Regional & Cross-Border Road Infrastructure Construction and Rehabilitation
Regional & Cross-Border Road Infrastructure Construction and Rehabilitation
Business Model Description
Invest in road construction tenders in collaboration with the Ministry of Energy and Infrastructure, through public-private-partnerships (PPPs), providing engineering, construction, operation and/or maintenance services for regional or cross-border road projects, generating revenue through toll collection, concession fees or other pre-agreed revenue-sharing models.
Expected Impact
Catalyze economic growth, enhance connectivity, and promote regional cooperation by facilitating efficient transportation of goods and people, fostering trade, and strengthening cross-border relations.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Albania: Tirana
- Albania: Shkodër
- Albania: Durrës
- Albania: Vlorë
Sector Classification
Transportation
Development need
The transportation sector constitutes the largest proportion of final energy consumption across all sectors, at 40%, and remains the most emission-intensive sector responsible for 60% of CO2 emissions, compared to the global average of 20%. The road, maritime and rail networks suffer from outdated equipment and lack of upgrades, resulting in low travel speeds, frequent disruption's and inefficient freight transport (1, 2).
Policy priority
National Strategy for Integration and European Integration (2022-30) acknowledges need for affordable transportations links to improve quality in life in remote areas, while the Government Program 2021-25 includes modernization of transport services among its key goals, providing grants up to EUR 5 million to enterprises in the transport sector (6, 7).
Gender inequalities and marginalization issues
Existing poor state of the transportation infrastructure hinders economic growth and private sector development in rural areas, directly impacting agricultural competitiveness & regional integration. Many people living in remote areas cannot easily meet their daily needs for health care/medicine, food and other basic supplies partly due to a lack of affordable transportation (3, 4, 6).
Investment opportunities introduction
Transportation falls under the strategic investments determined by the Law on Strategic Investments of 2015, providing incentives for investments between EUR 30-50 million (USD 32 - 53 million). Albanian Investment Development Agency lists road, rail, sea, and air transport as key investment opportunities due to the country's strategic location and connection to European corridors (6, 12, 13).
Key bottlenecks introduction
Alignment of national legislation with that of the EU for transport of goods and passengers, construction of necessary infrastructure for road and maritime transport and development of electric transport, observance of technical standards for transport safety, maintaining existing infrastructure, and development of intermodal capacities are cited as the key challenges facing the sector (6).
Land Transportation
Development need
The road and rail networks fall short of neighbouring European standards. Of the 18,000km road network, only 35% is paved, and 80% is in poor condition. The rail system lacks modern upgrades, like electrification and updated communication systems, causing slow travel, frequent disruptions, limited passenger services, and inefficient freight transport (2, 4, 5).
Policy priority
The Economic Reform Programme 2022-2024, includes electrification of key transport lines under its planned activities and lists the rehabilitation and construction of the Durres-TIA-Tirana railway as part of key reform measures. The Nationally Determined Contributions of the country includes key mitigation measures in the sector including increasing share of public transport for passengers and freight, and shifting road transport to other modalities including rail (8, 9).
Gender inequalities and marginalization issues
Women in rural areas, experience limited access to transportation, with direct implications on access to health, social services, and economic opportunities, partly due to gender stereotypes where vehicle operation is associated under male responsibility. Even in rural district women rely more heavily on public transportation, with 60% of bus passengers in Tirana being women (10, 11).
Investment opportunities introduction
Transportation infrastructure investments, including road and railway structures and exports of associated machinery and know-how are cited as key opportunities for foreign investors. The Economic Reform Programme 2023-2025 allocates ALL 0.43 billion (USD 4.3 million) to support public transport and ALL 120 million (USD 1.2 million) to urban transport sectors (14, 15).
Key bottlenecks introduction
Widening infrastructure gap, state ownership and governance and slow pace of sector reform, adopting a low carbon approach across the sector, road safety and environmental and social risks, and progress on electric mobility over long distances and associated infrastructure are among the key bottlenecks (2).
Road Transportation
Pipeline Opportunity
Regional & Cross-Border Road Infrastructure Construction and Rehabilitation
Invest in road construction tenders in collaboration with the Ministry of Energy and Infrastructure, through public-private-partnerships (PPPs), providing engineering, construction, operation and/or maintenance services for regional or cross-border road projects, generating revenue through toll collection, concession fees or other pre-agreed revenue-sharing models.
Business Case
Market Size and Environment
> USD 1 billion
Length of road network in use was 3,606 km as of 2023, with 828,306 vehicles in circulation.
The length of the road network in use during the second quarter of 2023 was 3,606 km referring to different categories, such as motorway, interurban or urban and local roads. Secondary interurban roads occupy about 74.2 % of the length of the road network (20).
Total number of registered vehicles in circulation was 828,306, 80% of which were passenger cars in 2023 (20).
Roads are one of the highest value public assets, estimated at about USD 6 billion. Investments in road transport infrastructure are focused on the construction of important road axes of the Core Network , with a total investment value of EUR 883.51 million (USD 942.2 million) (6, 22).
Indicative Return
20% - 25%
The overall economic internal rate (IRR) of the World Bank's regional and local roads connectivity project was calculated as 22.8% in the first year. Accordingly, all roads have IRRs above 8%, ranging from 11.4% to 28.3%. As a DFI supported project, the benchmark return can appear as above market standards (22).
Investment Timeframe
Long Term (10+ years)
The construction of a regional motorway in the Western Balkans, co-funded under the Western Balkans Initiative envisions a repayment period of 25 years, positioning road infrastructures in the long-term payback period (23).
Ticket Size
> USD 10 million
Market Risks & Scale Obstacles
Market - Highly Regulated
Capital - CapEx Intensive
Business - Supply Chain Constraints
Impact Case
Sustainable Development Need
Roads and highways in Albania are the predominant mode of land transport, providing essential connectivity for freight and personal mobility. However, the road network is far below the standards of neighbouring and other European countries; of the 18,000km-long road network, only 35% is paved and about 80% is in bad shape (4, 22).
Large number of vehicles and their traffic, in the absence of reliable public transport options, have created problems in major cities such as Tirana and Durres. Moreover, the transportation sector is the highest contributor to the country's CO2 emissions, partly due to the reliance on road transport, and private vehicles, constituting 40% of total energy consumption and 60% of CO2 emissions (1, 2, 24).
Approximately half of the regional and local road network is characterized as in a poor condition and maintenance of the road network has been systematically underfunded. Existing state of the road network fails to serve the emerging tourism industry and hinders the development of the agricultural sector (22).
Gender & Marginalisation
Populations living in remote areas cannot easily meet their daily needs for health care/medicine, food and other basic supplies, due to limited affordable transportation and decaying nature of regional roads (6, 22).
There is a significant gender gap in the construction sector, where women form less than 5% of employment. Women are also more reliant on transportation infrastructure and services due to gender differences in travel patterns, modes of transport used, and utilization of infrastructure and services (22).
Expected Development Outcome
Investments in regional and cross-boarder roads will improve riding quality, safety of journeys, while reducing vehicle operation costs and travel time and providing more reliable access to economic centers (22).
Investments that integrate climate resilience in the road network will help ensure a more sustained ability to provide transport services, while helping reduce emissions associated with road transport, through reduced travel distances and times (2, 22).
Investments in the road network will contribute to sustainable trade, delivery of goods and connection to international markets as roads and highways are the main mode of land transport for freight transportation, while producing positive spillovers for associated sectors including agriculture and tourism.
Gender & Marginalisation
Rehabilitation investments of regional and local roads will provide better rural connectivity, enhancing access to communities access to basic healthcare, services, and employment opportunities (22).
Investments in road infrastructure will enhance mobility and accessibility, particularly benefitting women who tend to be more reliant on transport infrastructure and services due to gender differences in travel patterns. (22)
Primary SDGs addressed
9.1.2 Passenger and freight volumes, by mode of transport
9.1.1 Proportion of the rural population who live within 2 km of an all-season road
Number of passengers 24,018 by rail, 862,757 by sea, 2,928,275 by air in 2021. 809,024 road vehicles in total in 2023 (25, 20).
N/A
N/A
N/A
11.2.1 Proportion of population that has convenient access to public transport, by sex, age and persons with disabilities
Data on access to public transport in Albania is limited, most intra-urban transport is carried out by private companies (26).
N/A
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Public sector
Indirectly impacted stakeholders
People
Corporates
Public sector
Outcome Risks
Investments in road infrastructure can increase dependence on road transportation and hinder alternative modes of transport, causing negative externalities including environmental and road damage, accidents, congestion and oil dependence unless network is electrified (27).
Road construction and operation can lead to loss of natural habitats including forests and wetlands which can cause a loss of biodiversity (28).
Increase in the number of vehicles in circulation through increased road connections, can lead to air and noise pollution, disrupting wildlife and surrounding communities (29).
Impact Risks
Unless regular maintenance services are provided, transport infrastructure may decay over time limiting impact as most transport related infrastructure assets have a life-span of maximum 50 years (2).
Risks resulting from climate change including rising sea-levels, extreme temperatures, storms, floods and landslides can also negatively impact transportation service-delivery (2).
Gender inequality and/or marginalization risk: Despite the expansion of the road network, if accommodating affordable public transportation options aren't provided, rural and low-income populations may be excluded from the benefits of enhanced connectivity to urban centers.
Impact Classification
What
Improved connectivity, reduced travel times and costs, increased access to markets, education and healthcare services.
Risk
Decaying infrastructure, and external shocks caused by climate change including extreme weather events can negatively impact service delivery.
Contribution
Road construction investments can contribute to economic growth and alignment of road safety and quality regulations aligned with the EU acquis and the Stabilization-Association Agreement (6).
Impact Thesis
Catalyze economic growth, enhance connectivity, and promote regional cooperation by facilitating efficient transportation of goods and people, fostering trade, and strengthening cross-border relations.
Enabling Environment
Policy Environment
National Strategy for Development and European Integration 2022-2030, 2023: includes the development of infrastructure in a sustainable, intelligent manner, to ensure an interconnected, interactive and integrated transport with the Western Balkan region and beyond with the European transport system among the key strategic objectives (6).
Government Program 2021-2025, 2021: under the goal of building a strong economy based on modernization, productivity and competitiveness, include investments in road infrastructure, namely improving existing axes but also in building new roads (7).
Economic Reform Programme 2023-2025: Allocates ALL 0.43 billion (USD 4.4 million) to support the public transport sector, and ALL 120 million (USD 1.2 million) for the urban transportation sector, while acknowledging the need to decarbonize the sector and enhance synergies by building smart transportation networks (15).
Sectorial Strategy of Transport & Action Plan 2016 – 2020, 2018: main goal of the strategy is to have an efficient transport system, integrated in the region and in the EU network, which promotes economic development and upgrades the citizens’ quality of life (30).
Strategy for Application of Intelligent Systems in the Road Transport, 2020: includes the main objectives of improved traffic safety, traffic flows and mobility, efficiency of freight transport, reduced traffic congestion, enforcement of existing laws, and gradual integration of transport corridors to the TransEuropean Transport Network (TEN-T) (31).
Financial Environment
Financial incentives: Public investments for the transportation sector reached EUR 915.98 million (USD 980 million), 96% of which were directed to road transport, the main priority. The government has also allocated USD 1.2 million for urban, and USD 4.4 million for public transportation (6, 15).
Fiscal incentives: Legal incentives including land consolidation, support for ancillary infrastructure, access to state-owned immovable property and expropriation of assets are provided to strategic investments in the transportation sector, for between EUR 30-50 million (USD 32 - 53 million) (12).
Other incentives: The Western Balkans Investment Framework, focuses on the preparation and implementation of projects along the extension of the TEN-T Core Network Corridors in the Western Balkans, by capitalizing on an EU allocation of EUR 1 billion (USD 1.07 billion) in grants to improve connectivity (36).
Regulatory Environment
Transport Community Treaty, signed 2017: aims to create a Transport Community in the field of road, rail, inland waterway and maritime transport as well as the development of the transport network between the European Union and the South East European Parties (32).
Law No 8308 "On Road Transport", 1998, amended 2020: regulates the conditions for admission to the activity of national and international transport operator of goods and passengers (33).
Law no. 55/2015 On Strategic Investments, 2016: aims to increase Albanian and foreign strategic investments in the sectors of the economy considered as strategic sectors, through the establishment of special favorable administrative procedures, mitigating and support services to the investors (34).
Law No. 8378 "Road Code of the Republic of Albania", 1998, amended 2020: article 1 states that norms and acts are led by the principle of security of movement in the road, following the objectives for a rational movement, the protection of environment and saving of energy (35).
Law no. 125/2013 On Concessions and Public Private Partnership, April 2013 (amended 2019): abolishes the 2006 Law no. 9663 on Concessions, provides that changes in the ownership or the management of the Special Purpose Vehicle (SPV) are subject to the approval of the contracting authority and the Ministry of Finance, unless such changes are due to trading of shares in a regulated capital market (41).
Marketplace Participants
Private Sector
Alba Konstruksion, Gener 2, Bechtel, Gjoka Construction Company, Salillari LTD, Titan Group, Enka, Kastrati Group.
Government
Ministry of Infrastructure and Energy, Ministry of Economy, Culture, and Innovation, Ministry of Agriculture and Rural Development, Ministry of Environment and Tourism, Institute of Statistics of Albania (INSTAT), Albanian Road Authority, Albanian Investment Development Agency (AIDA).
Multilaterals
European Bank for Reconstruction and Development (EBRD), European Union – Delegation to Albania, World Bank Group, Western Balkans Investment Framework, International Bank for Reconstruction and Development (IRBD), United Nations Conference on Trade and Development (UNCTAD), United Nations Economic Commission for Europe (UNECE), United Nations Framework Convention on Climate Change (UNFCCC).
Non-Profit
Automobiles Association of Albania, Ecovolis - Community Bike Sharing System, Co-PLAN, Foreign Investors Association of Albania (FIAA), Albanian Development Fund, Environmental and Rural Development Institute (ERDI).
Public-Private Partnership
Alba Konstruksion, a construction company with experience in civil works and residential projects was awarded the reconstruction of Ulza's road, Mat, with the contact price for the successful bit at ALL 258.75 million (USD 2.64 million) (37).
Target Locations
Albania: Tirana
Albania: Shkodër
Albania: Durrës
Albania: Vlorë
References
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