The Impact of the Private Sector Participation in the Infrastructure Public Services and the Way Forward in Albania

Abstract

The strategy of the government of Albania was to use privatization as a mean to improve the productivity of public companies in various public services, to access investment capital and improve service delivery of high cost that impact the economy; and reduce the fiscal burden of loss-making companies.The international literature indicates that for the countries, which are in the development stage private operators have preferred management and lease contracts as a convenient way to introduce themselves. This does not exclude the concession type contract where there is a regulatory system in place and a credible legal system and corporate low for public companies. In many cases where donors or International Finance Institutions (IFI) have played the main role in promoting the PPP, management and lease contracts have been preferred for Private sector participation (PSP). This would increase the likelihood of the success by giving to the private operator the task of improving the utility’s operational efficiency and financial viability, while leaving the public authority in charge of investment financing. The management contracts were used to introduce private participation in water utilities for the first time in the water and sanitation sector in Albania in 2004.In early 2000s there was a high level of optimism about the role of the Private sector participation (PSP) to bring the required changes in some key public services. In the late 2000s until 2012 this optimism declined rapidly. Privatization activity in the water and sewerage public services as a whole dropped off in the late 2000s in Albania and it seems that the electricity services will follow suit.The conclusion is that, promoting private sector participation now in the infrastructure public services – at least as it has been pursued to date in the water and sanitation sector in Albania – will be received with skepticism. The policy makers and decision makers have to take the ownership, and see it as a challenge to the public sector and local private sector that could bring more important changes, including selection of cities and regions which are prone to this partnership. The hypothesis of the analysis of the effects of the PPP in the infrastructure public services in Albania is that the PPP is not a panacea; it can be useful to the countries if they model is suitable to the country’s conditions and there is a workable environment with the public sector, which accept its own responsibilities, and encourage competition.

DOI: 10.5901/mjss.2013.v4n3p219