Questions For The International Comparative Legal Guide To: Project Finance 2016 - Albania

  1. Overview

    1.1 What are the main trends/significant developments in the project finance market in your jurisdiction?

    The activity of project finance in Albania is considered an important additional means of support and development for private-sector entrepreneurship. By ensuring project finance is provided to the eligible prospective investors, the delivering institutions assist in evaluating, structuring and implementing their projects in Albania and in providing loans and equity investments, including financing from other sources. Over the years, Albanian project finance implementation has been an area delivered not only to private companies; there have also been engagements from different lending institutions (banking and non-banking, or in joint collaboration) concerning policy dialogue with the Albanian government, with the potential to invest in key public sector projects, along with the implementation of numerous donor-funded projects in the country.

    1.2 What are the most significant project financings that have taken place in your jurisdiction in recent years?

    In Albania, project finance activity has seen continuous developments in terms of the amount invested and the variety of sectors covered in the financing process. Key sectors to which project finance support has been applied include:

    Government institution projects. Financial institutions. The energy, mining, and oil & gas sectors. Infrastructure. Corporate, small-medium production enterprises. Natural resources. Commercial construction (i.e. infrastructure). Residential construction (i.e. real estate). Sectors which have comparative advantages such as light manufacturing, fishing and tourism. The European Bank for Reconstruction and Development (EBRD) is one of the largest investors in the private sector in Albania. Its main areas of focus are supporting the financial sector and small-medium production enterprises, improving infrastructure, and developing natural resources. The Bank is also engaged in policy dialogue with the Albanian government, with the potential to invest in key public sector projects, along with the implementation of numerous donor-funded projects in the country.

    Since beginning its work in Albania, the EBRD has invested around €935 million in 70 projects in various sectors of the economy, 41% of them in the private sector. The current portfolio of projects is equal to €501 million.

    In 2015 the EBRD continued to support clients facing challenging market conditions, for example by restructuring its financing for the Tirana East Gate shopping mall in Albania. Also, the EBRD, the European Union and the Ministry of Economic Development, Trade, Tourism and Entrepreneurship in Albania launched a new EU-funded programme of support for small and medium-sized enterprises (SMEs).

    The EBRD is helping to boost confidence in Albania's financial sector with a €100 million stand-by credit line to the Albanian Deposit Insurance Agency (ADIA). The credit line, fully guaranteed by the government of Albania, will provide funds to ADIA to compensate insured depositors, if and when required.

    The facility, provided as a stand-by credit line rather than a loan, is designed to enhance the agency's capacity to protect depositors. The stand-by credit line will enable ADIA to improve its deposit coverage ratio, thus offering greater protection to depositors and strengthening public confidence in the financial system as a whole.

    In 2015, EBRD and Intesa Sanpaolo Bank Albania joined forces to boost medium- and long-term financing for fast-growing companies in Albania, by participating in a risk-sharing agreement of up to €10 million. The first to benefit from this freshly sealed partnership is GSA Ltd Albania, an Albanian company specialising in the energy sector. Intesa Sanpaolo Bank Albania is extending a loan of up to €12 million to GSA. The EBRD is providing a guarantee for half of this loan amount through unfunded risk-sharing. The proceeds of the loan will be used for the construction and development of a green field ferrochrome smelting facility in Elbasan, one of the largest cities in Albania, which will create approximately 170 new jobs.

    In the agribusiness sector the EBRD, in cooperation with the Government of Albania, is considering a framework operation of up to EUR 100 million for the implementation of the Albania Agribusiness Support Facility. The project will consist of a combination of credit lines for agribusiness lending and unfunded risk-sharing facilities for agribusiness loan portfolios of selected partner financial institutions ("PFIs") in Albania.


  2. Security

    2.1 Is it possible to give asset security by means of a general security agreement or is an agreement required in relation to each type of asset? Briefly, what is the procedure?

    Albanian law permits the creation of security interest over almost all assets and rights held by project companies.

    Securities over movable property are governed by Law no. 8537 dated 18.10.1999 "On Securing Charges". The security agreement must contain a description of the collateral in accordance with the definitions provided by the law, which may not necessarily be an itemised description of the asset. In any case, it is advisable that the security agreement ensures an adequate description of the collateral in order to avoid any disputes in the event of enforcement.

    Pledge is governed and regulated by the Albanian Civil Code. The pledge agreement must contain a description of the pledged asset.

    Securities granted over immovable property are subject to a mortgage agreement, which should contain a description of the collateral, and are registered with the immovable properties registry kept by the local Real Estate Registration Office where the property is located.

    2.2 Can security be taken over real property (land), plant, machinery and equipment (e.g. pipeline, whether underground or overground)? Briefly, what is the procedure?

    Security can be taken either over immovable property (i.e. land, buildings and fixtures) or over movable property (i.e. machinery and equipment).

    According to Civil Code provisions, the mortgage (security taken over immovable assets, usufruct or emphyteusis rights) can be taken/given over present or future immovable assets and present and/or future fixtures related thereto, as well as easement rights over immovable property. It is established upon an agreement (mortgage agreement) made in writing in the form of a notary deed, and is perfected upon registration of the mortgage agreement with the immovable properties registry kept by the local Real Estate Registration Office. The Civil Code provisions imply the necessity to describe the security in the security deed (i.e. mortgage agreement), even when taking/granting mortgages over future assets.

    Securing charges are a non-possessory security and are given/taken only over movable assets (i.e. machinery and equipment), for securing either a present or a future debt. The securing charge is created by written agreement and perfected through registration with the securing charges registry.

    The pledge is a possessory security and is only given/taken over movable assets/debtor's rights for securing either a present or a future debt. In addition, a requirement for the creation of the pledge is the possession of the asset/title by the creditor or by any third party agreed mutually between the parties.

    There is no specific register where the pledge is registered, with the exception of the pledge over shares which is perfected upon registration with the Company Shares' Ledger and the Commercial Register.

    2.3 Can security be taken over receivables where the chargor is free to collect the receivables in the absence of a default and the debtors are not notified of the security? Briefly, what is the procedure?

    In light of the changes that affected the Law on Securing Charges during 2013, based on which intangible assets may no longer be subject to securing charges, security over receivables may be granted/taken only under the form of pledge.

    The pledge is governed and regulated by the Albanian Civil Code. The latter does not contain any specific provisions that regulate the granting of security over receivables.

    2.4 Can security be taken over cash deposited in bank accounts? Briefly, what is the procedure?

    Security over cash deposits is governed and regulated by the Law on Payment Systems. The cash deposit may be granted/taken as security, subject to a financial collateral agreement.

    The security created by means of the financial collateral agreement serves the purpose of securing repayment of all kinds of obligation - whether present or future ones, existing, conditional or eventual ones that the collateral provider or any other third party has contracted by the collateral taker or its legal representative.

    The parties to the financial collateral agreement must be legal entities, which means that natural persons may not grant/take security over cash deposits subject to financial collateral agreement. Considering that the law has recently entered into force, it is to be noted that, as yet, there is no consolidated practice regarding its implementation.

    2.5 Can security be taken over shares in companies incorporated in your jurisdiction? Are the shares in certificated form? Briefly, what is the procedure?

    Security over shares is permitted under the Albanian law and it may be acquired by means of a pledge over shares agreement. The agreement must contain a description of the pledge. The pledge over shares is perfected upon its registration with the Company Share Ledger. In addition, the pledge over shares agreement is also filed with the Commercial Register.

    Currently, in Albania, the securities law requires that the shares of joint stock companies are dematerialised. No shares certificates can be traded. Instead, the company can issue a certificate confirming the shareholding, but this is...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT