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Power Cuts Plague Kosovo

After hundreds of millions of euro were channeled into Kosovo’s ailing energy sector, people are angry that so little has improved.
By Arbana Xharra

Kosovo has endured another summer of power cuts and shortages, even though between 700 million and one billion euro has been poured into the territory’s energy sector since 1999.

Even in the hot summer months, a time when consumers draw on relatively little power, the deafening sound of generators echoed through the streets of Kosovo towns and villages.

Since the end of the 1999 war, the European Union has donated about 380 million euro to Kosovo’s energy sector through the European Agency for Reconstruction, EAR.

The Kosovo government has spent 308 million euro while Washington’s development agency USAID has contributed 15 million US dollars to electricity-related projects.

Most of the funds went to the Kosovo Energy Corporation, KEK.

Local people are wondering where all the money went, as power cuts have not decreased noticeably in recent years.

Thierry Bernard Guele, head of EAR in Kosovo, said he believed much of his agency’s funding went to pay for imported energy, while other money went on repairs to a power plant known as Kosova Block B.

Ken Yamashita, head of USAID in Kosovo, said the American funding went on “equipping bill payment centres in different municipalities and on training staff across Kosovo to make it easy for customers to pay their bills”.

KEK officials have confirmed that they received donations from other governments such as Japan, but said nobody had kept clear accounts of how much money they received or how it had been spent.

“We don’t know the exact number of foreign investments in the KEK because we didn’t have access to the contracts that were signed and we didn’t supervise or manage the plans and results of those investments,” said Paloke Berisha, KEK’s spokesperson.

Berisha blamed frequent changes in the management of KEK for the financial muddle.

The company has had five international managing directors since 1999, including the current boss, John Ashley, from ESBI of Ireland, which specialises in managing energy corporations.

All international managers had worked with local counterparts, who have also changed five times since 1999.

Berisha admitted that generous western donations were not “as coordinated and supervised as they should have been”.

Local economic experts say there has been a woeful lack of transparency and information on the use of the funds.

Ismail Kastrati, head of the Economic Chamber of Kosovo, OEK, said KEK and the international administration responded to attempts to find out what happened to the donations with silence.

“There has been no accurate book-keeping and we were unable to receive any information from either the EU pillar for economic reconstruction or KEK as to how the money was spent,” said Kastrati.

Muhamet Sadiku, from Kosovo’s leading economic research institute RIINVEST, said he was equally frustrated.

“Nobody from the international administration has offered answers or evidence to the public or local institutions about where the money invested in the energy sector went,” he said.

“It doesn’t fit any economic logic that so much money should be spent and yet the problems remain unresolved.”

The lack of information available to the public has fed a perception that some funds have been misappropriated.

“If you just look at how much power we have and how much money was spent it is clear there has been misuse of funds and that someone is stealing,” said Ali Gashi, 50, a shopkeeper in Pristina, reflecting a widely-held view.

Public suspicions of malpractice have been fed by the example of Joe Trutschler, a former United Nations official in Kosovo who was found guilty of embezzling 4.5 million euro as chairman of the supervising board of KEK

A former employer of the European Bank for Reconstruction and Development in Pristina, who preferred to remain anonymous, said the real problem was not the mismanagement of the funds but of new equipment.

“Sometimes newly purchased equipment was ruined just by pressing the wrong button as the local technicians… didn’t know how to use it,” he said. “It might then take millions [of euro] just to repair that damage.”

Kanthar Shankar, the World Bank representative in Kosovo, argues that Kosovo’s energy problems are far more deep-rooted.

Shankar points out that the main power plants, particularly the Kosova A unit, are more than 40 years old and prone to breakdowns.

“Because of under-investment in the late Eighties and Nineties, the facilities are in constant need of investment just to keep them running,” he said.

Secondly, he went on, KEK has struggled to pay off the huge debts it has run up, partly due to consumers not paying bills and illegally tapping into the power supply. Finally, the lightning that struck one of the power plants last year placed additional strain on KEK as costly repairs were required, he said.

The World Bank now believes that investments needed to rehabilitate existing plants or build new ones are so huge that they are beyond the capacity of either donors or the Kosovo government. The bank says the only hope lies in the private sector.

“The government should put in place reforms to create conditions to attract private investors into the power sector,” concluded Shankar.

Even if Kosovo’s energy sector is privatised, it will not solve the mystery over where past donations ended up.

“I am just shocked that we still have power cuts in the middle of summer after all the money that has been poured into electrical energy,” said Pristina resident Gani Salihu, speaking for many.

Arbana Xharra is a journalist for the daily Koha Ditore’s Economy supplement.

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