PPP Concfession Contracts Contingent Liabilities over the 2015-2021 period

Open Data Albania is examining the value and performance over the years of contingent liabilities deriving from PPP Concessions. These contingencies are classified as ‘Off’ the Government Balance Sheet. This indicator will also help us determine its ratio or weight against the Gross Domestic Product GDP.

In 2020, a comparative analysis outlined on the Article about Contingent Liabilities for PPP, published by Open Data Albania, shows that Albania is the European country with the highest rate of contingent liabilities, weighted against the Gross National Product.

According to the Ministry of Finance, all concessionary or PPP projects are classified as ‘Off’ the Government Balance Sheet and the payments issued by the State Budget in a given year are included as item in that years’ current or capital expenses. Meanwhile, payments to be made in the upcoming years are not estimated in the year’s government balance.

The total monetary value of the PPP Concession Contracts with financial support from the State Budget amounts to around 226.28 billion Lek, or were we to convert them, about 1.82 billion Euros.

Table: Total Budgetary Payments, Contract Value and Contingent Liabilities of PPP’s classified ‘off-balance sheet’, in 000 Lek
Comments and Analyses: Open Data Albania

The total amount paid for concessions until the end of 2021 is about 56.3 billion Lek or 481.3 million Euro. Based on the OpenData.al’s estimations, liabilities arising from PPP concessions, classified as ‘Off-Balance’, made up about 9% of that year’s nominal GDP.

Over the years, there has been an increase in contingent liabilities weighted against the GDP, as a result of new PPP Concession Contracts with budgetary support, taken on by the Albanian State.

Burimi: MFE, Annual Fiscal Statistics
Comments and Analyses: Open Data Albania

Based on the estimates, the highest ratio of liabilities was reached in 2020, with about 13.2% of GDP. All agreements concerning PPP Concession projects appraised with support from the State Budget have been finalized that year. Meanwhile, according to Eurostat, liabilities related to PPP in 2020, that are classified ‘Off’ the Government Balance, in any European country do not exceed about 2.5% of the GDP.

Burimi: MFE, Annual Fiscal Statistics
Comments and Analyses: Open Data Albania

PPP concessions classified ‘Off’ the Government Balance, are those where the Private Party bears the risk of the construction, as well as either the risk of availability or the risk of demand. Contingent liabilities are liabilities that can be activated as a result of an unpredictable event in the future. Since Concessions and PPPs in Albania are classified as ‘Off’ the Government Balance, it means that the remaining future Budgetary installments to be paid on their behalf are included in the contingent liabilities.

Despite the obvious decline in 2021, the Contingent Liabilities ratio, weighted against the GDP, is expected to increase in 2022, due to the approval of a new PPP Concession Contract, namely “For the design, construction, operation, maintenance and transfer of the Thumanë-Vorë-Kashar road axis” with implementing company G2 Infra sh.p.k., which provides for a Traffic Guarantee of 22.81 million Euros. Also, additional contingencies will derive from the approval of an additional fund of 17.86 billion Lek, in relation the existing Concession Contract for the Construction, Operation and Maintenance of Arbri Street, with implementing company Gjoka 87, published in the 2022’s Budget Report in the ‘List of Active and Planned Concessions’, which fails to give any explanation justifying the move.

Data on the Concessionary Register and the concessionary companies belong to the Open Corporates Albania platform. Likewise, additional analysis and research on Concessions have been previously published on the Open Data Albania portal. Both, the Concessionary Register and the research articles are produced on the frame of the “Open Data, Access and Transparency over sectors to Risk of Corruption” project.

Download excel: PPP Concfession Contracts Contingent Liabilities over the 2015-2021 period
Comments and Analyses: : Open Data Albania
Translated by: Rezarta Cushaj