Construction – diversification
Is it worthy to invest on them?
Construction business increasingly is focusing on the construction of smaller hydro power plants as a profitable business alternative with guaranteed sales. How much does it cost to construct a hydro power plant? What is the payback period?[ad#ad-1]
Hydro power concessions given recently by the Albanian government have oriented to the energy sector a considerable number of Albanian construction companies, whose entry is expected to further grow in the years to come as a result of the expected future development of the energy renewable sources sector. According to National Agency of Natural Resources, orientation of the companies toward this sector is expected given the favorable financial situation created by the latest legal regulations undertaken in this context.
By the end of last year the standard mandatory contract on energy purchase was approved. According to it, the Albanian government guarantees the concessionaire the purchase for 15 years of the energy at the average import price plus 10%. Law is applicable for the hydro power plants smaller than 15 megawatt. “But we should state that most of the existing HPPs, about 90% of them, are of a capacity less than 15 megawatt. Such scheme is made for all concessionaires to have their energy sales guarantied”, told , ANRM director.
Figures from the National Agency of the Natural Resources indicate that almost entire range of those HPPs with a capacity below 15 megawatt is given with concession to the Albanian companies. This is due to the modest rate of investments needed for such projects. Total value of the concessions is u 1.94 billion euro. explained that 5 megawatt corresponds on average to an investment of 5 million euro. According to the global standards, the average value of producing 1 megawatt power requires approximately 1 million euro investment; it makes the investments on HPPs at 2-3-4 million euros to be done by the Albanian companies. “In general they are construction companies, which have considered it as a good opportunity to make use its own equipments and assets. They have machineries, structures, designers, implementers and they lack the construction market. Almost 80% of the hydro power plants concessionaires are construction companies”, stated the director of the Natural Resources Agency.
whose company operates in the construction sector, energy and city cleaning, presently the hydro energy is one of the sectors with higher rate of return. . “Guaranteed sales for first 15 years make us to hope that within the first five years to be able to return the investment”, said. “” company has won the right to use two other hydro power plants, respectively 1 and 2, built up at the communism regime. “Very soon both HPPs will undergo a total reconstruction, which will be accompanies with the increase of their producing capacities”,
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“We expect to repay the total investment value within 5-7 years period”, told , executive director of HPP, which has become operational since February 2010. He added that the works were completed within two years period, respecting all the terms and conditions of the contract entered with the Government, as well as the financial obligation provided in that contract. “No doubt the guarantee of the sale at the market price for the first 15 years of the operation is a significant financial advantage. This is one of the key reasons that many companies considered it as very interesting market”, said. But there is also another element that makes the companies more interested: crediting from the banks. “I see several constructors that have turned their eyes to the energy not only because of the organic ties with our sector, but it is also backed by the banks, which do consider this sector as of crediting potential”, said, president of the construction company “Fratari Constructions”. According to , the construction companies may easily adopt the construction capacities in this sector due to the construction volume in those kinds of works.