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INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE

UNCLAS SECTION 01 OF 03 TIRANA 000719 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR EUR/SCE 
 
E.O. 12958: N/A 
TAGS: PGOV ECON PREL EINV AL
SUBJECT:  Albanian Railways: Going Nowhere Slowly 
 
TIRANA 00000719  001.2 OF 003 
 
 
SENSITIVE BUT UNCLASSIFED - PLEASE TREAT ACCORDINGLY 
 
¶1. (SBU) SUMMARY: Prime Minister Sali Berisha's recent statements on 
the need for a rail connection between Albania and Kosovo as well as 
Minister of Economy Dritan Prifti's comments to PolOff in support of 
the privatization of Albania's railroads seem to demonstrate a 
renewed interest in the country's most neglected form of 
transportation.  In reality, however, these ambitious plans appear 
to be more wishful thinking than concrete proposals for action. 
Even the vaunted "Corridor 8" seems to be little more than a dream 
according to GOA officials, who say that the EU and the South East 
European Transport Observatory (SEETO) has to date only produced 
"lots of paper" and no results.  Sadly, Albania's rail sector 
appears to be caught in a vicious cycle - the GOA can't rebuild the 
sector without substantial private investment, but no one appears 
willing to invest unless the government moves to improve the 
railroads first.  END SUMMARY. 
 
"Industrial Archaeology" 
------------------------ 
 
¶2. (U) Despite recent public statements from Prime Minister Sali 
Berisha concerning updating the national railway system, 
conversations with working level officials indicate that the GOA and 
foreign investors have little appetite for making the investments 
necessary to improve the railways.  According to the Albanian 
Ministry of Transportation, Albania's dilapidated railway network 
has a total length of 278 miles of standard gauge tracks.  The 
national railroad company, Hekurudha Shqiptare (HSH), is the sole 
owner of the Albanian rail network.  After the first standard gauge 
tracks were laid in 1947, the railway was heavily promoted by the 
communist regime as a main form of transportation for the Albanian 
people, who were prohibited from owning personal vehicles.  However, 
with the fall of communism in the early 1990s and the subsequent 
scramble for personal automobiles, the railways became even more 
neglected. 
 
¶3. (U) The rail network is not electrified, meaning HSH's declared 
inventory of 66 passenger cars and 225 freight cars are pulled by 25 
diesel-powered locomotives, all Czechoslovakian T669 engines that 
were first built in 1966.  These ancient machines would seem more at 
home in a railroad museum than an actual rail yard, yet are sadly 
representative of the state of Albania's rail system.  The poor 
track conditions mean trains are often limited to traveling at no 
faster than 25 mph (despite the "official" speed limit being 50 
mph), leading to extremely long travel times and inefficient use of 
the already rundown train cars and diesel engines.  Safety is also a 
glaring concern, as Albania does not have an advanced signaling 
system in place to coordinate trains.  Rather, it relies on a 
radio-based system to keep the network running "smoothly" and avoid 
accidents.  The rail network's sole international link is with 
Montenegro by a single border crossing at Han i Hotit, but the 
crossing is limited to freight shipments only. 
 
"We Need International Connections to Survive" 
--------------------------------------------- - 
 
¶4. (SBU) In a meeting with PolOffs, General Director of Transport 
Ervin Minarolli did not attempt to paint a rosy picture of the 
railroad situation.  Following up on Minister Prifti's remarks on 
privatization, Minarolli said that the Albanian government had 
received recent offers by Estonian and Czech companies, but they 
were deemed unqualified. (NOTE: In a separate meeting, Prifti told 
PolOff that an Israeli company had expressed interest as well. END 
NOTE).  Minarolli said that the majority of the Ministry of 
Transportation's budget has been going towards road construction, 
notably the USD 1.77 billion Durres-Kukes road.  Minarolli stated 
that with the low rail passenger traffic in Albania it is impossible 
to justify upgrades on the basis of domestic transportation alone. 
The Tirana-Durres route remains the most trafficked line in the 
country for passengers, but event that line does not have the volume 
to be profitable for potential investors.  Private cars continue to 
be the most popular form of transport for Albanians.  Due to this 
lack of interest in passenger travel, Minarolli stressed that 
international connections are vital to the health and growth of 
Albania's railroads.  He cited the period of 2007-2008 as supporting 
the highest ever volume of freight transportation between Montenegro 
and Albania carried along the rail route that connects the two 
countries.  However, he was quick to point out that this singular 
border crossing does not have the capacity to deal with the 
expansion of trade needed to finance improvements to the line.  Rail 
connections with other neighboring states, as well as an expansion 
of the Montenegrin line, are necessary if Albania wishes to market 
itself as a country with great potential for rail infrastructure 
investment. 
 
¶5. (SBU) The revitalization of the Albanian railroads has mainly 
fallen under the auspices of the South East European Transport 
Observatory's (SEETO) Core Railroad Network Development Plan. 
Albania's main transportation lines form a critical part of Corridor 
 
TIRANA 00000719  002.2 OF 003 
 
 
8 within the Development Plan, linking Italy to Macedonia and 
Greece.  In addition, Albania's road and rail system lie on Route 2 
of the SEETO Core Network, which runs from Durres to Podgorica in 
Montenegro.  Part of the development plan for Corridor 8 requires 
the construction of two additional tracks running from the western 
Albanian city of Pogradec across the border into Macedonia and 
Greece, effectively linking the countries by rail.  According to the 
2009-2013 SEETO Five Year Multi Annual Plan, at least 33 percent of 
the tracks that make up Corridor 8 between Albania and Macedonia are 
in "poor" condition (NOTE: 34 percent are classified under N/A. END 
NOTE).  In addition, 83 percent of the 89 miles of tracks between 
Durres and Podgorica are classified as "poor," further reinforcing 
the desperate need for reform and development if Albania hopes to 
get its rail sector off the ground again. 
 
¶6. (SBU) Commenting on the role of SEETO in the development of the 
Albanian railroads, Minarolli stated that Albania has worked closely 
with the organization, but has found that SEETO has "only produced 
paper."  Without more attention being placed on Corridor 8 expansion 
by EU members such as Italy and Bulgaria there will never be enough 
interest or money to prioritize the Albanian transport sector for 
reform.  On the subject of the development plans themselves, 
Minarolli noted that the Albanian network extends to within 2 miles 
of the Macedonian border, offering hope to an eventual link with its 
neighbor to the east. However, he revealed that the nearest 
Macedonian railway is 37 miles away from the Albanian border, 
casting real doubt on the rapid realization of any of SEETO's 
development plans.  Minarolli was blunt in recognizing all of 
SEETO's plans as long term projects, further reinforcing the lack of 
priority being placed on Albanian railway development.  He 
acknowledged that it will be many years before Albania can acquire 
the funding necessary to even begin working on any of these railroad 
projects. 
 
"Lack of money, lack of interest, lack of everything" 
--------------------------------------------- -------- 
 
¶7. (SBU) It is clear that Albania needs a boost from the EU if it 
wishes to get its transportation projects on track.  Minarolli said 
that Albania is working closely with the EU, especially through the 
development of the Transport Community Treaty, to acquire the 
backing for an overhaul of the railroad network.  This proposed 
treaty would provide a framework for the planning and implementation 
of reforms and investment in the transportation networks of the 
Western Balkans in addition to facilitating market access between 
regional partners and with the EU.  Minarolli lamented, however, 
that EU funds are not forthcoming.  Yet despite a lack of available 
EU investment, Minarolli said that the European Commission has been 
placing pressure on Albania to increase its long term investment, 
especially in the transportation sector, if it wishes to gain 
candidate status for EU accession.  Due to this pressure, the 
Albanian government has begun to review its railroad code in 
preparation for reform.  Minarolli said that improvements to this 
code will facilitate the entrance of private operators to the 
Albanian network, create a safety authority for railroads, and 
prepare the way for infrastructure improvements. 
 
¶8. (SBU) In the end, it all comes down to money.  Minarolli admitted 
that any infrastructure improvement is almost prohibitively 
expensive.  The government budget for railroads amounts to around 
USD 6 million per year of subsidies with USD 880,000 of that amount 
going towards investments in minor infrastructure improvements and 
maintenance.  Minarolli said a preliminary study underway to connect 
the Albanian railroad network to Porto Romano, the new port 
development project north of Durres, has yielded cost estimates of 
around USD 8 million per mile of rail.  When asked about Prime 
Minister Berisha's call for a rail connection with Kosovo, Minarolli 
said there is no money available to fund the project and that it 
will remain a long term goal.  Minarolli did not attempt to skirt 
the obvious questions of feasibility, freely admitting that there is 
no hope for any projects like these in the short term.  His 
statements confirmed the inability of the Albanian government to 
spur growth in the railway sector, not just because of lack of 
interest, but because of lack of economic viability. 
 
¶9. (SBU) COMMENT: Albania's railroad network is decrepit, 
inefficient, and as it stands, unprofitable.  The main challenges 
facing its future development are its lack of infrastructure and 
lack of interest by investors due to little potential for profit. 
For now, the railways are stuck in a never-ending cycle: the absence 
of high-quality infrastructure means that massive investment is 
needed, but there are no groups willing to fund necessary upgrades 
because of the low economic viability of any project.  As we were 
honestly told by GOA officials, there are neither the funds nor the 
interest to improve this sector in the short term.  Hopes that the 
EU will be willing to invest more in Albania in the near future 
appear unrealistic  as well.  Barring a massive reversal of 
government or EU priorities, Albania's railroads will continue to 
languish. 
 
 
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