Ms. Ekaterina Solovova has taken up her position as Head of Albania for the European Bank for Reconstruction and Development (EBRD) in July 2021 and Albanian Daily News had an exclusive interview with her to learn on Bank’s performance in this Balkan country where it is a leading institutional investor.  

At the outset of the interview, Ms. Solovova expressed the proudness of EBRD for the Tirana-Durres railway project, saying “it highlights the transformational effect we can have in a country such as Albania”. She announced that EBRD is working with the Albanian Government on the preparation of the second major project - rehabilitation of the rail connection to the border with Montenegro. “Once these projects are completed, they will have a major positive impact on the Albanian economy.”    

There are limited national trains within Albania where the rail system is debilitated.  There is no rail network across the Albanian borders. There are no passenger trains to or from any of Albania's neighbouring countries, like Montenegro, Kosovo, North Macedonia and Greece.   

According to EBRD Head for Albania, EBRD is committed to support Albania’s EU integration and its activities in the country are consistent with that process. “We are working to strengthen the sustainability and competitiveness of the Albanian economy and accelerate convergence towards EU standards in many areas,” she said.

Ms. Solovova unveiled the wide range of projects being implemented in Albania, and according to her,current energy crisis revealed the importance of energy security and at the same time highlighted the central role of diversification of supply especially through renewables.       

“Regional integration promoted by EBRD (we are striving for this in all regions where the bank invests) has, particularly in the Western Balkans with its complex history, another important aspect, beyond economic benefits as you rightly noted. It supports stability,” she said, adding that EBRD has been for many years the champion, among IFIs, in supporting regional cooperation. “We were the first, in February 2014, to bring together, in our HQ in London, all six Western Balkans Prime Ministers for the historic Western Balkans Summit in EBRD, which de facto launched the whole new format of regional cooperation: “WB6 at the level of Prime Ministers”.”

Asked about the Open Balkans Initiative, the EBRD Head for Albania said the Bank supported all initiatives, including those coming from the region, that further regional integration and regional cooperation and as long as they are complimentary to the wider WB6 cooperation.

Below full interview:   

Albanian Daily News:  Madame Solovova, you inspected the site of work on the Tirana-Durres railway with PM Edi Rama and President of the European Commission Ursula von der Leyen recently.  That was a very high profile visit. What does that project mean for Albania and the EBRD?

EBRD head for Albania Ekaterina Solovova:  We are very proud of this project because it highlights the transformational effect we can have in a country such as Albania. The construction works on the 34 kilometres long Tirana-Durres section are already progressing, while we are working with the Albanian Government on the preparation of the second major project - rehabilitation of the rail connection to the border with Montenegro. Once these projects are completed, they will have a major positive impact on the Albanian economy.  

First, it will allow for safer and faster rail travel between two major Albanian cities – Tirana and Durres. Expected travel time on the reconstructed Tirana-Durres line is 22 minutes – just compare to about 45-60 min it takes today by car not considering traffic jams. While getting from Tirana to the airport will take 12 minutes with a speed of up to 100 kilometres per hour. Same for the transport of goods – it will be more efficient and cheaper

Second, decarbonisation effect. Modernising railways and increasing rail transport (both people and goods) will result in a “modal shift” away from road. Given that transport is responsible for approximately 20% of Green House Gas emissions and that rail is typically 50-60% cleaner than road transport, this modal shift will have a hugely positive impact on the environment and air quality. Together with investments in electrification of rail networks, this is a tremendous opportunity to decarbonise the transport sector.

Third, it creates jobs and motivation for the young people to seek profession in the sector, which has come to near non-existence in Albania despite being vital previously and which continues to develop rapidly in Europe.

And last but not least, it will connect Albania to the EU Strategic Trans-European Transport network. 

- Ms. Director, the total portfolio of EBRD’s investments in Albania exceeds 1.9 billion euros financing some 130 projects. According to your assessments, how much have they contributed to the progress of this country in view of its perspective to join the EU?

- EBRD is committed to support Albania’s EU integration and our activities in the country are consistent with that process. We are working to strengthen the sustainability and competitiveness of the Albanian economy and accelerate convergence towards EU standards in many areas. Two, in particular, are key priorities: accelerating the green economy transition and building sustainable transport and environmental infrastructure. The starting point is lowering overall consumption through energy efficiency investments, both in the industrial and residential sectors, which we support with targeted financing programs, largely implemented through commercial banks. In addition, investments in sustainable transport and energy infrastructure, like railway, solar and wind power plants, will help bring the country closer to EU both physically and in standards. 

In Albania we are supporting the government in all these initiatives both by mobilising technical assistance and financing.

The second priority is to strengthen the competitiveness of the private sector, helping companies to raise business standards in terms of digitalization, environmental performance, and social inclusion. We are doing this, for example, through a number of programs aimed at better access to finance and skills for the SMEs.

- As a follow up, EBRD is expected to approve close to 200 million euros of financing in Albania this year and most of it for the private sector. Please, would you be so kind as to specify some of the sectors to benefit from these investments and in what way will they help improve the living conditions of the ordinary citizens, particularly the needy segments of the population?

- This expected amount includes both already signed and pipeline projects. Not all of them may happen until the end of the 2022 but all are well advanced. EBRD supports projects consistent with our strategic objectives in Albania and this year is not an exception, but indeed, this year our financing almost entirely went to the private sector. It includes substantial support to the financial intermediaries to increase their lending capacity to the real sector, particularly, to the SMEs. Our Agriculture and Tourism Support Facility extended to Procredit Bank, OTP and Intesa, is designed to improve access to finance for the SMEs in the agribusiness and tourism sectors where end borrowers benefit from investment grants attached to the loans. Almost 40% of Albanian labour force is employed in agriculture, yet this sector is underserved by the financial industry. Rising energy prices are driving the need for energy saving investments across the economy- our credit lines blended with grants to OTP and Procredit are designed to support SMEs and households wishing to make investments into energy and resource efficiency. Additionally, this year we have supported several important FDIs such as investment by the Turkish Yildirim Group in Albchrome and regional expansion of German retail chain Lidl in the Western Balkans. Entrance of the international strategic investors in such sectors of Albanian economy as mining, is expected to bring best practices, including, importantly, in areas of sustainability and health and safety. And of course we continue our support to the energy sector by financing important investments aimed at improving security and efficiency of energy supply to the Albanian people –there are several projects both with state owned and private sector players.

- Like in other countries the energy crisis is becoming extremely worrisome particularly after the adoption of the new government scheme of prices for households and businesses in this Balkan country. Are there any initiatives between the Bank and Albania to mitigate the impact of the energy crisis whose effects on people’s life will reportedly be devastating, and no one can foresee the social reaction?      

- The key priority we have identified in Albania and have been working on closely with the government is to ensure sustainable supply through diversification of renewable sources of energy. Current energy crisis revealed the importance of energy security and at the same time highlighted the central role of diversification of supply especially through renewables. It happens also that the renewable projects, we as EBRD, have been supporting in the region are currently generating the cheapest electricity for the countries.

Thus, the competitive auctions – two for solar PV capacity and one for wind - launched as a result of the EBRD-led technical assistance, not only secured record-level prices of below 30 Euro/MWh for the solar auctions, both awarded to the French company Voltalia, but also overall attracted the interest of globally-renowned investors. The first auction for wind capacity is expected to complete in the next year with already a well-known list of pre-qualified experienced international investors.

In addition to the solar and wind capacities auctioned with the EBRD’s support, the Government of Albania has also licensed several utility scale PV projects led by the local private sector sponsors and the Bank is considering financing some of these projects.

Lastly, besides on-going wind auctions EBRD is committed to continue supporting the Government with setting-up the appropriate framework for electricity storage and to provide technical assistance necessary to explore the off-shore wind power potential.

- Madame Director, the Bank has to date invested more than 16 billion euros in the Western Balkans and continues to invest more than 1 billion euros in the region every year. Besides the economic impact, how does such a support contribute to foster peaceful cooperation among the 6 countries and promote people-to-people exchanges in all walks of life?

- If you look at all major regional cross-border infrastructure corridors in the Western Balkans you won’t find many that are not funded or co-funded by EBRD, alongside EU and other IFIs. About 1 billion Euro has been invested by EBRD so far in the construction of these transport and energy corridors which connect the countries of the Western Balkans from within the region, and the region as a whole – to the rest of Europe. Together with EIB and EU, we are, for example financing the motorway, which will connect Nis in Serbia and Pristina in Kosovo. We’re also investing in electricity corridors. Last year we marked the start of construction of the interconnector between North Macedonia and Albania which will enhance cross-border exchanges in electricity network.  Another example directly benefiting Albania: Corridor VIII that runs from West to East connecting the Adriatic Sea (from the port of Durres) and the Black Sea (at the port of Varna). Now, these highways, railways and energy interconnectors not only further regional integration, increase competitiveness of the relatively small economies and facilitate the movement of goods and services, they improve the connectivity in the wider sense, including movement of people.      

Regional integration promoted by EBRD (we are striving for this in all regions where the bank invests) has, particularly in the Western Balkans with its complex history, another important aspect, beyond economic benefits as you rightly noted. It supports stability. EBRD has been for many years the champion, among IFIs, in supporting regional cooperation. We were the first, in February 2014, to bring together, in our HQ in London, all six Western Balkans Prime Ministers for the historic Western Balkans Summit in EBRD, which de facto launched the whole new format of regional cooperation: “WB6 at the level of Prime Ministers”. We have been organising these meetings of the six leaders every two years since then and see their ultimate objective, besides promoting the region as an attractive investment destination and furthering the connectivity agenda, as our direct contribution to the peace and stability in the Western Balkans.

- Although the Open Balkans Initiative has not been joined by all the WB countries, which, in the meantime, have separate support contributions from EBRD, do you see opportunities for the EBRD to cooperate in the framework of that Initiative? 

- We support all initiatives, including those coming from the region, that further regional integration and regional cooperation. As long as they are complimentary to the wider WB6 cooperation, which is our key priority. As I mentioned, we have pioneered the WB6 format at the Prime Ministers level and the Summits in EBRD that I talked about are always inclusive. This is very important principle for us.

- Albania’s capital Tirana is one of the EBRD Green Cities. How will the EBRD Green Cities programme promote environment protection in Tirana, where, for the sake of truth, there is a boom of constructions, which have limited the green areas and recreational places for the people?

- Tirana Green City Action Plan was completed in 2018. The plan's ambitious aim is “to enable people to enjoy a healthy and high-quality life in a green, resilient and inclusive Tirana that makes smart use of resources”. It outlines a set of investment and policy actions to address Tirana’s pressing environmental challenges: transport, blue & green Infrastructure, water, energy, and climate resilience. Fully implementing this plan would deliver transformational changes to the city including a shift to public and active transport and smart mobility, more green spaces that people can enjoy and improve the quality of existing green assets, improving treatment of wastewater, higher energy efficiency of buildings and infrastructure, increase waste recycling.

- To conclude, it is to be applauded the pledge of the EBRD to have the Western Balkans its priority region. This is in line with the aspiration of these countries to join the EU? In your view, could the EBRD be more helpful to expedite the integration process of the WB, particularly when a war is being fought on the lands of our continent, Europe, after the aggression of Russia against Ukraine?  

- The decisions on the speed of formal integration of the EU-aspirant countries into the Union are obviously not in our hands. But EBRD strongly supports the EU approximation process. Because we believe that this region belongs to Europe and because the comprehensive EU reform agenda is complementary to the reform agenda that EBRD, as an IFI with unique transition mandate, pursues in the region. We have signed special MoUs with some EU candidate countries, including Albania, for the practical support in various areas related to the government’s efforts towards EU approximation.