KESH: 5 years, stable price for purchasing energy

The Albanian Electricity Corporation plans to carry out a long-term energy purchase for 5 years. This action is argued with the need for cost management while taking into consideration a reduction in energy purchase costs through the stock exchange price formula, minus some value that is not in energy purchase costs through the stock exchange price formula, minus some value that is not yet determined. However, referring to current prices in international markets, the corporation estimates that the price for the next 5 years will be around 270 euros/Mwh.

According to KESH, the unchanged price for 5 years means that the price expectation for the period is averaged by the producer. The official documents state that the producer takes the energy price forecast for the next 5 years and averages it into a fixed price, to which he adds the time value of money, the market risk, and his profit.

“If the company concludes a contract according to the above prices, the main effect that would come as a financial result is that of the fair distribution of the cost of energy throughout the 5-year period, bringing an equal and calculable burden to the state budget, which will have to carry out subsidies.” This is against the risk that the stock market prices can be accommodated to lower than the fixed price in a short period of time,” it is added further.

These plans of the Albanian Electricity Corporation come at a time when prices in the stock market are very volatile, as the government’s strategy is aimed at increasing the production capacity in the country, which will bring about a decrease in dependence on imports. In the case of finalization, this will be the first practice of applying long-term contracts by KESH, which throughout the entire period of the energy supply emergency has made purchases on a daily or weekly basis.

Ola Mitre / SCAN

 

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