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| Map and sketch of what the Llogara tunnel will go through |
Based on international market analyses for the year 2021, a pre-tax profit rate of 10% is considered very good by investment analysts. Furthermore, good investment rates are considered to be those between 5-10%, while in companies that have contracts with governments for work and services, where revenues are usually secured, profit rates are lower.
However, these profit rate principles are not valid for companies with contracts with the Albanian government, where profits are several times higher than the domestic market average. Intekar-ASL, a company contracted by the Albanian government to carry out work on the Llogora Tunnel in the Orikum-Himara road section, achieved pre-tax profits of over 9 million euros last year, a rate of 18%, at a time when the average profit of Albanian businesses in 2021 was 9.2%, according to INSTAT data, according Monitor.
Intekar-ASL won a competition opened by the Albanian government for the construction of the Llogora Tunnel in August 2021, with a value of 17 billion lekë (around 165 million euros).
According to data from the balance sheet, the company's revenues reached 5.3 billion lekë in 2022, while pre-tax profit was around 945 million lekë (9.4 million euros), or 17.8%. This tunnel ranked at the top of the list of public investments in terms of large amounts of financing from the state budget.
A profit rate twice the market average came at a time when companies that had contracts with the government complained about the high costs of raw materials caused by the post-war situation in Ukraine. Many companies temporarily suspended work, forcing the government to apply a compensation scheme for them. Strabag, the Austrian infrastructure construction giant, had a pre-tax profit rate of 7.4% in 2022, considering it a very good result.
The Llogora Tunnel is a Category C2 road that connects Vlora with Saranda over a short distance. The tunnel is designed with a speed limit of 50-80 km/h, with a two-way carriageway. The projected length of the tunnel is around 5.7-6 km. The tunnel is 12.8 m wide, consisting of two lanes, each with a width of 3.5 meters, two sidewalks with 85 cm width, and an emergency tunnel.
Data from the balance sheets show that overall profits in the private sector have weakened due to difficulties created by the crisis in prices resulting from the war in Ukraine and the increase in labor costs in the domestic market.
On the other hand, companies that had contracts with the government, especially Public-Private Partnership concessions, had profit rates that reached 40% in some cases. The majority of companies with government contracts reported double-digit profit rates, often more than twice as high as the market average.
Unreasonable profits outside the logic of public investments are showing that the government has not been careful with feasibility studies and project costing, as contractors report profit rates 200-300% higher than in the private sector.