East European Energy:

Prospects for Improvement in Albania's Energy Sector

NSIAD-93-27: Published: Nov 4, 1992. Publicly Released: Dec 4, 1992.

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Pursuant to a congressional request, GAO provided information on: (1) trends and problems related to Albania's energy production, imports, and use; (2) Albanian plans to address its energy problems; (3) the effect of foreign trade and investment on Albania's energy sector; and (4) U.S. and international efforts to assist Albania's energy and business sectors.

GAO found that: (1) Albania's declining energy production threatens its' economic development; (2) Albania has abundant oil, gas, and coal resources, but energy resource production has declined due to a lack of suitable port facilities and outside access to pipelines, poor mining conditions, a lack of financial resources needed for energy imports, outdated and obsolete mining equipment and spare parts, insufficient insulation and glass for buildings and residential homes, reduced exports due to the political turmoil in Yugoslavia, and an inadequate distribution system; and (3) Albania relies on hydroelectric plants to generate most of its electricity and recent droughts have also decreased power exports and production; GAO also found that: (1) Albania plans to modernize and expand its oil, gas, coal, and electricity industries by raising energy prices; (2) Albania plans to acquire new extraction technology to exploit coal resources and is interested in importing coal from Europe and the United States; (3) Albania has raised energy prices to reduce state subsidies and encourage efficiency; (4) Albania is moving away from a centrally planned government to a local enterprise level; (5) Albania is attempting to gradually privatize its economy to help attract foreign businesses through joint ventures, and reduce the size of its public sector; (6) impediments to foreign investment in Albania included decentralization and privatization process difficulties, a lack of financial resources to finance trade or investment, a lack of legislation protecting foreign investment, an unresolved political situation, and the population's unfamiliarity with a market economy; and (7) Albania's long term economic outlook is positive because of a low wage, educated work force, the country's small size, an improving political situation, and low religious tensions.

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