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Energy, the "rescue" of businesses, earned 25 billion ALL, but KESH lost 27 billion ALL

2023-11-25 12:59:24Biznes SHKRUAR NGA REDAKSIA VOX

Energy, the "rescue" of businesses, earned 25 billion ALL, but KESH

The strong increase in energy prices in 2022 favored both producers and private energy traders. In contrast, state-owned enterprises that were forced to buy energy on the free market had a difficult year, with huge losses for the public energy producer. In 2022, KESH reported a loss of 27 billion ALL, while the main energy indicators generated profits of 11.5 billion ALL. The main energy producers included in the "Monitor 200" list had profits of 14 billion ALL.

The energy sector showed two contrasts in 2022, as the peak of the energy crisis was marked, with prices on the stock exchanges touching unprecedented values, reaching at the end of August the value of 1047 euros/MWh or 130 ALL/kWh.

The average purchase price of energy in the free market during 2022 reached 305 euros/MWh, according to the Energy Regulatory Body, almost 3.5 times higher than the usual average that the country imported energy in the period before the start of the crisis.

The prolonged drought in the second half of the year significantly increased the dependence on imports. According to INSTAT data, in 2022, the weight of imports in relation to available energy reached 38.4%, from 26.8% in 2021.

The amount of energy imported in 2022 was 1,467,734 MWh, with an average import price of 305.48 Euro/MWh, according to official sources from KESH. In total, nearly 450 million euros were spent to provide this energy.

From this situation, the biggest losers were the state energy operators, especially KESH, which is responsible for buying energy to cover losses, while the biggest gainers were the energy producers, who sold at high prices, and traders, who act as intermediaries. between KESH and the free market for the purchase of imports.

KESH, with a loss of about 27 billion ALL

In January 2022, the public energy producer, the State Electricity Corporation (KESH), was charged with the obligation to provide all the necessary energy to universal customers, a role previously held by the Electricity Distribution Operator.

Until the end of 2021, the KESH Company played in the Albanian electric energy system only the role of the energy producer, the production of which it offered to the public company FSHU (Universal Service Provider, part of the OSHHE Group), as far as KESH could produce the latter he needed, not being exposed to the increase in energy prices in the stock market.

In 2022, the biggest challenge that KESH faced was the high prices of electricity in the regional market and beyond, and the need to provide electricity within the framework of the public service obligation in terms of energy optimization (generation/ import) and maintaining the current levels of the electricity price for household consumers.

The tightening of energy in 2022 had a severe effect on the finances of KESH, which ended the year with a loss of 26.7 billion lek, from the profit of 3.5 billion lek in the previous year.

Although revenues quadrupled to ALL 36 billion, they were not enough to cover the high costs of purchasing energy to cover losses.

"The year 2022 is considered a specific and difficult year, where the operational activity of the Corporation faced difficult challenges, due to the global increase in energy prices and the state of emergency in energy supply. The very obligation imposed on society constituted a challenge, which was accompanied by all the influences, both natural and of actors abroad.

The year 2022 was difficult in terms of water, which, coupled with the atypical situation of the energy markets, due to geopolitical factors in Europe, brought for KESH sh.a. the risk of immediate exposure to increased and unpredictable costs.

The challenges of 2022 were related to each other and were mainly summed up in that of providing electricity at an optimal cost, in order to realize the supply of energy within the country, without affecting the final price for consumers", affirms the Administrator of KESH , Ergys Verdho.

The year 2023 has been more positive. Mr. Verdho says that due to the hydrological flows of the end of 2022 and the first half of 2023, he is in a situation with reduced exposure to the energy crisis.

OSHEE Group returns to profits

In 2020, the Electricity Distribution Operator (OSHEE) became the first Albanian Public Corporation, owning 3 companies, the Universal Service Supplier (FSHU), the Free Market Supplier (FTL) and the System Operator Distribution (OSSH), under the umbrella of "OSHEE Group Sh.A."

Unlike in 2021, when OSHEE Group Sh.A resulted in a high loss of 15.6 billion ALL, influenced by the extraordinary increase in the price of energy on the Free Market in the second 6 months of 2021, in 2022 the group was "protected", since the purchase of energy in the free market passed KESH.

In 2022, OSHEE Group, according to consolidated data, reported by the company itself, reported a profit before taxes of 5.2 billion lek.

According to the official data of "OSHEE Group", the annual turnover of the three companies, netting the values ​​of income from the activity of companies within the group, was 73.3 billion ALL in 2022, with a 14% increase compared to the previous year.

The progress was positive in 2023 as well.

"The data so far speak of a positive performance, at least in the basic indicators, such as the level of collections and the reduction of losses. The losses have followed the downward trend, going down to 19%, thanks to the good organization of the groups in the field, the uncompromising fight against abusers of electricity, bringing, on the other hand, an increase in billing.

It is worth noting that the losses in June were 16%, while the expectation at the end of the year is for a level of losses of 19%. Fewer losses for society translate into more income, which has increased by 15.3%", says Enea Karakaçi, Administrator of "OSHEE Group".

OST, with stable profits

State operator OST sh.a. manages the power system in real time, maintaining a balance between demand for consumption and production of electricity, in order to ensure reliable supply of electricity, through modern practices of operation of the electricity transmission system.

The company's revenue was ALL 10.8 billion in 2022, with annual growth of 21.8%.

The company reported profits of ALL 827 million before taxes, down 10.2% on an annual basis.

The administrator of OST, Skerdi Drenova, claims that "the year 2022, for the Transmission System Operator, has been full of challenges, opportunities and positive results. OST has continued its dedication to ensure a quality and stable service for consumers, maintaining a high level of security and integrity of the network, contributing to the development of the regional energy market, as well as continuing with the implementation of projects strategic".

Energy traders double profits

Energy trading is a segment that is attracting businesses, since if you have the right knowledge and capital you can grow very quickly, as the number of employees required is minimal (companies have a maximum of 4 or 5 employees).

Although it is a volatile business, depending on the needs of state operators to buy energy from imports, the simple model and without the need for many investments (apart from the bank guarantee), is encouraging new entrants.

In 2022, for the second year in a row, energy indicators recorded high revenue growth, influenced by rising prices. Profits did not grow at the same pace as revenues, but they were still at satisfactory levels. The total profit of the 6 main operators in the field of electricity trading was 11.4 billion ALL, more than doubling compared to the previous year.

Energy market model

Albania started from 2015 to apply a new market model based on the law "On the electricity sector" approved that same year. This model envisaged some new links that came as a result of the division of OSHEE, the creation of the Energy Exchange or the clear definition of the roles of producers, suppliers or traders.

Especially the latter have become part of the debate quite a few times, how many times it was talked about the purchases of OSHEE by KESH before the emergency and then about the purchases of energy from the unregulated market by KESH.

The question that is constantly asked about this link that circulates hundreds of millions of euros is: Why are they not avoided? As part of the Energy Community and the implementation of the directives for integration in the European market, avoiding this link, even though it could theoretically be profitable for public companies, in practice is not allowed.

So KESH cannot go out and buy energy itself on the Stock Exchange or in the local market with the logic that it would "save" the fees it pays to merchants, since the 2015 law and the market rules that were approved in 2016 do not allow this.

Traders cannot avoid these rules.

They are defined as "commercial units that trade electricity:

i) will buy and sell wholesale electricity;

ii) will trade electricity from import or export, or producers, or from the electricity production company charged with the public service obligation;

iii) they will sell electricity for export". Taken with abbreviations from MONITOR

 

 


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