In November 2018, Prime Minister Edi Rama inspected the works of a 15 million euro investment in the port of Vlora – Albania’s second largest port. The investment was financed with a soft loan from the Italian government and was aimed at increasing the processing capacity of the ferries as well as expanding the passenger terminal.
„Here we must have a plan very soon, to connect Lungomarja with the boulevard,“ said Rama, suggesting the integration of the port with the life of the city. „That’s the focal point now, it’s the focal point,“ he added.
A new project did not take long to appear.
The port of Vlora has been an inseparable part of the city and since at least the 18th century it was considered the second most important port of southern Albania. But the story suddenly changed in 2020, when it was decided to move to the area of Triport, about 5 kilometers north of the Bay of Vlora.
While in March 2021, the government of Prime Minister Edi Rama decided to give the existing port with a concession and the land area of 57 thousand square meters with a symbolic rent of 1 Euro for the construction of a tourist marina and a luxury residential complex called “ Vlora Navy „.
The government based its decision-making on the controversial „Strategic Investments“ law and a 2014 decision of the Council of Ministers on the leasing or emphyteosis of state assets – otherwise known as the „Albania 1 Euro“ initiative.
„Marina Residences Vlorë“ intends to build about 663 apartments and two hotels on a state plot of 57 thousand square meters and plans to collect tens of millions of euros from the sale of apartments in the next ten years.
Economic experts criticize this business model, as they do not see benefits for the state budget.
„Albania 1 euro was built for people to undertake entrepreneurship, build business industries and develop economic activity and not build palaces, as is the case in question,“ said Azmi Stringa, finance expert and lecturer at New York University in Tirana .
„At this point, the state should do its own analysis, both the economic and social impact, as well as the benefits that the state budget would have,“ he added.
According to the lease contract with the Ministry of Finance, the company „Marina Residences Vlorë“ has taken the land in temporary enjoyment for a period of 20 years to build the residential complex and 4 and 5 star hotels. Since the beginning of the tourist season, it has started to sell apartments in the air with an average price of 3050 Euro/m2, in unclear ownership circumstances.
The Ministry of Finance and Economy did not answer the direct question whether it had authorized the sale of the apartments that are expected to be built on the state land, but clarified that the Albanian state continued to be the owner of the land.
„This body [Council of Ministers] has not approved the alienation of property rights, there is no transfer of ownership, there is no privatization, but there is provision for use with a fixed term,“ said the Ministry.
The company „Marina Residences Vlorë“ told BIRN that it is authorized to build and commercialize the units for sale through VKM 599/2021 and the lease contract with the Ministry of Finance, as well as its business plan approved by the Council of Ministers.
The company also stated that it planned to buy the land after making the investment.
„As a start, the investment will be realized in accordance with VKM 599/2021 and the Lease Contract, then the purchase of the land will be requested according to the Decision of the Council of Ministers no. 54, dated 05.02.2014, amended and, if this condition is met, the sale will be carried out after the certification and registration in the Civil Administration of Civil Facilities,“ said „Marina Rezidences Vlorë“ in a written response to BIRN.
Change of shareholders
Tourism is one of the strategic sectors of the Albanian economy and the government has undertaken through the law on „Strategic Investments“ to support its development with land, forests and other immovable assets of the Albanian state.
In the last four years alone, the government has transferred hundreds of hectares of land to private investors to build tourism structures on the coast.
The three biggest beneficiaries of public property are the tourist marina projects in Durrës, Vlorë and the port of Limion in Sarandë, which together have received about 1.1 million square meters of state land through 1 Euro lease contracts or special law in the case of Durrës.
The „Vlora Marina“ project was born in December 2020, just two months after the Albanian government planned the transfer of the port of Vlora to the Triport area.
At the beginning of 2021, the consortium of operators consisting of „Marina di Valona“ and “ Brunes “ with shareholder Geront Çelë, the English company „Marina Projects Ltd“ and the construction company „Ndregjoni“ sh.pk presented to the Albanian government a project of integrated for the acquisition of the port concession as well as the construction of a residential resort adjacent to the tourist marina.
The residential project is located on the existing land of the port of Vlora with a total area of 57,502.5 square meters.
The consortium received a quick response from the authorities.
On March 29, 2021, the consortium was declared the winner of the concession of the port of Vlora by the Ministry of Infrastructure and on the same day it also gained the status of strategic investor by the Strategic Investments Committee , headed by Prime Minister Edi Rama.
As a support measure, the consortium acquired 57,000 square meters of land owned until then by the port of Vlora.
On August 10, 2021, the consortium establishes two companies to operate the acquired rights; the concession company Marina Vlorë sh.pk for the port concession and „Marina Residences Vlorë“ for the construction of the residential complex.
In October 2021, the Council of Ministers authorized, through VKM 599, the Ministry of Finance to conclude a lease contract with a fee of 1 euro with the four participating companies in the consortium.
The lease contract was signed on November 23, 2021 by the Minister of Finance, Delina Ibrahimaj , with the company „Marina Residences Vlorë“, another company from the four companies of the consortium authorized by the Council of Ministers.
Six days after signing the lease contract, the English company „Marina Projects Ltd“ leaves the project and sells its shares [10%] in the two created companies for 2 thousand euros each.
In January 2022, the other winning company „Ndregjoni“ also leaves through the sale of shares for 100 ALL in each of the companies.
In June 2022, the residential complex project finds a new partner, the „Balfin“ group of businessman Samir Mane.
The Balfin Group is described as a „company with a history in the field of strategic investments“ in the document of the meeting of partners, which had expressed interest in engaging in the new projects of the „Marina Residences Vlorë“ company.
„Balfin“ paid about 3 million ALL for the capital increase of the company in exchange for a quota equal to 10% of the shares.
The change of shareholders after the end of tender procedures and the sale of shares with minimal values is a widespread practice in Albania, which raises questions about the procedures followed. The companies „Marina Projects Ltd“ and „Ndregjoni“ did not respond to BIRN’s questions about the reasons for leaving the project until the publication of the article.
According to the lease contract with the Ministry of Finance, the company „Marina Residences Vlorë“ will temporarily enjoy the area of 57,502 m2 in the Bay of Vlora in exchange for an investment of 9.8 billion lek [93 million euros] on this land and the employment of at least 100 employees.
The „Marina Vlora“ project aims to extend into 3 phases, where first the works will start for the yacht marina, then with the residential complex and finally with the construction of 4 and 5 star hotels with a total number of 168 rooms. [ Click to read the business plan]
The project envisages 165 thousand square m2 of construction area, divided into 82.5 thousand m2 for apartments and 82.5 thousand m2 in hotel structures.
However, the company’s partners undertake only part of the investment, while the rest will be covered by the apartment buyers and the bank loan.
The business plan provides that the company’s partners will contribute from 6% of the investment for the units for sale, to 38% of the investment for the construction of the resort. Receipts from sales are expected to cover 68% of the investment for the apartments and 23% for the resort, while the rest will be covered by the bank loan.
In the business plan approved by the authorities, the company predicts that the construction cost per square meter is 496 Euros per apartment, divided into 408 Euros construction plus VAT and 88 Euros for the purchase of land.
The apartments are calculated to be sold at 750 euro/m2, but unlike the business plan, the company „Marina Residences Vlorë“ is selling today at prices ranging from 2500 Euro to 3500 Euro per m2, ensuring a profit rate almost 3 times higher than what is said in the approved document.
At market prices, the company plans to collect around 180 million euros only from the sale of residential units, although in the business plan this amount was 58.6 million euros.
Stringa says that although private profits are predicted to be many times higher than planned, the state still does not win.
„The state could take from the increased profit, but not in this case, because it has not provided for it in the contract,“ said Stringa.
When the Albanian government decided to transfer the port of Vlora to the Triport area, an important investment for the rehabilitation of the passenger terminal and two piers had just been completed.
The last invoice for works with a total value of around 12.3 million euros financed by the Italian government was submitted in November 2020. But four months later, the Ministry of Infrastructure and Energy announced the granting of the port with a concession for 35 years to transform it into a tourist marina.
The concessionaire will take use of the entire port structure despite the investments made there, the land and the piers, while in return it will pay the state a concession fee equal to 2% of the annual income.
The concession company „Vlora Marina“ told BIRN that it was not aware of previous investments in the port, while adding that it would carry out its complete transformation to turn it into a modern tourist port.
„We are not aware of the previous stages of development or investments in the current Port of Vlora. We have a project that envisages the complete transformation of the entire space, transforming it into a modern tourist port“, said the company, which added that until July of this year it had invested 5.6 million euros.
„With these profits provided by the private sector, he will have the opportunity to privatize [the land] at reference prices and without competition, he will also have the opportunity to do this without putting in any of his own money, but from the money he will collect from the sale of the apartments ,” he added.
The company „Marina Residences Vlorë“ told BIRN that the business plan was an economic projection to guarantee „a minimum investment value“ on the land made available by the state, while the sales of the apartments were subject to the economic law of demand and supply as well as increasing construction costs.
The company also added that it had no obligation to share these profits with the state.
„The Lease Agreement does not establish a public-private co-investment relationship, where the parties undertake to share the risks of a joint investment and, therefore, profit or loss,“ said Marina Residences Vlorë.
„According to the Lease Contract, neither Marina Residences Vlorë nor the Ministry have any commitments regarding the change in prices or the value of the land,“ she added.
‚A game of bingo‘
Albanian legislation provides for competitive auction procedures for the sale of state assets, but there are also exceptions. In the law no. 54/2014 on the granting of state property for rent, emphyteosis or other contracts, it is also provided that when the value of the investments is over 150% of the value of the land, then the ministry carries out the direct privatization of the state property.
Referring to this decision, the company „Marina Residences Vlorë“ told BIRN that it intended to request the purchase of the land after making the investment. In the business plan, she has planned to pay the state about 4.8 million euros for the plot in the coveted Vlora Bay area – or almost 88 euros per square meter.
According to lawyer Redi Ramaj , this is a legal path that can be followed in the future, but for now, he estimates that buyers can face risks.
„It’s a game of bingo,“ Ramaj said, referring to buying apartments in the air.
„Not only based on Albanian law, but in universal legal principles, when there is a lease agreement, alienation of property is prohibited. It is impossible for the person who has an item for rent to alienate it, that is, act as the owner, by selling it or doing other actions,“ he added.
„Marina Residences Vlorë“ told BIRN that its customers were protected by the enterprise contract and the provisions of the Civil Code and that possible increases in costs in the future would not affect the contractual commitments in force.
„For example: if the performance of works by Marina Residences Vlorë results in a violation of the terms of the contract and standards according to Article 861 of the Civil Code, the Client has the right to terminate the business contract and request compensation for the damage suffered and the lost profit according to provision 640 of the Civil Code,“ the company said.
For the economy expert, Azmi Stringa, the leasing of land in this case is a farce.
„When the Albanian government gives a temporary 20-year lease contract, what did it have in mind, when the very business plan accompanying the contract is very clear that buildings will be built and sold?“ he asks.
„This scheme has avoided the element of transparency and competition, because the state had to develop clear auction procedures to get the most from the property,“ he concluded.