Extractive Industry in Albania, not in line with world developments for environmental protection

Ledion Krisafi: Mrs. Hajnaj, what is the role of EITI in Albania?

Anila Hajnaj: Simply put, the Extractive Industries Transparency Initiative is the most important instrument to control the management and exploitation of natural resources.

It is the instrument used to understand whether natural resources are a curse or blessing for the population living in those regions, whose national wealth this is.

The instrument that strongly supports and empowers civil society to control and force the government or business active in the extractive industry, to be open and accountable to ensure that revenues from oil, minerals or water resources are used for sustainable development of the country.

The key to understanding what is offered by the governments in contractual agreements with the extractive industry business; What are the obligations that the business has towards the use of these assets, that are the property of the country and its people;

Who are the real beneficiary owners (it is important to understand whether different politicians are involved in the business);

What are the benefits of the community living in the areas where those resources are exploited;

What damage does the extractive industry cause to the environment, and what are the obligations of companies for its rehabilitation;

How and to what extent does the local government cooperate with the community and civil society; How much does it invest in the most important community projects with the funds allocated from the royalty, etc.

L.K.: How much do the Albanian government and citizens really benefit from the extractive industry?

A.H.: All individuals or companies who are licensed to be active in the extractive industry for the exploitation of natural resources, are obliged based on contractual relations to pay a tax that is classified as a national tax called royalties, for hydrocarbons, metals, limestone etc.

The classification of royalty is done according to groups: for metallic minerals it’s from 4 to 10%, oil and gas 10%, coal and bitumen 5-6%, minerals and construction materials from 4-7%. Also concession fee of 2-10% which depends on the agreements of the contractual agreements.

L.K.: How much do Albanian citizens benefit from royalties?

A.H.: If we were to speak in general for the whole country, the benefits are as mentioned previously depending on the output which may vary from year to year.

If we look in particular, the population living in areas where natural resources are actually extracted, the benefits are very small, even often insignificant.

In 2010, when Albania was a candidate country, it was decided, by the Council of Ministers, that 25% of the revenues from the royalties be transferred to the local government where the extractive activity is performed. In 2014 this percentage decreased from 25% to 5%.

As members of the civil society group on the EITI board/MSG, my colleagues and I have strongly opposed the issue of reducing the royalty to 5%. The Albanian Center for Development and Integration (ACDI) has conducted the monitoring of the royalty in 5 municipalities. Numerous problems were found, both in the legal framework and in the implementation of the royalty reallocation procedures.

The 5% mining royalty is not fully reallocated to the municipalities; The procedures are complicated, involving four institutions that require very careful coordination. The same can be said about the procedures to transfer the money back to the municipalities.

We have made the appropriate recommendations where we ask for the elimination of all procedures and propose that:

The 5% of the royalty which belongs to the municipalities should be transferred immediately in the moment when the companies pay it.

We, the civil society, have also requested for the percentage of royalty to be increased up to 50%, but not less than 25%. We have also requested that the same procedure is applied for the concession fee, which will go to the municipalities, which currently do not receive anything.

L.K.: How transparent is the extractive industry in Albania?

A.H.: If we talk about the EITI process and obligations such as Annual Reports, they are generally performed well, although with delays, sometimes due to funding or human reasons.

For us as a civil society it’s important that all relevant institutions, such as the Ministry of Energy, Finance, AKBN, tax and customs directorates, as well as municipalities, have complete and updated information (which does not exist) on their official websites about their contracts, liability, investments, royalty, etc.

We demand that hydrocarbon agreements, as well as mining permits, be disclosed but also available to anyone seeking information.

Transparency also requires identifying the real owners, in other words the real beneficiaries of companies operating in the extractive industry, in order to see if people in power influence for personal gain, which is the basis of corruption.

There should also be complete information from the relevant institutions, as well as from all the companies on the work they do and the environmental damage they cause, what obligations they have, how, when and what they do for its rehabilitation.

L.K.: How do you think the Covid-19 pandemic will affect the extractive industry in Albania?

A.H.: Like anywhere in the world, the economic damage from Covid-19 is enormous, but especially for our country and its weak economy, where there are many small non-powerful companies, for which the difficulty is even greater. If we talk further about the quarantine that took place in March, production fell drastically, because citizens were forced to stay home; exports, especially of chromium and hydrocarbons, also affected all companies and their activity.

We have a considerable network of civil society members in different districts, with whom we monitor what is happening in their areas. Today I received information that many small mining companies are in danger of closing down and will have to lay off their workers due to lack of liquidity.

L.K.: Is the extractive industry in Albania in line with the world developments of the greater care for the environment?

A.H.: No, I cannot say! Although the companies have obligations under the contracts, we do not know exactly whether the rehabilitation is carried out or not. The information that comes to us is that some companies that apply quarries close to the cities constantly pollute the air. We can mention as an example Ura Vajgurore, where the owners do not take any measures to find suitable methods and avoid damage. Some hydrocarbon companies or their processing procedures contaminate the soil i.e. in Zharrëz, like others contaminate the waters in the river that passes through the city of Fier; the same is done by solid insoluble waste that covers the surface and the degradation of the soil in Bulqiza, etc. Monitoring by relevant institutions should be in continuation and the companies should be forced to fulfill all the standards.

Interviewed by Ledion Kristafi for Europa Magazine – Read full article here.