€22.6 million for extension, development of Albania’s only airport

The EBRD is extending a loan of €22.6 million for the further development and modernisation of Tirana International Airport (TIA). The project includes extending the new passenger terminal, construction of additional airport buildings and investment in new ground handling equipment and systems.

Tirana International Airport is operated by a consortium led by Germany’s HOCHTIEF AirPort GmbH, under a concession from the Albanian government.
In addition to the EBRD finance, TIA will receive parallel loans of €24.3 million from DEG-Deutsche Investitions-und Entwicklungsgesellschaft mbH, Alpha Bank and the American Bank of Albania.

EBRD’s financing will support the next stage in the modernisation of Tirana International Airport. A total of €10.6 million will be used for capital investments, and the remaining €12 million for restructuring of the original loan to TIA provided by EBRD in 2005. The refinancing reflects TIA’s improved risk profile and the ability to provide new terms to TIA is a reflection of the capacity to create a stable and profitable public-private partnership (PPPs) comparable to those in more mature markets. As such, the project is a landmark deal for transactions of this sort in Albania.

TIA operates on the basis of a 20-year concession awarded via competitive tender in 2004. The Bank’s original €21 million loan provided in 2005 allowed for essential modernisation work of the airport which was built in 1957 and had seen limited investment since. Proceeds of the EBRD loan were used for construction of a new passenger terminal and cargo terminal, as well as a new access road to the airport that substantially shortened the travel time from the city of Tirana to the airport.
The first part of the modernisation was successfully completed in March 2007 with the opening of the new terminal and the airport has since attracted several new high profile airlines.

The second phase of airport modernisation, which follows strong recent growth in passenger numbers and cargo volumes*, is expected to be completed by 2009.
Sue Barrett, EBRD Director for Transport, said this project is crucially important to Albania’s economic development. The terms of the new loan send a clear and positive message about the state of development of the commercial, political and legal environment for PPPs in Albania. Its innovative structure makes it a showcase for private-sector investment in medium-sized airport operations in the region. This is a model that could well be replicated elsewhere in south-eastern Europe, Ms Barrett said.

This loan agreement is of great value for the airport company, Andrea Gebbeken, Chief Executive Officer of TIA said, but just as importantly it is a showcase project for Albania’s ability to attract financing for important infrastructure investments. The success of this new loan is a result of good partnership, strong commitment and goodwill among all involved parties, Ms Gebbeken added.

The EBRD is the largest institutional investor in Albania, having invested €372 million in 40 projects in Albania, ranging in a number of important sectors, including national infrastructure, the financial sector and the private corporate sector.

* Passenger numbers increased from 708,000 in 2005 to 1.1 million in 2007 and cargo volumes expanded from 2,000 tonnes in 2005 to 3,500 tonnes in 2007.