Albania 2016: Gjoka Konstruksion jsc
Interview with Mr. Rrok Gjoka, Administrator of Gjoka Konstruksion jsc
PRISMA GROUP: This is a sector that has been very delicate over the last 15 years it’s not been transparent, there have been problems with corruption, and I know this is changing. I’m just wondering how you’ve seen this sector evolve, perhaps during Mr Rama’s administration since 2013?
Mr. Rrok Gjoka, Administrator of Gjoka (RG): The main change – or the main thing that we now consider to us was a very, very big help was because until 2013 in fact all of the construction companies were in a situation of collapse. Because we had projects, too many projects, we worked a lot. But for the last 5 years we were not paid for the works that we did. But since the new government came in in 2013 after about 1 year we were almost 90% paid and now we’re 100%. So this was the biggest help because all the works that we did before and we were doing, we were paid for everything.
This was for survival, because we were on the verge of bankruptcy and if they had not done this all of the companies would have collapsed and closed down, the whole sector – road construction, Because the projects were open, we started working, but there was no money. You know day-by-day we thought that the day that change will come so soon but in fact it lasted so much time. And before you know it we were so deep in that situation that we couldn’t get out again.
So now, in these 2 years, Ramos closed all the projects that were in the middle, left behind, 99%, and now, of course we are hoping that this kind of situation will be followed up with the new projects that they have started. Because in fact, beginning new projects… they couldn’t do new projects because all of the money that the government had earmarked in their budget for projects had to go to paying for the old projects. Now this year they are starting to open new tenders and until now it is going again and all of the bills being paid, so we hope that this situation will go on and get better every day.
This gives us hope because in this way then they can now... the money from the jobs and then we can invest in the private sector and different things in Albania
PRISMA GROUP: In what sectors are you investing now as a company?RG.: Renewable energy, water, hydro power plants.
PRISMA GROUP: And is that being negotiated, the pricing?RG: The fact is that in that situation because before there were some contracts with fixed price but the government had to re-buy it from us, everything that we produced at a fixed price. Now the contract was terminated at the end of 2014 and they put another price that is about 30% lower. And now there it’s all of the owners, the builders of the power plants negotiating to try and raise it a little bit and not leave it that low.
PRISMA GROUP: Have you noticed better working practices with this new government? Is each company trying to push each other as a sector further and further ahead?RG: Yes, Yes.
PRISMA GROUP: And in what way are you pushing ahead of the market? Why were you one of the leaders that was chosen?RG: Until now we can see that it’s a little bit more, the relationship from our private sector with the government it looks closer now. They hear about the problems, they try to resolve them and its more personal. They try to see the problems where they are and try to fix them.
But anyway, now it has started this year and now we can see the real changes and see how they go; because until now the government was fixing the old problems, they were paying off the old debts and focused on those problems. And they did it. That was a relief. Now we feel like it is getting better and the government looks like it is sincere. They know what they are talking about trying to help this sector and the business. But we’ll see in the future because now they have started new projects and now it will start to work, this new machinery.
And now what we feel even in the relationship with our neighbours, and everything for the invstors, it’s building. We see that Foreign investors are coming here and opening new possibilities for us to work because in fact there are 3 or 4 big projects that are big projects even for companies like us to go and work like a subcontractor. Like the […] power plant, like […] but these are big projects and big possibilities and there is a feeling that it will get better every day.
PRISMA GROUP: The Prime Minister was just in Austria negotiating the two new big roads to connect. We’ve heard of lots of opportunities. In what way is your portfolio as a company focused? Roads, bridges, hydro-dams? How is your company structured?RG: The main is infrastructure, roads and highways and bridges. This is our main portfolio. We are very experienced on top of the companies in this area. And now in [iter] power plant, because we already finished the [iter] power plant we are in the middle of a bigger one, about 34 megawatts, and now we can say that we are in the energy sector we are one of the biggest companies investing in that kind of business.
PRISMA GROUP: Looking at the sector, there are sometimes problems in regards to all of the technology and machinery and perhaps you don’t have the maintenance services here for all of the machines. How are you as a company overcoming these problems?RG.: In fact, I’m going to explain because this is a businessman part where I take over in this sector. In fact, we are the first one, but let’s not say, but one of the first to invest in new machineries in new technology. In 2007 we spent a lot of money and at that time in fact that was the time when dealerships like Caterpillar arrived in Albania.
PRISMA GROUP: Liebherr…RG.: Liebherr, no. They tried but they couldn’t manage until now. But this year even Liebherr has gotten in the market and with very big steps have been taken and even us we invested in Liebherr machinery this year in 2014 and in 2015. And we try to focus on machinery that they already had the dealership here. Of course they are getting better every day. If I compare 2007, all different things. Because in 2007 it was only us with new machines. Now almost all the companies have new machines and they are buying machinery. So we have gotten 200% better in regards to these things and the people are more professional, so it is getting better and I cannot say that it’s bad, it’s at least 60 or 70% better. But it has a place to get better – room to grow.
PRISMA GROUP: Where do you expect this company to be in ten years? Are you going to look at other sectors outside of infrastructure or is this a company that is solely focused on infrastructure in Albania?RG: For the moment as you see Albania still needs roads, and highways and we are focused on this type of thing so we are still very focused on that because these are things that we know we can do 100% and very, very well. So the moment we are focused only on this, so in ten years we don’t see it being that different. Maybe in ten years we will see some small things to try to do other things, a hotel here, etc. because we have the coastline here, it is one of the most beautiful. For the moment only here because we still need to grow up and consolidate. To raise the standards. If I might say my father was, it was in fact one of the many things that he was successful in this business because he focused only on one thing – only on roads. And he became the best at that. Doing the roads he had offers to do this and that but he focused only on the roads?
PRISMA GROUP: And in terms of projects right now, what projects are you petitioning? What tenders are open right now that you might be looking to close over the next year or so? How many kilometres of road are you aiming for and do you usually build a year?RG: It depends on what standard of roads they are looking at. For example, National road, standard road, this road is about 10km per year because we have to know the situation and in fact before now it is not more than 10km per year. Anyway, for the moment we have already won a project with the road authority which is about 2 or 13 km, I’m not sure, that we just started. And in the meantime we are waiting because in Albania there is an allotment fund that manages the funds so, [PSW/PFW] bank, KWF Bank, and these funds are from outside, they manage these funds and they manage a lot of projects that this year we are hoping will open but we are waiting for the day that they open to tenders. For the Director of the Albanian Development Fund…So these tenders we are waiting for at the moment and even the Ministry of Transport we are still waiting for they are waiting, even they have that I think will be open first and now its road maintenance, even this it is funds from the World Bank and it think this will be divided in four lots.
PRISMA GROUP: Is your company vertically integrated? Do you produce the raw materials yourself or are you importing?RG: We have in fact the largest at producing almost every kind of material, the only thing that we buy is cement that is produced here by Titan, a great company. It is even [Borstuya] that is owned by the Lebanese or Montenegro or I don’t know. But they are foreign investors; but Titan is the biggest producer of cements. Even [Kolochem] they import from outside. And we buy these kinds of materials: concrete, asphalt, all the materials that comes from the stone dimensions we have four concrete plants, we have crushing machines, stationary, three mobile crushing machines, we have one asphalt plant, mobile, we have invested a lot. 80% of everything we do we invested into machines and technology in this sector.
PRISMA GROUP: Have you worked with any foreign partners?RG: Until now, not yet. We are looking but we don’t have too much information, like I said before, we are foremost in this business and we didn’t get interested in that too much. But we are hearing good words every day about this. Because it looks like the government they are too much focused on that business and we did not exclude this kind of opportunity in the next months, next years, who knows?
PRISMA GROUP: What would you like to see the Ministry of Transport doing? What steps would you like the government to lay out now for your sector?RG: For us its important so that they have as much as they can investments in road construction.
For example, that one thing is a part that of course we want as much as we can investments, because this means it will make jobs. But one thing that was year-by-year from let’s say ‘94 until now – we had the chance to get in competition with tenders. Every year raising the possibility let’s say. From this moment we cannot compete, us the biggest companies in this market, for tenders of more than 20 million euros. Because in this climate now the government trusts us. The year before it was 15 million euros, two years ago it was lower. The government is raising it year-by-year. So if say there comes tomorrow a tender that is more than 20 million we cannot compete the loan there – we don’t have the references to compete. So let’s say in that in these cases we need to find a company from outside with bigger references to make a partnership. It makes more difficult the situation so if they would ask us our position was so that the government trusts us more.
For example, it was the tender now with [splanit] funds it was divided in 3 lots about each one was about 35 or 40 million dollars in total about 120 million dollars. Each of them they had the references that even 4 Albanian companies together they couldn’t reach those. So it was like names who got involved, international companies, that in in fact they never worked here. They did the job and they tried to find subcontractors and in fact it gets the situation a bit confused and in the end we did the job. That procedure…
For example, we had in [RBO] because [RBO] was an unfinished project and they said that maybe the Chinese would take over, like a concession, because half of it was done. And we had the tunnel there and everyone was too sceptical that we couldn’t do that it, because it was about 500m tunnel and it was all standards and in fact we did the tunnel in about 6 months. No problems with anything and it went perfectly in fact and everyone was impressed in fact because we did faster than say [Actor] did 500m in [El Passon], [Actor] which is very, very much bigger than us. We did, no problems, with 100% standards or maybe even better. And everyone was surprised but we did it. So this was what we would like to do so the government has more trust in us.
PRISMA GROUP: And what do you think is the most important thing our German readers should learn about your country?RG: As an Albanian, not as a businessman, but as an Albanian, I can say that every foreigner, not only Germans, investors too, will find at least good hospitality, and the fact that Albania is still at the beginning of almost everything, so it is a virgin market and you can come and invest in every kind of situation here.
And of course as a businessman I can say that everything is getting better every day – you can see changes every day, day-by-day. And of course every investor from Germany let’s say, they can then profit from us and our desire to learn as much as we can experience from Germany, technology and everything and it is mutually beneficial, they can find experience hospitality, wishes to cooperate and develop partnerships, because we want to grow up and learn as much as we can.
And as we can see from Albania, not because we want to say good words for the Prime Minister, but we see that he has a strong will to create good relations with Europe and to make more easy everything for investors for the most part. It looks like we’re seeing and we are sure that he has a strong will to do this kind of thing, to invite to make like a highway of all of the procedures that are involved to make easier bureaucratic and all of the things. It looks like he is fighting very much with all of these reforms and these things that he is doing but in fact for Albanians it is a little bit hard because we need some time to understand these changes and these things but as you see as a businessman on top of Albania we’ll see and we hope that these strong changes for now will make things much easier for working in Albania for the next years. Because of course more rules, more investment from outside and the changes we will see in the next years. And this is what you see now for the situation in Albania.