Tirana Impressions

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SUBJECT: Tirana Impressions

Tirana Airport Partners Surpass Expectations
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1. Tirana Airport Partners, the consortium that won a 20 year
concession to manage the Tirana International Airport (TIA),
finalized last week stage B of the modernization and expansion of
the airport. The 20 million euro stage B investment, which was
preceded by a 50 million euro stage A investment, will enable the
airport to serve to 1.5 -1.8 million passengers annually. The
Albanian-American Enterprise Fund is part of the TIA consortium that
led the airport's performance to new heights.


2. The number of passengers going through TIA has increased
steadily, reaching 1.26 million passengers by the end of 2008,
surpassing the 1 million passenger target three years ahead of
projections. This allowed TIA to start stage B of expansion earlier
than planned. The positive trend continued even during 2009, despite
the global economic slowdown, with the number of passengers 9%
higher for the period January-July 2009 compared with the same
period of last year. Thanks to greatly improved infrastructure and
services and higher security standards, the number of airline
companies has increased in quantity and quality with British Airways
and Lufthansa entering the market in 2008 and with summer direct
flights to and from New York for the second year. This makes TIA
administration optimistic for the future of the airport.


3. The consortium, lead by German company Hochtief, signed a 20
year concession contact with the Nano government in April 2005
(right before the 2005 general elections.) The contract stipulates
that during the contract's lifetime TIA has exclusive rights to all
international flights into and out of Albania. Considering the
Kukes Airport has been ready since 2006, and is sitting there as a
useless asset and the need to have another airport in South Albania
for tourism purposes, the consortium's monopoly on international
flights has been the subject of much discussion. Rumor has it that
the government has attempted to negotiate a deal with the Hochtief
consortium, and it remains to be seen if TIA might allow another
international airport to open in exchange for extending its TIA
concession.

Tourism development
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4. A recent initiative launched by PM Berisha during a meeting of
the Council of Ministers has fueled heated discussions about the
already chaotic process of property restitution and registration.
The PM called on the government to draft a law that will allow the
privatization of land by those who have built residential resorts in
tourist areas. So far, resort developers have lease contracts for 99
years. Berisha said that privatization revenues will be used to
compensate the original land owners.


5. Since 1994, 32 licenses have been issued for the construction of
tourist resorts under the law for the promotion of tourism. Almost
all of these resorts are located in the area near Durres, since it
provides easy access to the capital Tirana and many of them are
built in privately owned land. The law granted tax cuts to the
developers, but required developers build tourist resorts.
However, out of the 32 developers which received tax breaks, only
two have observed the law while the rest have been transformed into
residential resorts developments.


6. A strong opposition to the PM's initiative came from the
so-called "Former Owners Association", which represents people whose
land was confiscated by the communist regime. Owners'
representatives said that this initiative will further increases
confusion and the potential for corruption, since land is very
valuable in these areas. They ask that they be entitled to deal
directly with the current occupants of their properties.


7. Unclear property titles remain a major hassle for the
economic/social development of the country. Over the course of
years, politics has not been able to play a constructive role in
achieving a transparent, fast and sustainable process with property
restitution and registration. This new initiative might imply a
constructive goal, but there are already accusations that the
government wants to favor individuals close to it and raise some
additional revenues. In the event this initiative succeeds it is
very likely that, as in the previous process of the legalization of
squatters, will create new tensions and raise new accusations
against the government.

Pre-school classes offered for the first time
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8. Against the backdrop of 100th year of the National Congress of
Elbasan, the Ministry of Education and Sciences has given the green
light to a pilot project to open 100 public pre-schools throughout
the country. Students attending these classes will be between five

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and six years old. Classes will be taught by very experienced
teachers, and most of these classes will be held in Tirana, due to
the higher demand. Although pre-schools and daycare centers have
existed for some time in Albania, none of them were part of the
public school system.


9. The National Congress of Elbasan was held September 2-9, 1909
with a purpose of establishing a school, the Normal School of
Elbasan, which would train teachers for careers in education. These
teachers served as educational pioneers for the country.