November 22, 2005
Vrooommmm
It's the sound a diesel generator makes.
I'm hearing it outside my window right now, because Pristina is having another blackout. They seem to average four or five per day, lasting anywhere from five minutes to several hours.
This is a little odd, because Kosovo has a lot of coal. It should be able to generate plenty of electricity, and even have some left over to export.
But the electrical system was allowed to decay (like everything else in Serbia) during the kleptocratic days of the '90s. And then it got badly trashed during the war.
Today... well, it's become sort of a black hole of money. International donors have sunk over half a billion dollars into Kosovo's electrical system since 1999. (That's more than 25% of Kosovo's current GDP.)
It hasn't helped. In fact, it's worse now. And the blackouts are doing a lot of damage to the economy. One estimate is that they're adding 10% to the cost of doing business here. (Because electricity from loud little diesel generators, one for every house and shop, is really expensive.) Another is that the blackouts are shaving 5% off of the standard of living... which is already Europe's lowest.
Here's a figure that stuck with me: 170 -50 -50 = 70.
What's it mean? Well, KEK -- the Kosovo Electric Kompany, er, Company -- KEK produced about $170 million worth of electricity last year. Of that $170 million, about $50 million was unbilled. That is, they were only able to bill for about $120 million. Why? Well, some goes cheap or free to subsidized buyers, like state-owned firms. And then a lot just gets stolen. People shimmy up power lines and connect themselves, their house, their shop. Meter tampering. Very common here.
So, $120 million gets billed. But then another $50 million of that just never gets paid. State-owned firms don't pay because they're bankrupt. People don't pay because, well, they just don't. Firms don't pay and then lie about it and fight it in court. (The court system is horribly overloaded.)
So, at the end of the day, KEK only collects 170 -50 -50 = $70 million for that $170 million they've produced. In round numbers, they get only 40 cents for every dollar. They're bleeding $100 million a year.
Suddenly that $500+ million figure makes some sense. Even with all that money, you can see how they may be worse off than they were in 1999.
What's the answer? Well... there isn't an easy answer. It's going to take years to fix KEK.
Until then, everyone is going to have a generator.
(If you want to know more about Kosovo's economy, this paper from the IMF has plenty.)