Kosovo is in political limbo after the February elections, with stalled government formation affecting key decisions, according to Ardian Rexha, an Attorney at Law associated with Deloitte Kosova. At the same time, energy reforms and price hikes by the regulator are causing strong reactions from businesses and the public.
“In the Balkans, it’s hard to avoid discussing politics,” Rexha says. “Even though we had elections in Kosovo back in February, we’re now facing a political blockage. There have already been 15 failed attempts to complete the constitutive session of parliament, which means they still haven’t elected a president of the assembly or any of the other governing bodies. This is a necessary step to form the government. As things stand, the current administration is working with limited competencies – they can’t drive many agendas or make any major decisions, which is starting to impact daily life.”
On the market side, Rexha stresses that most of the recent buzz has come from “decisions issued by the Energy Regulatory Office (ERA).” One of the big ones, according to him, “was a recent announcement that electricity prices will go up by 16.1% starting in May, which has understandably caused some backlash from the public. Another significant move from ERA is the decision to require some businesses to move to the open energy market. This is a legal obligation for all non-household consumers with 50 or more employees or those with more than 10 million annual turnover, meaning they’ll no longer benefit from guaranteed pricing. The concern raised by business associations is that the offers they’re receiving from energy suppliers are much higher than what they’ve been paying so far.”
“This shift is also aligned with old energy directives, which ERA had previously struggled to implement due to the COVID-19 pandemic and later, the broader energy crisis,” Rexha notes. “Now that the situation has become more stable, they’re pushing to enforce the move to the open market. Naturally, this has triggered strong reactions from chambers of commerce and other business groups.”
On top of that, Rexha highlights that “there were already signs of inflation, with the Competition Authority recently opening investigations into sudden price hikes on coffee, bread, and about 20 other products. These steps are being taken in line with competition laws to ensure that the open market functions properly and meets expected thresholds.”
“Meanwhile, we’re seeing some positive developments in the energy transition space,” Rexha adds. “There’s growing momentum around reducing reliance on coal and ramping up renewable electricity production in Kosovo. One notable example is a new wind power project currently undergoing the qualification process. It’s being developed through a special purpose vehicle, with the state owning 49% and a private investor holding 51%. The plan includes a guaranteed price for the first 15 years. By the end of the summer, we’re hoping to receive bids for the project.”
“Outside of energy, not much has been happening in other sectors, even in the run-up to the elections,” Rexha emphasizes. “There have been attempts to push certain agendas forward to create more impact in the private sector, but energy remains the dominant topic. We hope to have a new government in place soon. Hopefully, we can avoid another round of elections, which wouldn’t be in anyone’s interest. It wouldn’t be a total disaster, but the results would likely end up looking pretty much the same.”
