This is a study conducted by Albania EITI on the social impact of extractive industries in the local content and employment.
Rich in natural resources, Albania uses the EITI to modernise and promote good governance of the extractive industries. The hydrocarbon, mineral and hydropower industries have been consistently contributing to the national income and development of the country. Albania's energy sector includes hydrocarbons (crude oil, natural gas, solid fuels), hydropower and renewable energy systems (RES), with crude oil being its primary source. In 2018 the energy sector accounted for 6.1% of country's GDP. The mining sector is mostly represented by chromium, copper and nickel-silicate, and had a domestic ouput estimated of USD 770 million in 2018. At the same time, Albania is the only EITI implementing country to expand its EITI scope to hydropower.
While Albania’s extractive sector has been previously dominated by state-owned enterprises, in 1994 it opened up to private investment. The Albanian government is promoting investment in its energy sector to stimulate development and job creation.
Albania's latest EITI Report published in December 2020 covered the 2017-2018 fiscal years. The country continues to report on hydropower and to disclose relevant information on commodity trading.
The energy sector is regulated by separate laws and provisions. The Ministry of Energy and Industry (MEI) is responsible for granting exploration and production licenses in the mining sector, and evaluating applications for petroleum production sharing agreements (PSAs) and concession rights for the hydropower sector. The government receives most of its revenues through a share of production, as well as through bonuses, royalties, profit taxes and from direct investments in the sector. Revenues such as service tariffs and license fees are collected through the State Treasury System (Ministry of Finance). Albpetrol, the country’s third largest state-owned enterprise, collects a share of oil production and bonuses.
The petroleum industry has two main systems for awarding contracts: competitive bidding and ad hoc negotiations. The Ministry of Energy and Industry grants mining licenses and hydropower concessions. State-owned Albpetrol may sub-contract its exploration and production rights to oil and gas companies through petroleum agreements, approved by MEI.
Throughout 2017 and 2018, the oil and gas sector counted six companies extracting crude oil and four companies engaged in exploration activities. Albpetrol reported domestic crude oil production in 2017 at 955 thousand tons and 911 thousand tons in 2018. The biggest operating oilfield is Patos-Marinza, which represents 87% of total crude oil production. Crude oil is mainly exported to Italy, Spain and Malta.
Domestic mining output was estimated at USD 433 million in 2017 and USD 770 million in 2018(not including the value added through mineral processing). The increase in production value in 2018 is mostly due to the resuming of copper extraction activities in 2018. Chromium and ferrochrome contributed the largest share of the mining production throughout both reporting years.
Source: Albania’s 2013-2014 EITI Report.
|Hydro power||10,000||GWh||Annual potential capacity of hydropower production|
Albpetrol sells the oil received from PSAs (profit share) and extracted through its own oil field operations (equity oil) through open public auctions. The auctions allocate annual contracts to sell oil, and the quantity of oil to be sold under the contract is based on the annual forecasts of oil to be received in-kind by Albpetrol. Albpetrol delivers oil and collects payments from the company contracted to sell the oil in accordance with a pre-defined annual schedule.
Albania’s 2017-2018 EITI Report, published in November 2020, disclosed information on how the country’s commodity trading industry works. The country has also produced its commodity trading report in 2018.
A share of oil and bonuses are collected by the state-owned enterprises Albpetrol and AKBN, whereas a royalty tax, profit tax, dividends and other payments are collected by the government. The government’s revenues from extractive industries and hydropower sector amounted to USD 805 million in 2016, which comprises about 5% of total revenue recorded in the State budget.
Royalties levied from taxable sales of oil, gas, and minerals is recorded in the state budget. According to the “Law on National taxes no. 9975, dated 28 July 2008, amended,” 5% of royalty tax collected must be allocated to each local government unit (“LGU”), proportionate to their contribution to the domestic output of oil, gas and mining.
According to the 2016 EITI Report, subnational transfers amounted to USD 3.5 million in 2016 and represented the main revenue allocated to the local governments.
The EITI encourages multi-stakeholder groups to explore innovative approaches to make the EITI more relevant and useful.
Commodity trading is covered in the 2017-2018 EITI Report and in a standalone 2018 Commodity Trading Report.
- Hydropower is included in EITI reporting makes Albania so far the only EITI implementing country covering hydropower sector.
The Government of Albania committed to implement the EITI on 27 December 2008 by enacting Order Nr.156 on establishing an Inter-Institutional Working Group to prepare Albania’s EITI candidature application. The country was accepted as an EITI candidate in May 2009. As of November 2019, Mr. Genci Tërpo is appointed the Head of the National Secretariat (Albania EITI).
The current objectives for its EITI implementation (in the 2020 EITI work plan) include fighting against corruption, improving natural resource governance, implementing open data policy, introducing legal changes on EITI reporting and beneficial ownership, increasing transparency in commodity trading, identifying impact of the EITI, supporting civil society and addressing the corrective actions.
Mining companies are required to implement the EITI, according to Law 10304. The Presidential Order No. 71 (dated 21 July 2011) establishes the EITI structures and process that must be followed. As of March 2015, oil companies are required to participate in the EITI, according to an amended legislation on hydrocarbons, Law 7746 from 28 July 1993.
The Multi Stakeholder Group is headed by the Deputy Minister of Ministry of Energy and Industry, consisting of 16 representatives. The government is represented through the Ministry of Energy and Industry, Ministry of Finance and Economy, Ministry of Justice, the General Directorate of Taxes, Geological Albanina Service and the National Agendcy of Natural Resources. There are also 5 representatives from civil society and 5 representatives from the companies which operate in extractive industry.
Albania is using the EITI process for wider reforms in the sector, including the development of a revenue management plan to address informality in the mining sector and building its capacity in contracts.
In February 2018, the EITI Board agreed that Albania has made meaningful progress in implementing the 2016 EITI Standard. In the second Validation, the EITI International Secretariat assessed the progress made in addressing the ten corrective actions established by the EITI Board following the first Validation. On 17 June 2019, the Board decided that Albania made meaningful progress with considerable improvements. The third validation of Albania will commence on 1 October 2021. The MSG has to address six corrective actions.
This EITI Report covers Albania's extractive sector in 2017 and 2018. It was published in November 2020.
This is the Albania EITI 2018 Annual Progress Report (in accordance with Requirements 7.4 and 8.4).
In February 2018, the EITI Board agreed that Albania has made meaningful progress in implementing the 2016 EITI Standard. See Board decision on the first Validation 2018-11/BM-39/BP-39-5-A
In the second Validation, the EITI International Secretariat has assessed the progress made in addressing the ten corrective actions established by the EITI Board following the first Validation. See more under background below. Board decision 2019-44/BM-43 can be found here
Timeline of Validation and related materials
This EITI Report covers Albania's extractive sector in 2016. It was published in August 2018.
This is the Albania EITI 2017 Annual Progress Report (in accordance with Requirements 7.4 and 8.4).
This is the Albania EITI 2016-2019 work plan (in accordance with Requirement 1.5).
On 13 February 2018, Albania was found to have made meaningful progress in implementing the EITI Standard. See Board decision 2018-11/BM-39
Timeline of Validation and related materials
Initial data collection and stakeholder consultations