Kosovo avoids energy crisis, for now

PRISTINA (Reuters) - Kosovo’s power corporation KEK has reached a deal with two private landowners to access to some of the lignite it needs to feed its power plants and avoid an energy crisis.

Last month, state-owned KEK said it was running out of coal after villagers close to the lignite reserves asked for more money to resettle.

The two landowners signed expropriation agreements on Wednesday, KEK said.

The company, which relies entirely on coal to produce power, wants to take over 52 hectares (128 acres) of private property to get to coal in a country that has more than 14 billion tonnes of proven lignite reserves, the fifth largest in the world.

“We are starting today to remove the earth to uncover the coal,” KEK CEO Arben Gjukaj told Reuters.

“This solution gives us the opportunity to work but the entire problem is not solved until we sign contracts with all owners,” he added.

An urgent solution will have to be found or the freezing winter will hit the country of 1.8 million people hard.

It might also mean importing more power to meet demand, a cost for an economy U.S. officials rank 140th in the world in terms of GDP per capita.

Three years ago, when KEK told homeowners it needed their land, the area had 99 houses. But inhabitants have in the meantime built another 120 houses hoping to profit from the expropriation law. Authorities did nothing to stop the building.

The expropriation cost, initially put at 4.5 million euros ($5.3 million), has now grown to around 15.5 million euros and will have to be paid by KEK.

Politics is partly to blame for the impasse. Landlocked Kosovo held snap elections early in June and no new government is expected to be formed soon as no party won a majority to govern alone and forming a coalition is proving difficult.

Reporting by Fatos Bytyci; Editing by Mark Potter