bne IntelliNews – Incinerator scandal threatens to bring down top Albanian politicians
Prime Minister Edi Rama, Mayor of Tirana Erion Veliaj and other high-level political figures are to be questioned by a cross-party parliamentary committee set up to investigate suspicions of large-scale corruption over the three waste-to-energy incinerators in country waste.
Hearings are already underway as MPs seek to disentangle the payment of hundreds of millions of euros in public funds for the three incinerators, two of which were never commissioned.
The opposition Democratic Party is pushing for the prime minister to resign over the scandal, which has already seen a former environment minister arrested.
As Democrats revealed following a committee meeting earlier this month, MPs are probing the distribution of around 430 million euros to the companies responsible for building and operating the three incinerators.
The visits of the factories by the members of the commission led to the conclusion that no waste had ever been treated in the incinerators of Tirana and Fier, despite the money paid by the State.
The Democratic Party announcement on February 15 that “the hearings of the first day confirm to the Albanians the criminal theft of 430 million euros”, and affirm that “the whole government” is involved.
The commission includes members of the ruling Socialist Party and opposition Democrats, and is headed by Democratic Party MP Jorida Tabaku. A total of 26 witnesses, including high-level politicians, will be interviewed. Inquiry findings to be presented by February 25, parliament says declaration.
Earlier this month, a three-month extension was granted to the committee to continue its investigation, despite calls from the Socialist Party to end the investigation. The ambassadors of the two countries welcomed the decision to pursue the investigation, stressing the importance of the fight against corruption in the country.
Former Environment Minister Lefter Koka was arrested by the Special Tribunal for Organized Crime and Corruption (SPAK) in December 2021 in connection with the Elbasan incinerator contract.
The SPAK investigation has been launched following a criminal complaint filed by the Democratic Party and another opposition party, the Socialist Movement for Integration (LSI). He said that Koka had “received and received from the companies “Albtek Energy” sh.pk and “Integrated Technology Services” sh.pk, which are the beneficiaries of the concession contract, irregular monetary benefits, indirectly, through the creation of a fictitious scheme for the performance of work in the concessionaire company, using several other companies indirectly controlled by him, controlled by members of his family, as well as controlled by business entities in his possession.
The heads of the companies that received the concession, Stela Gugallja and Klodian Zoto, have been declared internationally wanted by the Albanian state police. However, according to reports in the Albanian media, payments for the incinerators have continued.
As revealed during the hearings, in 2014 a new company with no income or experience was chosen to build the Elbasan incinerator following an unsolicited proposal. – a controversial procedure that has been widely used in Albania in recent years. Public-private partnership (PPP) contracts for the construction of the incinerators in Fier and Tirana were then awarded according to similarly accelerated procedures. According to critics, the terms of the contracts were very favorable to the companies, which received substantial funds before the construction was completed.
The Democratic Party, which used details of the committee sessions to embarrass Rama’s government, revealed“Documents from the Incinerators Inquiry Commission show how former Minister Koka, out of enthusiasm for the success of an uncompetitive race to give a seven-year concession to a company with no revenue and no experience, signed a ‘draft contract’ which gave 22 million euros to Ms. Stela Gugallja.
The party detailed the accelerated process in December 2014, when the sole bidder to build the Elbasan incinerator, Gugallja’s Albertek Energy, was declared the winner. The missteps included a shortened appeal period to determine that there was no complaint. Just one day after the bidding, the contract was signed between the Ministry of Environment and the winning company and funding was approved.
According to the Democratic Party statement, the deal was signed despite the “clear disapproval” of Albania’s then finance minister, Shkelqim Cani, who was sacked in 2016 and replaced by Arben Ahmetaj, who was accused of links to Zoto.
Among other party claims, payments for the Tirana incinerator began two years before work on the incinerator began; since 2018, the State has been paying €29 per ton of waste while two of the incinerators are not working; €850,000 was billed for travel during the pandemic; 10 million ALL (€81,000) were paid per month to Edmond Bllako, the father of socialist deputy Alqi Bllako; and, the same sum was paid to Zoto, while his associates Gugallja and his partner Mirel Mërtiri received large payouts through their consulting companies.
“According to the data, the company owned by Stela Gugallja, Albtek Energy, although supported by the government with a negotiation without announcing 17 procedures in one day, turns out to have had no money in its pocket for the investment in the Elbasan incinerator,” the party added.
On February 9, the deputy Luciano Boçi presented the conclusions representatives of the opposition to the commission of inquiry into the Elbasan incinerator, starting with the non-publication of the concession contract notice and the opening of the tender for the concession/ PPP. Boçi told the commission that the process “did not follow any of the procedures provided for by law.”
In Le Fier, members of the opposition noted that no cost-benefit analysis had been carried out and that payments had been made from the state budget even though the plant had not produced energy. During the factory tour on February 8, its technical director, Enid Dine, said the plant was complete, but was still in the testing phase.
An earlier report by anti-corruption watchdog Transparency International also detailed the problematic nature of cremation deals.
“In all three cases, the companies that won the government contracts were the only bidders, and the winner from Elbasan submitted unsolicited proposals and won an untendered contract. Key people in each company are tightly linked to each other through business partnerships,” wrote Transparency International.
“Furthermore, the opposition Democratic Party has accused the government of clientelism, alleging that Arben Ahmetaj, who is a former finance and economy minister and a prominent member of the Socialist Party, is implicated in the deals by the intermediary of Klodian Zoto. Zoto is a key contractor pulling the strings of the companies that were declared the winners of the bids for the three incinerators.
Far from the landfill
Albania has a real need to modernize its waste management systems. As detailed in a municipal waste management fact sheet in the country published by the European Environment Agency in November 2021, the waste management system is highly dependent on landfill disposal (legal and illegal). The government has set targets to reduce the share of waste sent to landfill to 50% by 2025, 30% by 2030 and only 10% by 2035. However, according to the European Agency for environment, the 2025 target is only achievable if separate collection is introduced. and the Tirana incinerator – the biggest of the three – working at full capacity. All three incinerators should be in operation to meet the 2030 target.
However, the European Commission warned in the 2019 enlargement progress report on Albania that the decision to build incinerators (rather than investing in other forms of waste management such than recycling) raised concerns about compliance with EU directives as the country moves towards EU membership. “The construction of an incinerator in Elbasan and the start of the procedures for the construction of two other incinerators in Tirana and Fier pose problems of compliance with European directives on waste, the principle of the hierarchy of waste with incineration as least preferred waste management option, and with EU recycling targets,” the report says.
The Socialists came to power in 2013, pledging to tackle the corruption that had flourished under the last Democratic Party government. Bold steps have been taken, such as the campaign against informal economic activity and an effort to eradicate the large-scale drug culture. However, since then efforts have stalled, as evidenced by the recent decline in Albania’s position in Transparency International’s annual Corruption Perceptions Index (CPI).
Moreover, the government’s enthusiastic use of PPPs – many of them unsolicited and of dubious economic value – has been widely criticized not only by opposition politicians, but also by the IMF and other international financial institutions.
Both the Democrats and the LSI have profited politically from the scandal that has embroiled senior members of the Socialist Party, which was elected less than a year ago to an unprecedented third consecutive term.
However, the latest Barometer poll published by Euronews Albania shows that Albanians are relatively evenly split on whether the government should resign if the concessions are found to have been corrupt, with 42% for and 40% against.