In November 2018, Albanian Prime Minister Edi Rama inspected progress on a 12.3 million-euro upgrade of the Vlora seaport, paid for with a low-interest loan from Italy with the aim of improving the processing of goods and people travelling mainly from the southern Italian city of Brindisi.
“We should have a plan here and have it fast because the Lungomarja and the boulevard are connected to this,” Rama is heard telling his aides in a video distributed by his PR team. “This is now a focal point, a central point,” he says, referring to two main road corridors from the port, one running north across the central boulevard, the other south along a coastal strip that has seen significant tourism development.
Then, however, Rama’s government announced it would relocate the port five kilometres further north, and in November 2021 gifted a 20-year lease on 57,000 square metres of prime port land to private investors who pledged to turn it into a marina with luxury apartments. The price? A symbolic one euro.
The government used a controversial law on so-called ‘strategic investments’, adopted in 2015 as a temporary measure to grease the wheels of significant investment projects, as well as another instrument passed under a previous administration allowing the state to give away large parcels of land for a euro.
The ‘Vlora Marina’ project is a joint venture of Albanian businessmen Geront Cela and Samir Mane, with Cela holding 90 per cent of shares.
They proposed to build 663 apartments and two hotels on 57,000 sqm of previously publicly-owned land, funding construction through the sale of apartments before they are built and potentially pocketing tens of millions of euros. Experts, however, have been left puzzled by the benefit to the state.
‘The initiative ‘Albania One Euro’ was meant to grant public land to investors for the purpose of job-creating initiatives, such as factories, not to build just another block of apartments as is the case here,” said Azmi Stringa, finance expert and professor at the University of New York in Tirana.
The Vlora seaport dates to at least the 18th century and has long been Albania’s second most important port behind Durres.
Tourism too has taken on major importance to the Albanian government and to Rama’s government, which regularly wields the Law on Strategic Investments to support its development through perks for private investors including free land and state-financed infrastructure works, such as water supply.
In one case, a helipad was built for one such investment courtesy of the Albanian taxpayer.
Over the past four years, millions of square metres of land, mainly on the coast, have been transferred to private hands.
Three marina projects – in Vlora, Durres and Limioni [Saranda] – have jointly benefitted from some 1.1 million sqm of publicly-owned land via the one-euro lease scheme.
The Vlora project was born in December 2020, two months after the government announced it was relocating the port.
In early 2021, a consortium involving Cela-owned ‘Marina di Valona’ and ‘Brunes’, the UK-registered firm ‘Marina Projects Ltd’ and a contractor named ‘Ndregjoni’ sh.p.k., applied for a concession to transform the current port into a marina for private yachts with a residential development adjacent.
On March 29 the same year, the consortium was declared winner of the Port of Vlora concession and the Committee of Strategic Investments, led by Rama, granted it the coveted status of Strategic Investor.
In the October, the government authorised the finance ministry to sign over a 20-year lease on some 57,000 sqm of land owned by the port authority, for one euro, to ‘Marina Residences Vlore’ one of two companies founded by the consortium two months earlier.
Six days after the lease contract was signed in late November, UK-registered Marina Projects Ltd left the project, selling its 10 per cent stake to the other two companies in the consortium for 2,000 euro.
In January 2022, Ndregjoni also pulled out, selling its own stake for 0.95 euros. Five months later, a new company came aboard – the Balfin group of Samir Mane. For some 29,000 euros, Balfin secured a 10 per cent stake in Marina Residences Vlore.
It is not the first time a business or consortium in Albania has changed ownership structure not long after winning a public tender, a phenomenon that has raised eyebrows given that businesses are seen to give up shares at surprisingly low rates having just secured lucrative public contracts.
Marina Projects Ltd refused to comment, saying, this is a matter of business confidentiality. Ndregjoni didn’t respond to requests for comment.
Meanwhile, apartments in the planned development are being offered for sale at the eye-watering price of 2,500-3,500 euros per sqm.
The government insists it still owns the land on which they will be built.
“[…] there is no transfer of ownership, there is no privatisation, but there is the transfer for usage within a clearly defined time period,” the finance ministry told BIRN.
Marina Residences Vlore told BIRN it has been authorised to build and sell the units in accordance with Decision no. 599/2021 of the government, the lease contract with the finance ministry, and its own business plan which was approved by Rama’s cabinet.
The company plans to buy the land following the investment, it said.
“As a start, the investment will be made as foreseen by the Government Decision no. 599/2021 and the Rent Contract and later will be requested the purchase of the land based on the Government Decision No. 54, 05.02.2014, and if this condition will be fulfilled, the sale will go through after the civil objects have been certified and registered with the National Cadastre Register,” the company noted said in a written response to BIRN.
Stringa questioned the process.
“The government signs a 20-year lease contract based on a business plan that actually clearly foresees the construction of apartment blocks on the land it has leased. What is the meaning of the lease when it is clearly visible that the apartments will be put up for sale?”
“This is just a trick to avoid legal requirements for transparency and competitive processes for the sale of publicly-owned land. Normally, the state should have put the land up for sale in an open bid to receive the highest price offered by competitors.”
Prices three times higher
The lease contract between the finance ministry and Marina Residences Vlore’ foresees the use by the latter of 57,502 sqm in Vlora Bay in exchange for investment of 9.8 billion leks, roughly 93 million euros. The investment should create at least 100 jobs.
The project will be implemented in three phases – the marina itself, then the apartments, and finally the 4- and 5-star hotels with a total of 168 rooms.
Sixty-eight per cent of the investment required for the apartment and 23 per cent for the hotels will be paid for from the advance sale of apartments.
According to the business plan approved by authorities, the apartments will cost 496 euros per sqm to build and will be sold at an average price of 750 euros per sqm. But Marina Residences Vlore is currently advertising apartments at between 2,500 and 3,500 euros per sqm, meaning potential revenues of 180 million euros, or roughly 121 million more than in the business plan.
The state will receive two per cent of revenues as a concessionary fee.
“While securing such profits, the private party will be able also to purchase the land using reference prices and without a competitive process,” said Stringa, the finance expert.
Reference prices are set by the government and are notoriously low.
Marina Residences Vlore told BIRN its business plan is based on an economic estimate aimed at guaranteeing “the minimum level of the investment” on the land granted for use by the state, while the actual sale price of the apartments is determined by the market and cost fluctuations.
The company stressed it is under no obligation to share any extra profits with the state.
“The lease contract does not create a joint venture between the state and the private party, in which they jointly undertake the risks of a joint investment and, consequently, its profits or losses,” the company said.
Albanian legislation foresees the use of competitive procedures for the sale of state property, but there have been numerous exceptions, notably Law no.54/2014 on leasing or renting out public property and then its sale in the event the private party has invested more than 150 per cent the value of the land.
Both the value of the land and the price of the sale in such cases are determined by the reference prices first created to determine compensation for properties seized under communism.
Marina Residences Vlore said it plans to use this law for the purchase of the land, after reaching the investment conditions. Its business plan foresees a purchase price of 4.8 million euros, or just 88 euros per sqm for prime property in Albania’s picturesque Vlora Bay.