Ruining of natural assets

According to the Institution of Statistics, the private companies that exploit the natural reserves in Albania have exported more than 1.6 billion USD of only oil and chrome. This is 12% of the Gross Domestic Product. But what did the Albanian citizen profit from the massive exploitation of their natural assets?

Albania started collecting revenues from oil and chrome concesions in 2008, when the government decided to increase the unearned income from 2 to 10% of the raw production. From that year, the government has collected only 200 million USD.

But even most of this 200 million USD has been paid by the Albanian public company, Albpetrol. The private companies that have the lion share in chrome and oil have collected 1.6 billion USD, but they haven’t paid any tax on profit, because they have declared high spending.

This is a phenomenon that has made previous Albanian governments give up. But why was the Albanian government unable to control the concessions?

In 2006, the government allowed some concessionary companies to expoit the natural resources and send the spending bills through offshore countries, such as Cyprus, which have special rules for the fiscal area and for the tax information, and the verification of bills is almost impossible.

Although the revenues have increased, the companies have declared the same growth on their spending. If they have collected more than 1.6 billion USD just from exports in 2005, without including those from the domestic market, the oil and chrome companies have paid less than 200 million USD through all direct taxes.

This is only 12%, while the International Monetary Fund declared that at least for oil, the optimal tax should be from 65 to 85%. Oil and chrome are two non-renewable natural assets. They are only taken and never return. The private companies are exploiting them with a high pace. The oil production has reached 1.2 million tons each year, while the chrome reserves are almost over.

And while the natural resources are ending, the revenues that the Albanian people have taken, as the real owners of these assets, are minimal. Because profits go somewhere else, to the private sector, and the public finances have plunged in a debt spiral that seems endless.

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