WASHINGTON, May 12, 2022 — Albania will receive substantial support to reform its Water Sector through a World Bank financing operation, which includes a $75 million loan and a $6.3 million grant, approved today by the World Bank’s Board of Directors. The loan is part of $135 million in financing for the Albania National Water Supply and Sanitation Sector Modernization Program, which is co-financed by the Government of Albania. The grant is funded by the Swiss State Secretariat for Economic Affairs (SECO) and will be managed by the World Bank.
This Program aims to improve the operational and financial performance of water supply and sanitation utilities and to increase access to safe water services in Albania.
Albania does not lack adequate water resources and therefore should be able to provide its entire population with safe and fresh drinking water. In recent years, Albania has developed a strong regulatory framework for water services delivery and introduced changes in institutional arrangements to improve service delivery.
Nevertheless, most of the water utilities in Albania continue to perform poorly, both technically and financially. This results in low levels of service to the population and to businesses, and an inability to extend services to those without them, especially the most vulnerable in the peri-urban and rural areas of the country. Around 20 percent of the rural population has no piped access at home. Most utilities are chronically dependent on central government funding. 37 out of the 58 municipal water companies continued to rely on budget support. The Water Supply and Sanitation (WSS) sector needs reforms in its governance and organizational models to improve and achieve national targets.
“Radical changes are needed to improve the quality and sustainability of water supply services. We commend the Government for its commitment to reforming water services in Albania,” said Emanuel Salinas, World Bank Country Manager for Albania. “The World Bank will support the sector through an innovative financing instrument called Program for Results. This means that, rather than just providing financing for infrastructure, we will focus on supporting institutional reform, or as we call it unofficially ‘instead of fixing the pipes, let’s fix the institutions that are supposed to fix the pipes.”
The WSS Program will help deepen the sector’s transformation to address structural challenges it faces. It will strengthen planning and programming of investment, both at the local and central level, in the WSS sector, allowing expansion of public investments in peri-urban and rural areas. Under such reforms, water utilities are expected to improve their performance, relying less on public funds. The efficient use of public funds will not only benefit individual households but also boost the economy. Higher quality and reliability of services for residents and businesses will positively impact the tourism industry, employment creation and poverty alleviation, as well as close the urban/rural gap.
The new operation uses a Program-for-Results (PforR) financing instrument, which links disbursement of the loan directly to the achievement of specific program results. The grant will provide financing for technical assistance, capacity building within central sector institutions, and implementation and monitoring, as well as evaluation of the program results.
This Program is designed by, and will be jointly implemented by, the Ministry of Infrastructure and Energy and Agency of Water Supply, Sewerage and Waste Infrastructure (AKUM), as well as the Ministry of Finance.