Why is the VLORA TPP a failed project from the start?/ The Ministry of Infrastructure and Energy reacts

2024-03-11 13:07:00, Aktualitet CNA

Why is the VLORA TPP a failed project from the start?/ The Ministry of

Illustrative photo

Taking the lead from an investigative article in the title, but speculative in content, we think it is appropriate to shed light on some indisputable facts that accompany the long and sad history of TEC Vlora.

The Vlora thermal power plant, expected to produce 97 MW of electricity per year, is a failed project since its inception, due to faulty design and the problems that followed its commissioning in 2011. This plant is another failure inherited from the government of that time, for which MIE and KESH have tried with all available resources to make it operational and to reduce and recover the financial costs created by this mismanaged project.

The power plant was finally delivered in October 2011, two years behind the contractual forecast, and has been in long-term conservation status since January 2012. The plant is a combined cycle power plant with one gas turbine and one steam turbine. Originally planned to run on low-sulfur diesel, natural gas was expected to be the main feedstock once the connection to the Trans Adriatic Pipeline was secured.

The plant was commissioned two years late due to an incorrect installation of the seawater cooling pipeline on the coast, a fact acknowledged by the parties involved in the process at the time.

The first attempt to start up the Vlora TPP, in October 2009, caused a complete failure of the seawater cooling system. The engineering, procurement and construction (EPC) contractor, the company "Tecnimont", took responsibility to repair the newly built system, without a single man-hour of consumption.

Shortly after stating that the cooling system had already been repaired, in January 2012, the second attempt resulted in another complete failure of the cooling system. No repair or rehabilitation work has since been undertaken by the EPC contractor or any other company. Currently, KESH has maintained EPC Performance Insurance, according to contractual obligations.

Claims that a sea storm caused the problems with the cooling system are more like an alibi, which seeks to hide the real problem of the plant, since the two attempts to start up the TEC were carried out at different times 2 years apart and it would be a strange coincidence that exactly on the days when the TEC was put into operation, two storms occurred so big that they caused irreparable damage to the cooling system of the TEC.

Clearly, the engineering project was deficient and the implementation even more deficient, so even if we want to allude to a storm or tsunami in the bay of Vlora, at least this project, despite the fact that it envisaged the construction of a TPP on the shores of the Adriatic Sea, did not foresee possible situations sea ??storms. Then even if it were true the version of an unprecedented storm from those that repeat once in 100 years as an event that happened in 2012, but in 2009 when the Vlora TPP was declared completed for the first time, why am I not working no day? Precisely because of the cooling system, which was designed and implemented incorrectly from day one and was never resolved, despite the second chance given to the company by the government of the time.

The situation in the energy system in 2013

It is easy to come out today and say that the government or KESH has 13 million euros to fix a technological error that cost the country millions of euros, but it is good to refresh the memory of the writing investigators a little, since the energy system of a the country is treated as a whole and not as isolated islands between production, transmission and distribution. In 2013, the Albanian electricity system was in its most difficult situation, on the verge of a collapse not only technical as in the 2000s, but now also financial:

Losses in the distribution system were over 45%, so about half of the energy produced or imported was wasted. This is as a result of the lack of vision, strategy and implementation of investments in the network. The lack of control in the territory and the surrender of the state before the theft and abuse of electricity.

The technical condition of the HPPs in the Drin river cascade was in the most critical moments, with a lack of maintenance, with effects up to the collapse of the Koman dam in 2011 as one of the biggest scandals that revealed the irresponsibility of an entire state towards a of the country's most valuable assets. The lack of operational assessment of the energy assets of the Drin cascade, the lack of investments and readiness rates at the lowest levels are another indisputable fact, based on documents.

As if leaving the Drin Cascade to the mercy of fate was not enough, the power system was damaged by an arbitrary decision to remove from the portfolio of the public generation company HEC Bistrica 1 - 2 and Ulez-Shkopeti. Sold at a ridiculous valuation, as the procedure that was chosen by the government to give these hydropower plants to the private sector, irreversibly destroying the Albanian electricity balance, cannot even be called a price.

Meanwhile, the financial situation was characterized by debts to third parties, in excess of 200 million euros. From tax debts of public companies, to non-payment of social and health insurance. The costs of the losses were covered by the state budget with budget loans and loans in second level banks, for the company KESh sh.a., up to 500 million euros. Loan exposures to second-tier banks with the inability to repay were a normality of those years. Undoubtedly, all this chaos would lead to a complete lack of public investment for new generating capacities.

Under such a panorama, the financial consolidation of the energy system was a priority, while the spaces to secure other additional investments for a project that was already burdened with large loans like that of TEC Vlora, were impossible.

ECA (2017) and Roland Berger (2018) reports

MIE and KESH not only have not neglected the Vlora TPP, but have engaged with all their capacities since 2013 to find opportunities for putting the TPP into operation, seeking specialized international assistance for this sector.

Two international reports from specialized consultants have been provided as a result of this commitment, one in 2017 by ECA (Economic Consulting Association) and the other in 2018 by "Roland Berger".

The ECA study is focused on the position of the Vlora TPP, within the development of the gas network and market in Albania, closely linking the need of the TPP gas supply network for the continuation of its activity.

In this study, a cost of 13 million euros is predicted only for the repair of the cooling system, but the report has not calculated a number of other costs for putting the plant into operation, which are related to all other TEC systems.

This is because ECA did not have the task of making a comprehensive analysis of TEC Vlora, an assessment of its technical status was not made without analyzing the entirety of the functionality of the asset.

The report of "Roland Berger" has analyzed the possibilities of putting the Vlora TPP into operation, considering several options:

The commissioning model for a period of time, including the Fier-Vlora pipeline, which today is one of the concrete projects of MIE, but not in 2013, when the needs of the electric power system were basic, energy for citizens coming from a period of disconnection of several hours a day, until the recovery of ruined finances.

The commissioning model for a period of time (excluding the Fier-Vlora pipeline)

Partial privatization

Operational service provider model

Both consultants in their reports have not determined the final cost, but have suggested conducting a technical-economic feasibility study for the final determination of the real costs of putting Vlora TPP into operation.

TAP

Both reports of international consultants suggest the operation of the Vlora TPP with gas, where the supply is carried out through the connection with the TAP pipeline. MIE together with KESH have continuously explored the commissioning of the Vlora TPP using this strategy.

In March 2017, a commitment agreement was signed between the Albanian Government and TAP for the development of the gas market and the agreement for local benefits, approved by VKM No. 233 dated 21.03.2017.

Through this agreement, TAP engaged in the construction of the exit point in the area of ??Fier according to the agreed basic technical data. For the implementation of this commitment, an Agreement for Cooperation and the delivery of the exit point south of Fier was signed between MIE and TAP on July 09, 2021.

Through this agreement, the TAP project company will build at its own expense the exit point in Fier, the point at which the gas transmission infrastructure, part of IAP, will be connected to Vlora, which will be owned by the public company Albgaz JSC

The development of this infrastructure, after the signing of the agreement, was negatively conditioned by a very important factor, that of the war in Ukraine and the impact it had on the energy markets, especially electricity and gas.

Currently, the gas and energy markets are in a different situation, where the conditions for the development of projects are more secure and the goals of these projects are also oriented towards the security of the national and European energy systems.

In the agreement with TAP, the connection with the compressor station of Fier is possible, and TAP has undertaken to facilitate the connection of the Fier-Vlora pipeline with this connection point, as an investment of TAP.

The commissioning of the Vlora TPP is closely connected with the Fier-Vlora gas pipeline.

AlbGaz is currently working on updating the Fier-Vlora pipeline project, which will also serve the Vlora TPP according to the above-mentioned recommendations.

Current efforts to put Vlora TPP into operation

In order to re-commission the Vlora Thermal Power Plant and in accordance with the recommendations of the international consultant "Roland Berger", at the end of 2018, an international competition was held for the "Rehabilitation and commissioning of the Vlora Thermal Power Plant as well as the construction of the pipeline Fier-Vlora for its gas supply". This procedure was not successful, as the submitted offers did not comply with the criteria set out in the concession/PPP documents of the ROOT form

Meanwhile, the commitment and efforts of MIE and KESH for the commissioning of TEC Vlora have been continuous and have not stopped even during the situation of the global energy crisis.

In the context of cooperation with the USA and the development of the gas sector in Albania, in 2021, MIE signed a memorandum of understanding with the American companies ExxonMobil and Excelerate Energy for the integrated project of the revitalization of the Vlora TPP and its gas supply through floating liquid gas terminal in the bay of Vlora.

Increasing energy security and diversifying sources of electricity production remain the main priorities of the Albanian Government and the Ministry of Infrastructure and Energy. In this context, the restarting of the Vlora TPP has had a constant attention and commitment, but the problem stemming from the failed project from the start and then overlapping with other no less important factors, such as the global energy crisis and the war in Ukraine, have made it even more difficult to find a quick solution to this problem.

Beyond all these objective difficulties, the possibilities of integrating the initial Vlora TPP project with the natural gas infrastructures that are being planned to be developed in the country, have already created the necessary climate and the right spaces to revitalize the energy park of Vlora.

It is unfortunate how an article funded for the good reason of transparency and with the label investigative article, instead of shedding light and referring to the true facts, simply creates an alibi to cover the sun with a sieve, accuses them who actually worked and are working not simply to solve the problem of the wrong design in the cooling system of 2009, but to put the Vlora TPP into operation once and for all and not only with 97MWH power as predicted, but with three modules that, divided into three phases, will ultimately provide a thermal asset of 350MWH power.

The truth always comes to the surface through work, but we call on "investigative" journalists to be careful and not misinform the public about such important issues, even considered essential for the country's critical infrastructure./ CNA