BIRN: The Forewarned Failure of Vlora Airport Threatens Hundreds of Millions of Euros in Arbitration

According to experts, the Infrastructure Ministry’s decision to begin procedures to terminate the contract for Vlora Airport is a symptom of Albania’s PPP scheme, carrying high financial costs for taxpayers.

The Ministry of Infrastructure and Energy announced on Wednesday that it had officially begun the procedure to terminate the concession contract for Vlora International Airport, paving the way for a confrontation with the private company in international arbitration.

The decision comes after a fierce legal conflict and physical blockades at the construction site between the two partners, “Mabco Construction” and “2A Group”, which began in the autumn of 2025 over the division of shares between them. After months of clashes, including mass fights between workers from the two companies over access to the construction site and a series of court rulings, the situation remained deadlocked even after the Supreme Court, in May 2026, rejected “2A Group’s” requests for interim measures to secure the claim, followed later by further blocking decisions at the first-instance level.

But beyond a simple dispute between partners, experts say the failure of this concession represents a genuine syndrome of Public-Private Partnerships, or PPPs, in Albania, where the risks are borne by the state and the benefits go to the private sector.

The Vlora airport project has been deeply controversial since its inception: it was signed on the eve of elections, pursued despite recommendations from financial experts, and is now stuck in a deadlock that risks leaving Albanian taxpayers with a colossal bill of liabilities.

“The initiation of the procedure to terminate the Vlora Airport contract is not an isolated failure of the Mabco–2A Group consortium, but the latest evidence of the structural problems of PPPs in Albanian infrastructure,” said Zef Preçi, executive director of the Albanian Center for Economic Research.

Faced with this situation, the government has provided no public explanations. A spokesperson for the Ministry of Infrastructure briefly confirmed the decision.

“I can only confirm to you the initiation of the procedure to terminate the concession contract for VIA. We cannot make any other comment,” he said in a WhatsApp message.

Meanwhile, businessman Behgjet Pacolli publicly accused the government of seeking to strip the investor of “the rights arising from the largest public-private partnership contract ever carried out in Albania”.

Valon Ademi, president of 2A Group, the other company involved in the construction work and the dispute, had not responded by the time this article was published.

A Favored Contract

The Vlora airport project emerged as an early electoral promise by Prime Minister Edi Rama, who pushed it forward despite financial assessments indicating low feasibility and protests from environmental organizations.

The project was built near the Narta Lagoon, a protected natural area and home to dozens of endangered bird species. The choice of this location triggered strong public opposition, as well as official reactions from the European Commission and the Bern Convention, which repeatedly warned of the high and irreversible environmental costs.

The contract was signed in April 2021 with the winning consortium, comprising businessman Behgjet Pacolli’s company “Mabco Construction SA”, the Turkish company “YDA Group” and Valon Ademi’s “2A Group”, with the state offering the concessionaire a guarantee of 138 million euros in revenues from the budget for the first 10 years. But in September 2022, the Turkish company “YDA Group” suspiciously withdrew from the project, selling its shares for just 4,450 euros to Pacolli’s company.

According to official correspondence between institutions, made public in an investigative article published by BIRN on January 27, 2026, the Ministry of Infrastructure assumed unprecedented risks by guaranteeing payment of the concessionaire’s bank loans in the event of the contract’s early termination. This concession was made during a three-day review period before the contract was signed, even though the Debt Directorate and the Ministry of Finance requested that the clauses be amended, arguing that this commitment “had no legal backing”.

According to Zef Preçi, the risk that the case will end up in arbitration with severe penalties for the budget becomes alarming precisely because of these clauses, as the contract obliges the state to repay the 56-million-euro loan to BKT in all three termination scenarios. “The risk that the case will end up in international arbitration with severe penalties is high,” Preçi stressed.

Public costs, Preçi points out, could easily rise to “hundreds of millions of euros”, considering that the airport’s assets may also have been mortgaged as collateral for a 100-million-dollar loan from “Mabco” to “Delphos Securities”, bringing a third international creditor into the equation. According to Preçi, the contract’s 5% security deposit has not functioned as an effective shield, since its execution requires court decisions and is not automatic.

The Long Legal Battle

The initiation of procedures to terminate the contract comes as the concessionaire company has been paralyzed for months by a fierce legal conflict between the main shareholder, “Mabco Construction”, and the minority partner, “2A Group”. In addition to their clashes in civil courts, they have filed criminal complaints against each other over manipulation, fraud and the transfer of shares.

In lawsuits concerning interim measures alone, at least eight different decisions were issued by all three levels of the justice system over a period of approximately nine months.

Although the Supreme Court rejected “2A Group’s” requests for interim measures in May 2026, the situation took another turn at the beginning of summer. According to VIA’s historical extract, in July 2026 the Tirana First Instance Court decided to prohibit any governing body of the company, including the Assembly and Administrator Vegim Hoxha, from joining or guaranteeing the Financing Agreement concluded between “Mabco Construction SA” and “Delphos Securities S.A.R.L”.

Earlier, the media reported that the Ministry of Infrastructure had given the parties an ultimatum to resolve their dispute and that the decision to terminate the contract came after no agreement had been reached.

The government’s decision to terminate the contract immediately prompted a reaction from businessman Behgjet Pacolli. In a public statement, Pacolli warned that arbitration was now unavoidable, since the ministry’s move “seeks to strip the investor of the rights arising from the contract”. He directly accused state institutions of allowing the rule of law to deteriorate by failing to intervene against “attempts to transfer the investor’s shares”, the “unlawful exclusion of MABCO from the management of the investment” and the “physical blocking of access to the construction site by groups acting outside the law”.

According to Pacolli, “MABCO’s” requests, made since August 2025, for an international technical and financial audit of the investment were ignored, as were the criminal complaints they filed over unlawful actions. “I have never wanted Albanian taxpayers to pay the consequences of the actions or inactions of certain officials,” he said, stressing that there was no alternative other than seeking protection under international law.

Pacolli blames his partner and the government for failing to fulfill the contract and put the airport into operation within the deadlines, accusing the ministry of citing false facts when initiating the procedure to terminate the agreement.

Experts emphasize that, in the face of this situation, institutional monitoring has been alarmingly passive. Although the conflict emerged in the autumn of 2025, the Ministry of Infrastructure waited until May 2026 to issue a 30-day ultimatum, while the monitoring and penalty clauses should have been activated much earlier.

Under the current circumstances, Zef Preçi believes that “the most rational option is not to restart at any cost, but to conduct a full reassessment of the project’s economic rationale, whose financial sustainability has been questioned from the beginning”.

Preçi offers as a possible solution a new transparent international tender for a qualified airport operator, under renegotiated terms without state guarantees, or the reuse of the infrastructure for regional aviation and logistics, thereby avoiding the heavy environmental costs in the Narta Lagoon./BIRN