Italy and Albania have signed a series of agreements worth an estimated two billion euros, boosting power supplies to both and marking a revival of co-operation between the Adriatic neighbours.

The two countries have also signed a 160 million euro agreement for an Italian cement plant and a joint plan for development cooperation.

Italy’s Prime Minister Silvio Berlusconi and his Albanian counterpart, Sali Berisha, watched as the deals were signed in Tirana.

The gas and wind power deals will produce electricity for domestic use and also for export to Italy, to ease Albania’s own chronic shortages and help Italy cope with its power deficit.

It could also boost Tirana’s hopes for closer ties with the EU.

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