working group was held on 27 June 2014, chaired by the Deputy Minister of Environment. In the meeting, representatives from 10 Line Ministries participated. The agenda of the meeting focused on Climate Change Policies under EU and UNFCCC, national intended contributions to the 2015 international climate agreement, as well as the institutional challenges on mitigation of GHG and adaptation to climate change. The second meeting of the Interministerial Working Group on Climate Change, led by the Deputy Minister of Environment was held on 17 February 2015, in Tirana. The administrative capacities will be strengthen through different projects on climate change implemented in regional and national level such as ECRAN project, GIZ project, UNDP project, TAIEX instrument. An international expert was contracted in September 2014 by GIZ to support the Ministry of Environment to develop the National Adaption Plan. Regarding the recommendation of the 2014 Subcommittee on Transport, Environment, Energy and Regional Development that Albania will share a schedule for the alignment of remaining climate acquis by the end of 2014, the schedule for the alignment of remaining climate acquis is provided in the National Plan for European Integration (NPEI) 2014 – 2020, which is revised in January 2015. A detailed schedule for the period beyond 2016 will be provided during the first quarter of 2015 in the framework of IPA 2013 project implementation. Regarding the recommendation of the 2014 Subcommittee on Transport, Environment, Energy and Regional Development that Albania is strongly encouraged to start developing its IPA II project pipeline in view of its climate acquis approximation efforts, and for that purpose work closely with the EU Delegation and DG CLIMA, in June - July 2014, the Ministry of Environment in cooperation with TAIEX expert mission, supported by DG CLIMA and ECRAN project, developed a project fiche on “Implementation of the EU F-gases and ODS Regulations in Albania”. As IPA 2014 is finalised and agreed with the relevant EC bodies, this project fiche will be submitted under IPA 2015 or under EU Integration Facility 2014 as part of IPA 2014 project fiche. The administrative-territorial reform and the strengthening of local governments' capacities The recently repealed Law No 8653 of 31.07.2000 “On the administrative-territorial division of the local self-government units in the Republic of Albania” regulated the administrative and territorial division of Albania, composed as of 15 September 2014, of 373 local government units (65 municipalities and 308 communes) and 12 regions (qarks). The administrative-territorial division that it laid down largely mirrored the administrative division of the previous communist regime based on a centralised economy and agricultural cooperatives. Law No 8653 of 31.07.2000 and the political decentralisation were a great democratic success. However, the implementation of the Law generated a high degree of fragmentation leading to the establishment of very small local self-government units (LGUs) where 55% of communes and 15% of municipalities had less than 5,000 inhabitants each and, at the extreme, 4% of communes had less than 1,000 inhabitants in 2001. Questions were raised on the service delivery efficiency and the effectiveness of the administrative-territorial organisation. The asymmetrical economic development of Albania in the last two decades generated a massive demographic mobility towards the most developed western lowlands and the main urban centres, simultaneously decreasing the number of inhabitants and depopulating many small administrative units. The 2011 census revealed this depopulation and its extent: 70% of communes and 26% of municipalities have less than 5,000 inhabitants and 12% of communes count fewer than 1,000 inhabitants. Further, independently of their size/ population and economic resources, the Law granted quasi symmetric competences to all local government units leading to extreme inefficiency and seriously hampering the provision and quality of services and the overall local development. In 2013, 230 LGUs out of a total of 373, spent 60% of their budget on own staff salaries and about 80 smallest LGUs did not provide any public service to their respective communities. On the other hand, these local administrations did not raise any revenues and thus simply represented spending units. The programme of the current Government of Albania explicitly stated its goal to reform the administrative-territorial organisation. The result of the reform was the adoption of the Law No 115/2014 of 31.07.2014 “On the administrative and territorial division of the local government units in the Republic of Albania”. The main criterion used for the new territorial and administrative reform was the principle of the “functional areas”. The “functional area” was understood as a territorial space characterised by a dense and frequent interaction among residents and institutions for economic, social and cultural development purposes. In these terms, “functional areas” were considered those local government units organised around an urban centre (city) that has the highest number of population compared to other centres in the area and which are able to provide the full range of public services that should provide LGUs, by applying the efficiency of the “economy of scale”. The Law 115/2014 of 31.07.2014 was published in the Official Gazette No 137 of 1.07.2014, and entered into force on 15 September 2014. According to the Law, Albania will be divided in 12 regions and the number of local government units will be reduced from 373 to 61 future local government units. The Law will be applied in the 2015 local elections from which, 61 mayors and 61 municipal council (first level of local government) and 12 regional councils (second level of local government) will be elected. After the new Law entered into force the implementation phase began. The implementation phase is divided in the transition phase and consolidation phase. The objective of transition phase is to guarantee smooth transfer from the old territorial division with 373 local government units (LGUs) to 61 newly established municipalities. The transition phase includes the process of stocktaking/inventory of liabilities, financial assets, immovable properties, human resources, drafting of appropriate legal framework and guidelines for the new administrative structure at local level, piloting a “one stop shop” scheme with ICT solutions for all administrative services at local level, drafting the guidelines for the new administrative structure at local level, drafting social-economic development profile for selected new municipalities. The transition phase will be completed during 2015. The consolidation phase will start in 2016. This phase will comprise a more structured support to consolidate the well-functioning of newly established municipalities with legal, financial and capacity building instruments. The Government of Albanian strategic goal to strengthen the local government and increase efficiency in local public services will continue with approval of the new Decentralization Strategy (foreseen date of approval in March 2015) and soon after this the Minister of State for Local Government (MoSLG) will start drafting the new law on local self-government and the new law on local finances which will aim to deepen the decentralization process and strengthen the financial position of the LGU’s. The reform will increase the efficiency of the local service deliver because of the economies of scale and the technical capacities and experience that 61 municipalities have. The Ministry of Local Issues analysed that savings in the local budget in total will be around 40 – 60 million USD (or 15% to 30% of total local budget expenditures in Albania), and they will be spend locally on new investments, improving service delivery and/or hiring more qualified staff. In regard to the EC recommendation that Albania will transmit to the Commission final version of the National Strategy for Development and Integration 2014-20, as soon as adopted, we inform that two of the five chapters of the draft National Strategy for Development and Integration are finalised; namely the Chapters on Sectoral Policies and on Macroeconomic and Fiscal Perspective. Chapters on Budgeting and Costing, and Accountability and Monitoring are being finalised. The Strategic Planning Unit at Department for Development Planning, Financing and Foreign Aid (DDPFFA) has already reflected all the comments of line ministries and independent institutions on this chapter. The chapter on Vision and Strategic Priorities is in the process of reappraisal. The costing process of NSDI is in the process of finalising. A consultation platform will all stakeholders and donors is being designed. The goal is to present the draft NSDI for consultations by mid March 2015. The consultation process is scheduled to last till mid April 2015. The NSDI is scheduled to be approved by the Council of Ministers in June 2015. Concerning the EC recommendation of the 2014 TEERD Subcommittee that Albania will continue its efforts to develop a pipeline of mature investment projects, which will reduce the infrastructural gap and increase convergence of the less developed areas of the country, and following the granting of the candidate country status in June 2014, in January 2015, the new concept of Regional Management in Albania, as a pilot “action for development” for 2015 was introduced to the Council of Ministers. The concept is prepared in response to the necessity to have a coherent regional policy, in accordance with the orientations of the EU cohesion policy, in order to ensure a balanced and sustainable economic well-being of regions in Albania and also to avoid regional disparities. At its first meeting held on 19 January 2015, the Committee for Regional Development adopted the RD Operational Programme for the period 2015-2016, as well as funding priority directions. Albanian Regional Development Fund, conceived as the financial instrument of national policy, for regional development, is also included as part of the reform. In this sense, has started the process for aligning the RDF, with the policies and mechanisms of the European Fund of Regional Development, in order to transform it, in an instrument to promote economic development potential and mechanism that generates growth, forging identities, and enhances the competitiveness of our economy among regional economies. In support of the new strategic orientation for the development of regions, for 2015 prevailed the support for the National Programme on “Urban Renaissance of Cities of community coexistence” by allocating to the RDF a portfolio, a fund of about 100 million USD. Destination of the portfolio is for two priority pillars financing respectively, pillar 1: Programs of Local and Regional Development and pillar 2: Digital Albania. This portfolio constitutes, approximately 42% of the total capital expenditures foreseen in the 2015 state budget. Based on such approach and support, is aimed to:
For further information on the decisions of the Committee for Regional Development, please see Annex 6.6.1. Addressing the EC recommendation of the 2014 TEERD Subcommittee that the Local Governments in Albania should increase their capacity to design, implement and monitor projects. The Albanian Regional Development Fund is expected to contribute to the development of this capacity via regular rounds of transparent and competitive calls for project proposals, the mechanism of preparing projects with local stakeholders was introduced in 2014, through a framework agreement signed between the ADF, such as applications from development agencies and local government units, in order to design projects co-financed by the RDF and LGUs. Several projects developed in the framework of this mechanism, were adopted in the second meeting of the Committee for Regional Development held in February 2015. | ||||||||||||||||||||||||||||||