Water Sector Reform

In May 2022, the Council of Ministers has approved the Decision No 302, on Reorganization of Water Supply and Sewerage Companies which consolidates the Albanian water Albania by merging 57 Municipally based service providers into 15 Regional Companies. The objective of this consolidation process is to

improve service quality,
increase efficiency of service delivery, and
improve financial sustainability of providers.

Some key aspects of the Council of Minister Decision to restructure the sector are summarized as following:

15 new Joint Stock Companies

New regional companies set up as joint stock companies

The reorganization of the water utilities as Subject of Joint Competencies (SKPUK)* will be carried out through the establishment of new joint stock companies with two levels of administration in accordance with the provisions of Law no. 9901, dated 14.4.2008, “On traders and companies”, as amended.
*NOTE: These ‘Subject of Joint Competencies (SKPUK) will be named subsequently also as ‘Ujesjelles Kanalizime Rajonale (UKR). This term will be used from hereon.
The local government units (municipalities) that agree on the establishment of the new SKPUK will follow the standard template statute which serve as foundamental acts for the establishment of the SKPUK. The SKPUK will carry out the activity of water supply and wastewater services in the service areas according to the territorial map, approved by the National Agency for Water Supply and Sewerage and Waste Infrastructure (AKUM)

Institutional setup of the new regional companies

Ministry of Infrastructure and Energy is major shareholder

The established UKR will have in their shareholders assembly representatives of the central government MIE, which will hold at least 51% of the shares with the remainder held by representatives of the local government Municipalities within the Region and/or the various Regions which currently own the existing water utilities, whose activity will be transferred.
The percentage participation of the Municipalities in the assembly of shareholders of the new UKR will be calculated in proportion to the number of active customers that these companies have at the moment of signing the agreement for the establishment the regional company. The total value of which will constitute 49% of the shares of the new regional company.

Investment financing of new UKRs

The UKRs are required to respect the agreements, contractual obligations, service contracts, as well as any rights / derived from them, signed between the Council of Ministers, ministries and central institutions, water utilities and former local government units, with international financial institutions and contracting companies.
The Ministry of Infrastructure and Energy, in accordance with the approved sectoral strategic documents, will allocate all planned funds for investments from the state budget or international financial institutions only through new UKR.

Transfer of activities and assets

Municipalities which agree to participate in the reorganization process, approve and take all the necessary steps required by the laws in force to proceed with the transfer of the current water utility activity (transferor) to the new UKR (transfer recipient) will be according to the provisions of Law no. 92/2014, dated 24.07.2014 “On value added tax in the Republic of Albania”, amended, in accordance with the reorganization and the national plan drafted by AKUM.
The transfer of activity will be based on a notarized contract (transfer agreement) that will be signed between the parties (transferors and transfer recipient) which will be recorded in the financial statements of the new Companies.

New licenses from ERRU

The new UKR created by the reorganization in accordance with the map of territorial division drafted by AKUK, within three months from the approval of the Prefect of the Region, will apply to obtain a new license for the provision of water supply and sewerage services from the water Regulatory Authority (ERRU).