The assistance, through Loans, of Concessions and PPP’s with Budgetary Support from the Banking Sector

Open Data Albania is researching the level of bank crediting for PPP Concessions with financial support from the State Budget. Among 13 PPP concessions with financial support from the State Budget, it emerges that 6 of them have been financed in significant amounts from the Banking Sector.

For two of these concession contracts, there is no information about the amount loaned from the Banking Sector. It concerns the contract about the Building, Operating and Transferring of the incinerator for the processing of urban waste of the Municipality of Fier with implementing company Integrated Technology Waste Treatment Fier sh.p.k, as well as the contract the Building, Operating and Transferring of the incinerator for the processing of urban waste of the Municipality of Elbasan, with implementing company Albtek Energy sh.p.k.  For both of these contracts, there are Quota Insurance Agreements between the concessionaire companies and the Second Level Bank, Credins, but in these agreements there is no information about the amount of the loan received.

Whereas the other 4 companies were financed with loans from the banking sector worth about 16.8 billion Lek or about 140 million Euros. Details of each funded contract will be presented below.

Table: Financing, through Loans, of Concessions and PPP’s with Budgetary Support from the Banking Sector (in Lek)
Source: OpenCorporates.al, Ministria e Financave dhe Ekonomisë
Comments and Analyses: Open Data Albania

The largest loan approved by the Banking Sector, more specifically by the National Commercial Bank, is for the PPP concession for the Arbri Street construction contract with implementing company Gjoka 87 sh.p.k., worth 9.5 billion Lek, which are to be used for investments in the frame of the project, based on the concession contract. The parties have concluded the Credit Contract with No. Rep. 986, No. Kol. 502, dated 24.07.2018.

Source: OpenCorporates.al,
Comments and Analyses: Open Data Albania

BKT Bank has also financed with a loan in the amount of 3.77 billion Lek or 28.5 million Euro the Albanian Highway Concession sh.p.k the company, which is implementing the Concession Contract for the Construction, Improvement, Use and Maintenance of the Milot-Morina highway. The parties have concluded the loan agreement No. Rep. 926, No. Kol 316, dated 03.05.2017, in order for the project to be financed from the bank. Referring to the 2020 Balance Sheet, by the end of the year 2020, an amount of 1.39 billion Lek was disbursed and another 15 million Lek was spent on interests. The loan repayment term is 7 years from the date of the disbursement installment. The annual interest rate is 12-month Euribor +3%, but not less than 5%.

Meanwhile, in 2021, 3 commercial banks (Bank of Tirana, Intesa San Paolo Bank and OTP Albania Bank) have financed a joint loan of 3.1 billion Lek or 25.6 million Euros for the concessionaire company Llogara Orikum Road sh.p.k, which is the implementing company for the Design-Construction-Financing and Maintenance concession contract of the road segment Yacht Port-Orikum-Dukat. The loan repayment term is 10 years from the year of disbursement. According to the Loan Agreement, the Borrower will pay Contractual Interest every 3 months on the disbursed and unpaid amount loaned, according to the Borrower’s Loan Repayment File. The contractual interest rate is variable and will be calculated as follows: 12-month treasury bond (weighted average rate) base interest plus the margin of 3.5% per year, but not less than 6% per year, where the base interest rate is subject to review and change by the Bank every 12 months.

Another concessionary company which was financed with bank credit is Laboratory Network sh.p.k, the implementing company of the Concessionary Contract for the provision of laboratory services to regional and municipal university hospitals. The value of this loan is 372.9 million Lek or about 3 million Euro and it is financed by OTP Albania Bank. The parties have concluded a medium-term bank loan contract No. 150 Rep. and No. Kol 27, dated 20.03.2020, according to which the Bank has granted a loan to the company in the amount of 2.3 million Euros and another contract for the granting of credit facilities, letter of guarantee with No. 680 rep and No. 160/1 col, dated 27.08.2019 which states that the Bank granted a loan to the borrower in the amount of 700 thousand Euros, a total of 3 million Euros.

In all these insurance agreements between concessionaire companies and the Banks, it is to be noted that the first have placed as a guarantee or collateral an insurance lien on their shares, as well as on the bank accounts of the income collection of these companies. As long as the companies have contractual guarantees and royalties, collectible by way of PPP contracts supported in the State Budget, lending from second-tier banks is a guaranteed process.

Download excel: The assistance, through Loans, of Concessions and PPP’s with Budgetary Support from the Banking Sector
Comments and Analyses: Open Data Albania
Translated by: Rezarta Cushaj