Albania will seek a new €250 million commercial loan to finance the construction of a highway connecting its Adriatic coastline with newly independent Kosovo, the Ministry of Finance said on Tuesday . The170-kilometre highway, which will link the port of Durres with Albanian-majority Kosovo, is the country’s biggest public works project in decades. Albania has spent €328 million already this year on the road, some 89 percent of its capital expenditure budget.
“The Albanian Government represented by the Ministry of Finance is requesting an offer for financing of various capital expenditure needs for the year 2009,” the ministry said in a statement. “Proceeds… will be used in accordance with the priorities defined in the National Strategy for Development and Integration.”
Albania had originally sought to finance the road with revenues from the privatization of public companies, but negotiations for the sale of Albanian Power utility, valued at around €102 million, have stalled. Almost 200 million of the cost has been raised as syndicated commercial loans at high interest rates, attracting criticism from international financial bodies concerned about the country’s monetary stability.
There is no clear estimate of the total cost of the road, which opponents have slammed as a white elephant that will fail to return on the huge investment. Experts think Albania will need to invest another €250 million to complete the project, due to be finalised in the summer of 2009.
The project has already been tainted by a corruption scandal involving former Foreign Minister Lulzim Basha, who is charged with abuse of power and breaking tender rules relating to the project. The charges filed against Basha indicate that one particular 60-kilometer section of the highway will cost Albania over €1 billion.