The Trans-Adriatic Pipeline (TAP) is a project that will connect Azeri natural gas with Italian markets. The gas from the Shah Deniz field will pass through the Trans-Anatolian Pipeline (a different project) and then connect into the Trans-Adriatic at Kipoi, on the Greco-Turkish border. The pipeline will then go through Greece and Albania before plunging under the sea to end in Brindisi, Italy.
Press accounts have made much of the transit fees that will go to countries like Greece.* From the link: “With the economic crisis in Greece, TAP promises the added benefit of funneling billions of euros from transit fees into the Greek economy.” Moreover, Montenegro expects to earn €30 million per year from a possible northern extension of the pipeline.
We fully expected that Albania would be earning fees., although we had heard credible rumors that they would be paid in molecules of gas rather than currency. In fact, we came up with a business plan to attract investment into thermal generation based on the idea.
So we were stunned when the CEO of the national generator, Kesh, told us that Albania was getting nothing but the option to buy some of the gas at market prices. He said that when the Albanian negotiators raised the issue, the pipeline consortium threatened to go through Greece. That seemed like an amazing failure of diplomacy. After all, Greece had nothing to gain by denying the Albanians their fees. Greece would not get them either; why screw over your poorer neighbor?
But then we learned that there was a wrinkle: Greece will get no transit fees either.
Why not? Well, a member of the European parliament asked that very question. The answer: European Union rules prohibit governments from charging transit fees. The reason for that makes sense: special transit fees above-and-beyond those charged commercially would be a restraint on trade.
And that is why Albania won’t get any fees. It is true that the Greek government might stiff Albania out of spite. (The two governments are involved in a spat over their exclusive economic zones in the Adriatic. And place names. And the Chams. See here for more.)
But it is also true that Albania wants into the European Union. And that means complying with E.U. rules even if they don’t have to. So no transit fees, no free gas. Just a commercial operation on Albanian soil.
In other words, a nice thing for Albania, but not a panacea for its energy problems. Oh well. Back to work!