Kosovo: MEM drafts Foreign Investment Attraction Strategy

Prishtinë, May 14, 2006 – The Ministry for Energy and Mining has drafted a strategy on international investment attraction in the energy sector, aiming to improve the energy supply situation in Kosovo. The Kosovo Government has already approved the first draft of this strategy.

Ethem Çeku, Minister of Energy and Mining said: “This strategy is a document that we have drafted and offered to the public for discussion. In general, this strategy incorporates all studies and analysis that were undertaken from 2002 to 2006 by the World Bank, the European Agency, USAID and many other donors. Based on these studies, the Ministry has come to some conclusions: the Kosovo market needs electricity, the energy consumption is increasing, the energy price on the market is high and the economic growth is falling – and one of the reasons for this stagnation is KEK. The financial plan indicates that a rehabilitation of KEK requires € 700 million. This urged us to start compiling a strategy on energy in order to eliminate the energy crisis in Kosovo. The first draft document of this strategy has been adopted by the Kosovo Assembly. The new power plant, Kosovo C, will not be part of KEK. I would like to inform the public that the legal infrastructure is ready. The Law on Foreign Investment has been signed. In the first phase we will construct units of 1,000 to 1,100 Megawatts, in the second phase a unit of 1,000 Megawatts. We are now in the most dynamic phase of including the private sector in the energy sector. We are planning to rehabilitate the A4 an A5 units, also by including the private sector. This rehabilitation is planned to be completed by the end of 2008. At the same time we plan to finish all procedures to commence the construction of Kosovo C by 2008. The first phase includes the establishment of a steering committee. For the first time we will have an open and transparent institution that will undertake this kind of venture. This steering committee will be chaired by the Ministry of Energy and Mining, while other members will be of other relevant ministries. The civil society will also be part of this committee. We are also working closely on modalities with European Agency, USAID and the World Bank for the selection of the investor in the energy sector. We are looking for a serious and stable investor since our natural resources are the component for a sustainable economic development in Kosovo. According to this document, the energy sector development is not only based on the generation of energy by using coal but also alternative means like hydro power plants. We consider that the new power plant would create about 1,300 new jobs and contribute to Kosovo Budget by € 150 million per year. We have contacted the largest companies in the world, such as French EDF, American AES, and many other companies that are potentially interested in investing in Kosovo’s energy sector. We will open a tender for this purpose. We have a strong support from UNMIK Pillar IV Chief, Joachim Ruecker, and USAID Mission Director, Ken Yamashita, for the implementation of these projects. They are working intensively. We may have different opinions, but we are working together on these projects.”

Lorik Haxhiu, Mining Department Director at MEM said: “The strategy document has two objectives. The first one is the stabilization of energy generation; the second is the development of the energy sector. The project contains three components: the opening of a new coal mine and the expansion of this mine in order to supply the new power plant; the second component is the rehabilitation of the existing capacities; and the third one is the construction of a new power plant. According to the strategy, we plan to involve private investment in the opening of the new mine.

We have also considered having two mines in Sibovc. One mine would supply the existing power plants with coal, the second one the new capacities. After many considerations we decided that the best option would be to start with the southwest location. Around 30 % of this area belongs to KEK. This mine will provide coal for the next 40 years, as it has reserves of 990 million tons of coal.