Albania report on initial data collection and stakeholder ... · 2 Validation of Albania: Report on initial data collection and stakeholder consultation Website Email [email protected]

[email protected]+4722200800Fax+4722830802 AddressEITIInternationalSecretariat,Ruseløkkveien26,0251Oslo,Norway

ValidationofAlbania

Reportoninitialdatacollectionandstakeholderconsultation

EITIInternationalSecretariat 11August2017

2ValidationofAlbania:Reportoninitialdatacollectionandstakeholderconsultation


Abbreviations

ACA AlbanianCustomAdministrationAKBN NationalAgencyofNaturalResourcesAKPT NationalAgencyforTerritorialPlanningALBEITI AlbaniaEITIBOE BarrelofOilEquivalentBpd BarrelsperdayCIT CorporateIncomeTaxCSO CivilSocietyOrganisationEGPS ExtractivesGlobalProgrammaticSupportEITI ExtractiveIndustryTransparencyInitiativeEU EuropeanUnionFIAA ForeignInvestors'AssociationinAlbaniaGDT GeneralDirectorateofTaxGDP GrossdomesticproductGFS GovernmentFinanceStatisticsGWh GigawattperhourIFRS InternationalFinancialReportingStandardsIMF InternationalMonetaryFundINSTAT NationalInstituteofStatisticsINTOSAI InternationalOrganisationofSupremeAuditInstitutionsISA InternationalStandardsonAuditingLGU LocalGovernmentUnitMDTF MultiDonorTrustFundMEDTTE MinistryofEconomicDevelopment,Tourism,TradeandEntrepreneurshipMEI MinistryofEnergyandIndustryMOU MemorandumofUnderstandingMSG Multi-stakeholderworkingGroupNGO Non-GovernmentalOrganisationNOC NationalOilCompanyNRGI NaturalResourceGovernanceInstitutePSA ProductionSharingAgreementScf StandardcubicfeetSOE State-ownedenterpriseToRs TermsofReferenceUN UnitedNationsUSD UnitedStatesDollarVAT ValueAddedTax



Tableofcontents

Abbreviations.........................................................................................................................................2

ExecutiveSummary................................................................................................................................5

Introduction.........................................................................................................................................14

PartI–MSGOversight.........................................................................................................................181.OversightoftheEITIprocess................................................................................................................19GovernmentengagementintheEITIprocess(#1.1)................................................................................19IndustryengagementintheEITIprocess(#1.2).......................................................................................22CivilsocietyengagementintheEITIprocess(#1.3).................................................................................25Workplan(#1.5).......................................................................................................................................41

PartII–EITIDisclosures........................................................................................................................472.Awardofcontractsandlicenses...........................................................................................................47Legalframework(#2.1)............................................................................................................................47Licenseallocations(#2.2).........................................................................................................................49Licenseregisters(#2.3).............................................................................................................................56Contractdisclosures(#2.4).......................................................................................................................60Beneficialownershipdisclosure(#2.5).....................................................................................................62Stateparticipation(#2.6).........................................................................................................................643.Monitoringandproduction..................................................................................................................72Overviewoftheextractivesector,includingexplorationactivities(#3.1)...............................................72Productiondata(#3.2).............................................................................................................................73Exportdata(#3.3).....................................................................................................................................764.Revenuecollection...............................................................................................................................80Materiality(#4.1)......................................................................................................................................80In-kindrevenues(#4.2)............................................................................................................................86Barterandinfrastructuretransactions(#4.3)..........................................................................................89Transportrevenues(#4.4)........................................................................................................................90TransactionsbetweenSOEsandgovernment(#4.5)...............................................................................91Subnationaldirectpayments(#4.6).........................................................................................................93Levelofdisaggregation(#4.7)..................................................................................................................94Datatimeliness(#4.8)..............................................................................................................................96Dataquality(#4.9)....................................................................................................................................975.Revenuemanagementanddistribution.............................................................................................113Distributionofrevenues(#5.1)..............................................................................................................113Sub-nationaltransfers(#5.2)..................................................................................................................115Additionalinformationonrevenuemanagementandexpenditures(#5.3)..........................................1186.Socialandeconomicspending...........................................................................................................121Socialexpenditures(#6.1)......................................................................................................................121SOEquasifiscalexpenditures(#6.2)......................................................................................................124Contributionoftheextractivesectortotheeconomy(#6.3)................................................................124



PartIII–OutcomesandImpact..........................................................................................................1297.OutcomesandImpact........................................................................................................................129Publicdebate(#7.1)...............................................................................................................................129DataAccessibility(#7.2).........................................................................................................................133LessonsLearnedandfollow-uponrecommendations(#7.3)................................................................134Outcomesandimpactofimplementation(#7.4)...................................................................................1378.Impactanalysis...................................................................................................................................142

Annexes.............................................................................................................................................145AnnexA-ListofMSGmembersandcontactdetails.............................................................................145AnnexB–MSGmeetingattendance.....................................................................................................146AnnexC–CostofEITIReports...............................................................................................................147AnnexD-Listofstakeholdersconsulted...............................................................................................148AnnexE-Listofreferencedocuments..................................................................................................151

Bibliography.......................................................................................................................................151

Indexoffiguresandtables

Figure1–Initialassessmentcard.................................................................................................................12

Table1–Summaryinitialassessmenttable:MSGoversight.......................................................................44

Table2-Summaryinitialassessmenttable:Awardofcontractsandlicenses.............................................69

Table3-Summaryinitialassessmenttable:Monitoringandproduction...................................................78

Table4-Summaryinitialassessmenttable:Revenuecollection...............................................................108

Table5-Summaryinitialassessmenttable:Revenuemanagementanddistribution.............................119

Table6-Summaryinitialassessmenttable:Socialandeconomicspending..............................................127

Table7-Summaryinitialassessmenttable:Outcomesandimpact..........................................................140



ExecutiveSummary

TheGovernmentofAlbaniacommittedtoimplementtheEITIon27December2008byenactingOrderNr.156onestablishinganInter-InstitutionalWorkingGrouptoprepareAlbania’sEITIcandidatureapplication.ThecountrywasacceptedasanEITIcandidateonMay2009attheEITIBoard’smeetinginWashingtonDC,UnitedStates.ApermanentMSGwasappointedon21July2011followingPrime-MinisterialDecreeNr.71.InSeptember2013,thegovernmentestablishedtheMinistryofEnergyandIndustry(MEI)asthegovernmentinstitutionwithresponsibilityforoverseeingtheextractiveindustriesinAlbania.TheMSGischairedbytheDeputyMinisterofMinistryofEnergyandIndustryandconsistsofrepresentativesfromgovernment,industryandcivilsociety.

On25October2016,theBoardagreedthatAlbania’sValidationunderthe2016EITIStandardwouldcommenceon1April2017.ThisreportpresentsthefindingsandinitialassessmentoftheInternationalSecretariat’sdatagatheringandstakeholderconsultations.TheInternationalSecretariathasfollowedtheValidationProcedures1andappliedtheValidationGuide2inassessingAlbania’sprogresswiththeEITIStandard.WhiletheassessmenthasnotyetbeenreviewedbytheMSGortheindependentValidator,theInternationalSecretariat’spreliminaryassessmentisthatanumberoftherequirementsoftheEITIStandardhavenotbeenfullyaddressed.Fourrequirementsareassessedasunmetwithinadequateornoprogress.TherecommendationsandsuggestedcorrectiveactionsidentifiedthroughthisprocessrelateinparticulartocivilsocietyengagementandMSGoversight,dataqualityassuranceandcomprehensivenessofreportingbybothgovernmentandindustryaswellasstate-ownedenterprises,includingquasi-fiscalexpenditures,financialrelationswithgovernmentandlevelofstateownership.

Overallconclusions

AlbaniaistheonlycountryintheBalkanstoimplementtheEITI,inkeepingwithitseffortstoaccedetotheEuropeanUnion(EU).Withalegacyofopacityinthemanagementofitsnaturalresources,thecountryhassoughttousetheEITItoensureaccountabilitytocommunitiesthathostoil,gasandminingprojects.Anumberofprojectsonthehorizon,includingtheTrans-AdriaticPipeline(TAP)fornaturalgasandpositiveprospectsforShell’soilexploration,haveaddedcommercialimpetustofurtherimprovingtransparency.

AlbaniabeganimplementingtheEITIin2009tostrengthenthegovernment’seffortstoestablishtransparentandresponsiblemanagementofnaturalresources.EITIimplementationcomplementedbroadereconomic,financialandinstitutionalreforms,inparticularanewMiningLawandHydrocarbonsLaw.AnotherstrengthofAlbania’sEITIimplementationhasbeenitseffortstousetheprocesstoaddresslocalconcerns,boththroughactivedisseminationandoutreacheffortsandbyexpandingthescopeofEITIreportingtothehydro-powersector.ThegovernmentisconsideringexpandingEITIreportingtotheforestryandfisherysectors–strategically-importantindustriesthatcontributesignificantlytothecountry’seconomy.

1https://beta.eiti.org/document/validation-procedures2https://beta.eiti.org/document/validation-guide



TheGovernmentofAlbaniahasbeensupportiveofEITIimplementation,enshriningreportingrequirementsinsectorlegislationandfollowinguptoensurefullrevenuetransparency,eventhoughsomegovernmententitieshavebeenlessthanfullycooperative.RepresentativesfromagenciessuchastheMinistryofEnergyandIndustry(MEI),theMinistryofFinance(MoF),theMinistryofJustice(MoJ),theGeneralDirectorateofTaxes(GDT),theAlbanianGeologicalService,theNationalAgencyofNaturalResources(AKBN)andtheDepartmentofCustoms(DC)havecontributedtotheworkoftheMSG,provideddataforEITIReportsandsupportedembeddingEITIreportingingovernmentsystems.Representativesfromtheoil,gasandminingindustriesaresupportiveoftheEITIandhavefounditusefulfortheirpublicrelations,helpingtoimprovepublicunderstanding.ThecivilsocietyconstituencywasactiveatthebeginningoftheEITIprocessbuthasbecomeincreasinglyinactiveovertime;theycontinuetosupportEITIreportingandtoaskforgreatertransparency,howevertheydonotmakeuseEITIdatainpractice.Civilsociety’sinternalchallengeseffectivelyhampertheparticipationofthebroaderconstituencyintheEITIprocessandlimittheeffectivenessoftheEITI.

TheimplementationprocesshasbeenwellsupportedbytheWorldBank,whichhasprovidedsubstantialfundingsince2013.ThegovernmentcontributesbyhostingtheAlbEITISecretariatattheMEI,employingninestaff,andcoveringsomeoftheactivitiesoutlinedintheMSG’sworkplan.ImplementationoftheEITIStandardhasbeendrivenprimarilybytheAlbEITISecretariatinclosecooperationwithMEI,andwithonlylacklustreengagementfromcivilsocietyandindustry.Whiletherehavebeeninstancesofindividualcompanyrepresentativesandcivilsocietyactivistsplayingproactiverolesinreporting,disseminationandoutreach,thereislittleevidencethattheconstituenciesareworkingeffectively.Intheabsenceofeffectivemulti-stakeholderoversightofimplementation,theAlbEITISecretariathasgrowntobecomeaquasi-independentgovernmententity.WhereasthisapproachhasproveneffectiveinempoweringAlbEITItoexpandthescopeofimplementationtohydro-powerand,infuture,environmentalpayments,fisheryandforestry,itwouldappeartohavecomeatthecostofmeaningfulstakeholderoversightoftheEITIprocess.ItwouldnowseemtimelytorevisittheinstitutionalstructureofEITIimplementationinAlbaniatoimproveMSGoversight.

AspectsoftheEITIStandardareparticularlypertinenttosomeofAlbania’skeychallengesandsourcesofpastpubliccontroversy.RequirementsoftheEITIStandardrelatedtoclarifyingthemanagementofoff-budgetrevenues,thefinancialrelationsbetweenstate-ownedenterprisesandthegovernment,productiondata,socialexpenditures,subnationaltransfersandauditpracticesalltouchuponissuesthatstakeholdersconsidersensitive.TheEITIStandardprovidesauniqueopportunitytoaddresstheseissues.

Despitethechallengesinmulti-stakeholderoversightandcertainreportinggaps,EITIimplementationhasledtotangibleimpactsthroughgovernmentreformsandgreaterawarenessbyhostcommunitiesoftheirrights.Forexample,followingrecommendationsofthe2011EITIReport,Albaniahasestablishedapubliclyaccessiblelicenseregisterforallmining,oilandgaslicenses.Followingrecommendationsrelatedtoinactivesubnationaltransfersofminingrevenuesinthe2013and2014EITIReports,thegovernmentalsoreformedtheLawonNationalTaxes,witheffectfromJanuary2015,reducingtransfersfrom25%to5%ofroyaltiestoLGUs,albeitwithoutconditionsallowingtransferstobeexecuted.

Recommendations

WhilethefollowingreportincludesrecommendationsforspecificimprovementsthattheMSGmaywish



toconsiderimplementing,thefollowingisalistofstrategicrecommendationsthatcouldhelpAlbaniamakeevengreateruseoftheEITIasaninstrumenttosupportreforms.

1. TheMSGshouldensuremoreconsistentparticipationofgovernmentrepresentativesindisseminationactivities.

2. Tostrengthenimplementation,theindustryconstituencyisencouragedtoensurethatitsMSGmembershipisrepresentativeofthestructureofthemining,hydropower,oilandgassectorsandthattheregularityandseniorityofindustryparticipationatMSGmeetingsiscommensuratewiththeMSG’sneedtotakeinformeddecisionsandfollow-uponpastactionpoints.TheMSGshouldensurecomprehensivereportingfromallmaterialcompanies.

3. Inaccordancewithrequirement1.3.a,thecivilsocietyconstituencyshoulddemonstratethattheyarefully,activelyandeffectivelyengagedintheEITIprocess.Specifically,civilsocietyshouldensurethattheyareabletofullycontributeandprovideinputtotheEITIprocessandthattheyhaveadequatecapacitytoparticipateintheEITI.Inaccordancewithrequirement8.3.c.i,thecivilsocietyconstituencyshoulddevelopanddiscloseanactionplanforaddressingthedeficienciesincompanyengagementdocumentedintheinitialassessmentandvalidator’sreportwithinthreemonthsoftheBoard’sdecision,i.e.by<BoardDecision+3months>.TheconstituencymaywishtoundertakeanindependentreviewofcivilsocietyengagementintheEITIinAlbania,broadeningtheengagementwithCSOswithpotentialinterestsinEITIimplementation.Undertakingacapacityneedsassessmentandformulatingactionstoaddresscivilsocietycapacityconstraintsarecrucial,notleasttounlockfundingfromdevelopmentpartnersandotherrelevantparties.ThecivilsocietyconstituencyisencouragedtodevelopandagreeonguidelinesthateffectivelysetouttheprocessbywhichrepresentativesontheMSGwillbeselectedandheldaccountable.

4. Inaccordancewithrequirement1.4.a.ii,theMSGshouldensurethatitsproceduresfornominatingandchangingmulti-stakeholdergrouprepresentativesarepublicandconfirmtherightofeachstakeholdergrouptoappointitsownrepresentatives.Tostrengthenimplementation,thegovernmentisencouragedtoensurethatrelevantstateentities,suchasthenationaloilcompanyAlbpetrol,givengapsinreportingonstateparticipation(seeRequirement2.6),arerepresentedontheMSGandthattheirlevelofseniorityiscommensuratewiththeneedfortheMSGtotakeinformeddecisionsandfollowuponagreedactions.Inaccordancewithrequirement1.4.b.iiand1.4.b.iii,theMSGshouldundertakeeffectiveoutreachactivitieswithcivilsocietygroupsandcompanies,includingthroughcommunicationsuchasmedia,websiteandletters,informingstakeholdersofthegovernment’scommitmenttoimplementtheEITI,andthecentralroleofcompaniesandcivilsociety.MembersoftheMSGshouldliaisewiththeirconstituencygroups.Inaccordancewithrequirement1.4.b.vi,theMSGshouldensureaninclusivedecision-makingprocessthroughoutimplementation,particularlyasconcernsindustryandcivilsociety.Governmentandcompanyconstituenciesareencouragedtoensurethattheirrepresentatives’attendanceatMSGmeetingsisconsistentandofsufficientlyhighleveltoallowtheMSGtotakedecisionsandfollowuponthem.ItisalsorecommendedthattheMSGreviewsevaluationproceduresforitsmembersthatallconstituencieswouldagreetofollow.

5. Tostrengthenimplementation,theMSGisencouragedtoagreeaworkplanthatislinkedtonationalprioritiesandthatistheproductofwideconsultationwithstakeholders.Clearerlinkstonationaldiscussionsandprioritieswillencouragemoreactiveparticipationbyallstakeholder



groupsandhelpmobiliseadditionalresources.TheMSGshouldaddressthefinancialsustainabilityofEITIimplementationoverthemediumterm.

6. Tostrengthenimplementation,theMSGmaywishtoexplorethepotentialofusingEITIreportingtohighlightinconsistenciesinAlbania’slegalenvironment,fiscalframeworkandregulatoryresponsibilitiesinthemining,oilandgassectors.TheMSGmaywishtolinkEITIreportingtoplannedtechnicalassistanceinthemining,oilandgassectorstoensurethatEITIimplementationservesasadiagnostictosupportongoingandplannedreforms.

7. Inaccordancewithrequirement2.2.a,theMSGshouldensureannualdisclosureofwhichmining,oilandgaslicenseswereawardedandtransferredintheyear(s)underreview,highlightingthetechnicalandfinancialrequirementsandanynon-trivialdeviationsfromtheapplicablelegalandregulatoryframeworkgoverninglicenseawardsandtransfers.

8. Inaccordancewithrequirement2.3.b,Albaniashouldensurethatdatesofapplication,awardandexpiry,commodity(ies)coveredandcoordinatesforalloil,gasandmininglicensesheldbymaterialcompaniesarepubliclyavailable.Thegovernmentisencouragedtomakethisinformationavailableforlicensesheldbyallcompanies,regardlessoftheirmateriality.

9. Inaccordancewithrequirement2.4.b,AlbaniaisrequiredtodocumentinfutureEITIReportsthegovernment’spolicyondisclosureofcontractsandlicensesthatgoverntheexplorationandexploitationofoil,gasandminerals.Thisshouldincluderelevantlegalprovisions,anyreformsthatareplannedorunderwayaswellasanoverviewofcontractsalreadypublished.

10. Tostrengthenimplementation,theMSGmaywishtoconsiderpilotingbeneficialownershipreportingintheforthcomingEITIReportinordertoincreaseawarenessofbeneficialownershiptransparencyandpilotbeneficialownershipdefinitionsandthresholds.AlbEITImayalsowishtoconductbroaderoutreachtothecompaniesontheobjectivesofbeneficialownershiptransparency,aswellasholdconversationswithgovernmentagenciesonhowtomakesuchdisclosuresmandatory.

11. Inaccordancewithrequirement2.6.a,theMSGshouldprovideanexplanationoftheprevailingrulesandpracticesrelatedtoSOEs’retainedearnings,reinvestmentandthird-partyfunding.ThegovernmentshouldalsoensureannualdisclosureofanychangesingovernmentownershipinSOEsortheirsubsidiaries,andprovideacomprehensiveaccountofanyloansorloanguaranteesextendedbythestateorSOEstomining,oil,andgascompaniesinlinewithrequirement2.6.b.

12. Tocontinuestrengtheningimplementation,theMSGmaywishtofollowuponrepeatedrecommendationsfrompastEITIReportsrelatedtoensuringtheaccuracyofofficialreservesestimates.

13. Tostrengthenimplementation,theMSGisencouragedtoensurethatfutureEITIReportsprovidedisaggregatedproductionvolumesandvaluesforallkeymineralsproducedintheyear(s)underreview.TheMSGmayalsowishtoworkwithrelevantgovernmententitiestoensurethatinformationondomesticpricesofallmineralsispublishedaspartofroutinegovernmentdisclosures.

14. Inaccordancewithrequirement3.3,theMSGshouldensurefutureEITIReportsprovide



disaggregatedexportvolumesandvaluesforallkeymineralsexportedintheyear(s)underreview.TheMSGisencouragedtoclearlysegregateanyfuturetransitnaturalgasfromthedevelopmentoftheTrans-AdriaticPipelineareclearlysegregatedfromAlbania’sotherexports.

15. Tostrengthenimplementation,theMSGisencouragedtoconsiderrevisitingitsmaterialitythresholdforselectingminingcompaniestostrikeabalancebetweenthecomprehensivenessofdisclosuresandthequalityofreporting.TheMSGmaywishtoconsiderasamplingapproach,whichwouldallowthesepaymentstobeinvestigatedwithoutcreatinganunreasonablereportingburden.TheMSGisalsoencouragedtoensurethattheIndependentAdministratorprovidesitsopiniononthecomprehensivenessoftheEITIReport.

16. Tostrengthenimplementation,theMSGisencouragedtoensurethatfutureEITIReportsclearlydisaggregatethestate’sin-kindrevenuesfromAlbpetrol’sequityoil,asithasdoneinpreviousEITIReports.TheMSGcouldconsiderjoiningtheEITI’stargetedeffortoncommoditytradingtoprovideaframeworkforensuringthatdisclosuresofthestate’ssalesofitsin-kindrevenuesareinlinewithinternationalbestpractice.

17. Tostrengthenimplementation,theMSGshouldensurethatfutureEITIReportsclearlyaddressRequirement4.3andconfirmtheMSG’sassessmentofitsnon-applicability.TheMSGmaywishtoconsidertheextenttowhichareviewoftheactualtermsofmining,oilandgascontractswouldbenecessarytoensureacomprehensiveassessmentoftheapplicabilityofRequirement4.3.

18. Tostrengthenimplementation,theMSGshouldconsiderensuringthatfutureEITIReportsexplicitlystatethatthegovernmentandSOEsdonotreceiveanyrevenuesfromthetransportationofminerals,crudeoilornaturalgasintheyear(s)underreview.

19. Tostrengthenimplementation,theMSGisstronglyencouragedtoensurethatfutureEITIReportsincludeAlbpetrol’sdividendstogovernmentinthescopeofreconciliation,inlinewithrequirement4.5.

20. Inaccordancewithrequirement4.6,theMSGshouldundertakeappropriatescopingofdirectsubnationalpaymentsbyextractivecompaniestoLGUs,establishingacomprehensivebasisfortheMSG’smaterialitydiscussionsregardingdirectpaymentstoLGUs.TheMSGmaywishtoconsiderasamplingapproach,whichwouldallowthesepaymentstobeinvestigatedwithoutcreatinganunreasonablereportingburden.

21. Tostrengthenimplementation,theMSGmaywishtoconsidertheextenttowhichitcanmakeprogressinimplementingproject-levelEITIreportingofsector-specificleviesandtaxesaheadofthedeadlineforallEITIReportscoveringfiscalperiodsendingonorafter31December2018,agreedbytheEITIBoardatits36thmeetinginBogotá.

22. Tostrengthenimplementation,theMSGmaywishtoliaisewithkeyrevenuecollectingagenciesandsectorregulatorstoexploremeansofembeddingdisclosuresofEITI-requiredinformationinroutinegovernmentsystemstoensuretimelierEITIreporting.

23. InaccordancewithRequirement4.9.a,theEITIrequiresanassessmentofwhetherthepaymentsandrevenuesaresubjecttocredible,independentaudit,applyinginternationalauditingstandards.Inaccordancewithrequirement4.9.b.iiiandthestandardTermsofReferenceforthe



IndependentAdministratoragreedbytheEITIBoard,theMSGandIndependentAdministratorshould:

a. examinetheauditandassuranceproceduresincompaniesandgovernmententitiesparticipatingintheEITIreportingprocess,andbasedonthisexamination,agreewhatinformationparticipatingcompaniesandgovernmententitiesarerequiredtoprovidetotheIndependentAdministratorinordertoassurethecredibilityofthedatainaccordancewithRequirement4.9.TheIndependentAdministratorshouldexercisejudgementandapplyappropriateinternationalprofessionalstandardsindevelopingaprocedurethatprovideasufficientbasisforacomprehensiveandreliableEITIReport.TheIndependentAdministratorshouldemployhis/herprofessionaljudgementtodeterminetheextenttowhichreliancecanbeplacedontheexistingcontrolsandauditframeworksofthecompaniesandgovernments.TheIndependentAdministrator’sinceptionreportshoulddocumenttheoptionsconsideredandtherationalefortheassurancestobeprovided.

b. ensurethattheIndependentAdministratorprovidesanassessmentofcomprehensivenessandreliabilityofthe(financial)datapresented,includinganinformativesummaryoftheworkperformedbytheIndependentAdministratorandthelimitationsoftheassessmentprovided.

c. ensurethattheIndependentAdministratorprovidesanassessmentofwhetherallcompaniesandgovernmententitieswithintheagreedscopeoftheEITIreportingprocessprovidedtherequestedinformation.AnygapsorweaknessesinreportingtotheIndependentAdministratormustbedisclosedintheEITIReport,includingnaminganyentitiesthatfailedtocomplywiththeagreedprocedures,andanassessmentofwhetherthisislikelytohavehadmaterialimpactonthecomprehensivenessandreliabilityofthereport.

24. Inaccordancewithrequirement5.1.a,theMSGshouldensurethattheallocationofextractivesrevenuesnotrecordedinthenationalbudgetareexplained,withlinksprovidedtorelevantfinancialreportsasapplicable.TheMSGmaywishtoexploretheextenttowhichitcoulduseextractives-specificGFSclassificationsfromitsEITIsummarydatatablesasameansofdisaggregatingtheextractivescomponentsofcommontaxesinexistingMoFsystems.

25. Inaccordancewithrequirement5.2.a,theMSGshouldassessthematerialityofsubnationaltransferspriortodatacollectionandensurethatthespecificformulaforcalculatingtransferstoindividuallocalgovernmentsbedisclosed,tosupportanassessmentofdiscrepanciesbetweenbudgetedandexecutedsubnationaltransfers.Giventhehighlevelofpublicinterestinthisissue,theMSGmaywishtoconsiderincludingLGUsinthereportingprocessforsubnationaltransfersinordertoreconcilethesetransactions.

26. Tostrengthenimplementation,theMSGmaywishtoconsiderincludingadditionalinformationonthebudget-makingandauditingprocessesforgovernmentaccountsinfutureEITIReports.

27. Inaccordancewithrequirement6.1.a,theMSGshouldagreeacleardistinctionbetweenmandatoryandvoluntarysocialexpenditurespriortodatacollectionandensurethatmaterialmandatorysocialexpendituresarecomprehensivelydisclosedinfutureEITIReports.Where



beneficiariesofmandatorysocialexpendituresareathirdparty,i.e.notagovernmentagency,theMSGshouldensurethatthenameandfunctionofthebeneficiarybedisclosed.TheMSGmaywishtoconsidertheextenttowhichdisclosureofactualmining,oilandgascontracts(orreviewofkeyterms)wouldbenecessarytoprovideacomprehensiveassessmentoftheexistenceofmandatorysocialexpenditures.TheMSGmayalsowishtoconsiderthefeasibilityofreconcilingmandatorysocialexpenditures.

28. Inaccordancewithrequirement6.2,theMSGshouldconsidertheexistenceandmaterialityofanyquasi-fiscalexpendituresundertakenbyextractiveSOEsandtheirsubsidiaries,ensuringthatallmaterialquasi-fiscalexpendituresaredisclosedinfutureEITIReports.

29. Tostrengthenimplementation,theMSGisencouragedtoensurethatfutureEITIReportsincludethevalueofextractiveindustries’contributiontoGDPinabsolutetermsandprovidespecificfiguresforthemacro-economicinformationcoveredunderRequirement6.3.TheMSGisencouragedtostudytheextenttowhichitcouldprovideupdatedmacro-economicinformationonthecontributionoftheextractiveindustriesinatimeliermannerthroughtheAlbEITI(orotherrelevantgovernment)website.

30. Tostrengthenimplementation,theMSGshouldconsiderstrengtheningmulti-stakeholderengagementinitscommunications,disseminationandoutreachefforts,toensurebroaderdisseminationandpublicdebateonEITI-relatedissues.Naturalresourcegovernanceandanti-corruptionareheatedtopicsinAlbania,andtheMSGmaywishtoconsidertailoringEITIdiscussionstotangibledemandsfromstakeholders.

31. Inaccordancewithrequirement7.3,theMSGshouldtakestepstoactuponlessonslearnt,toidentify,investigateandaddressthecausesofanydiscrepancies,andtoconsidertherecommendationsresultingfromEITIreporting.TheMSG,inconsultationwithgovernmentstakeholdersinparticular,maywishtoconsiderinstitutionalisingitsmechanismsforfollowinguponrecommendationsfromEITIReportsandValidationasameansofensuringstricterattentiontoimplementation.

32. Tostrengthenimplementation,theMSGcouldconsiderdiscussingtheroletheEITIcouldplayinachievingnationalprioritiesinreformoftheextractiveindustriesaspartofitsannualreviewoftheworkplan.TheMSGmayalsowishtoundertakeanimpactassessmentwithaviewtoidentifyopportunitiesforincreasingtheimpactofimplementation.



Figure1–Initialassessmentcard

EITIRequirements LEVELOFPROGRESS

Noprog

ress

Ina

dequ

ate

Meaning

ful

Satisfactory

Beyon

d

Categories Requirements

MSGoversight

Governmentengagement(#1.1) Industryengagement(#1.2) Civilsocietyengagement(#1.3) MSGgovernance(#1.4) Workplan(#1.5)

Licensesandcontracts

Legalframework(#2.1) Licenseallocations(#2.2) Licenseregister(#2.3) Policyoncontractdisclosure(#2.4) Beneficialownership(#2.5) Stateparticipation(#2.6)

Monitoringproduction

Explorationdata(#3.1) Productiondata(#3.2) Exportdata(#3.3)

Revenuecollection

Comprehensiveness(#4.1) In-kindrevenues(#4.2) Barteragreements(#4.3) Transportationrevenues(#4.4) SOEtransactions(#4.5) Directsubnationalpayments(#4.6) Disaggregation(#4.7) Datatimeliness(#4.8) Dataquality(#4.9)

RevenueallocationDistributionofrevenues(#5.1) Subnationaltransfers(#5.2) Revenuemanagementandexpenditures(#5.3)

Socio-economiccontribution

Mandatorysocialexpenditures(#6.1.) SOEquasi-fiscalexpenditures(#6.2) Economiccontribution(#6.3)

Outcomesandimpact

Publicdebate(#7.1) Dataaccessibility(#7.2) Followuponrecommendations(#7.3) Outcomesandimpactofimplementation(#7.4)



Legendtotheassessmentcard

Noprogress.Thecountryhasmadenoprogressinaddressingtherequirement.Thebroaderobjectiveoftherequirementisinnowayfulfilled.

Inadequateprogress.Thecountryhasmadeinadequateprogressinmeetingtherequirement.Significantelementsoftherequirementareoutstandingandthebroaderobjectiveoftherequirementisfarfrombeingfulfilled.

Meaningfulprogress.Thecountryhasmadeprogressinmeetingtherequirement.Significantelementsoftherequirementarebeingimplementedandthebroaderobjectiveoftherequirementisbeingfulfilled.

Satisfactoryprogress.ThecountryiscompliantwiththeEITIrequirement.

Beyond.Thecountryhasgonebeyondtherequirement.

Thisrequirementisonlyencouragedorrecommendedandshouldnotbetakenintoaccountinassessingcompliance.

TheMSGhasdemonstratedthatthisrequirementisnotapplicableinthecountry.



Introduction

Briefrecapofthesign-upphase

AlbaniawasadmittedasanEITIcandidateinMay2009andwasdeemedcompliantwiththeEITIRulesinMay2013.

PrimeMinisterSaliBerishaissuedOrderNr.156dated27December2008establishinganInter-InstitutionalWorkingGrouptobecomposedofrepresentativesfromvariousstateinstitutionsandrepresentativesinvitedbytheheadoftheWorkingGroupfrom“non-profitorganisations,AlbanianBank,EnergyRegulatoryAgency,groupsofinterest,UnionofTradeandIndustry”(HartNurseLtd,2011).AlbaniaappliedforEITIcandidatecountrystatusinMarch2009bysubmissionofaletterfromtheMinisterofEconomy,TradeandEnergydated30March2009.TheWorkingGroupapprovedthecountryworkplan,developedwiththeassistanceoftheWorldBank,atitsfirstmeetingon17March2009.FollowingrecommendationsfromAlbania’sValidationundertheEITIRules,PrimeMinisterSaliBerishaissuedDecreeNr.71on21July2011establishingtheMulti-StakeholderGroup(MSG)(HartNurseLtd,2011).AccordingtotheDecree,theMSGischairedbytheDeputyMinisterofEconomy,TradeandEnergyandconsistsofrepresentativesfromgovernment,companiesoperatingintheextractiveindustriesandcivilsociety.InSeptember2013,thenewgovernmentrestructuredthecabinetandcreatedtheMinistryofEnergyandIndustry(MEI)asthegovernmentinstitutionwithresponsibilityforoverseeingtheextractiveindustriesinAlbania.

Objectivesforimplementationandoverallprogressinimplementingtheworkplan

Albania’sMSGhasagreedaworkplanforEITIimplementationover2016-2019,publishedontheAlb-EITIwebsite.Whiletheworkplanwasapprovedbycircularon17February2016,theMSGandsecretariatsubsequentlycontinuedrevisionsoftheworkplan,keepingtrackoffulfilledactivities.

TheworkplanliststhefollowingfournationalprioritiesrelatedtonaturalresourcegovernanceandprovidesadetailedexplanationofhowtheobjectiveswillbeimplementedinrelationtotheEITIprocess:naturalresourcegovernance;naturalresourcegovernance;opendata;supporttocivilsocietyandthefightagainstcorruption.Theworkplanactivitiesareclearlycategorisedaccordingtotheobjectivesaddressed.

HistoryofEITIReporting

AlbaniahasproducedsevenEITIReportscoveringthefiscalyears2009-2015.TheIndependentAdministratorDeloitteAuditAlbaniawascontractedthreetimes,producingintotalfiveEITIreportscoveringfiscalyears2011-2015.ThepreviousIndependentAdministrator(FairLinks)wascontractedtocompleteEITIreportsfor2009and2010.

Summaryofengagementbygovernment,civilsocietyandindustry

TheInter-InstitutionalWorkingGroupinAlbaniawasestablishedbyPrimeMinisterialOrder#156dated27December2008andcomprisedrepresentativesfromvariousstateinstitutionsandrepresentatives–



invitedbytheheadoftheWorkingGroup–from“non-profitorganisations,AlbanianBank,EnergyRegulatoryAgency,groupsofinterest,UnionofTradeandIndustry”(HartNurseLtd,2011).FollowingrecommendationsfromAlbania’sValidationundertheEITIRules,PrimeMinisterSaliBerishaissuedDecreeNr.71on21July2011establishingtheMSG.

ThesevengovernmentmembersincludeDeputyMinisterofEnergyandIndustryIlirBejtja,theMSGChair,DritanSpahiufromtheMEI,SajmirLaçejfromtheMoF,EldaSpassefromtheMoJ,BorjanaShakafromGDT,NikollKazafromtheGeologicalAlbanianServiceandAzbiArapifromAKBN.Industry’srepresentationontheMSGincludesAdriatikGolemifromBankersPetroleumLtd,SaimirBokafromAlbchrome,PerparimAlikajfromtheFIAA(HeadofitsCommitteeonIndustryandMining),DritanDervishajfromANTEACementandTurkerSengonulfromShellUpstreamAlbania.CivilsocietyontheMSGisrepresentedbySamiNezaoftheCentreforTransparencyandFreeInformation,IlirAliajoftheCentreforDevelopmentandDemocratizationsoftheInstitutions,AnilaHajnajoftheAlbanianCentreforInstitutionalDevelopmentandBakiBajraktarioftheMinersUnionofBulqiza.

Keyfeaturesoftheextractiveindustry

Withreservesofchromium,coal,copper,iron,nickel,oilandgas,Albania’sextractiveindustriesaccountedfor5.6%ofGDPin2015,including3%frommining,oilandgasand2.6%fromtheelectricitysector(AlbaniaEITI,2016).Albaniawastheworld’sthird-largestproducerofchromiumduringtheCommunistperiodto1990andstillaccountsfor2.5%ofglobalproduction.AlbaniaalsoholdsEurope’slargestreservesofthemineralatroughly10mmetrictons(AlbanianInvestmentDevelopmentAgency,2017).Thecountry’sPatos-Marinzaoilfield,discoveredin1928,remainsEurope’slargestonshoreoilfieldwitharound200mbarrelsofprovenandprobable(2P)reservesofcrudeoil(ablendoflightandheavycrudeoil,API8-11)(BankersPetroleum,2017).Albaniaholdstheworld’s63rd-largestreservesofcrudeoil(IMF,2016).WiththevalueofmineralexportsdeclininginlinewiththerecessioninkeyEuro-areatradingpartnerslikeItalyandGreece,theshareofmining,oilandgasintotalexportsfellfrom39%in2013to24%in2015(AlbaniaEITI,2016)(USGeologicalSurvey,2016).

Whileallmineralexplorationandproductionwasfirmlystate-controlledduringtheCommunistperiod,the1994AlbanianMiningLawopenedthedoorstoprivateinvestmentintheextractiveindustries(AlbaniaEnergyAssociation,2012).Thestatedominanceoftheminingsectorleftalegacyoflargeindustrialcomplexesintegratedacrossthevaluechainofchromite,copper,iron-nickelandbitumen,althoughthetransitiontoamarketeconomyinthemid-1990scausedanear-totalcollapseinminingactivity(AlbanianInvestmentDevelopmentAgency,2012).Bythemid-2000s,asminingsectorreformswereimplementedandinternationalpricesforkeymineralcommoditiesrosesharply,Albania’sminingsectorattractedsignificantinvestment,particularlyinchromite(USGeologicalSurvey,2016)(AlbanianInvestmentDevelopmentAgency,2012).Thecountry’skeychromitedepositsarecentredintheNorth-East,CentreandSouth-East(AlbaniaEnergyAssociation,2012).

Albania’sfirstoilfieldswerediscoveredatDrashovicëin1918andatKuçovëandPatos-Marinzain1928(WorldPetroleumCouncil,2003).Significantgasdepositswereidentifiedinthecountry’swestasearlyas1963-1966(AKBN,2012).State-ownedAlbpetrolcontrolledtheentireupstreamoilandgasvaluechainuntiltheopeningofthesectortoprivateinvestmentin1990,whenitstartedcontractingprivatecompaniesthrough“petroleum-sharingagreements”(PSAs–similartoproduction-sharingagreements)



(AlbaniaEITI,2016).Thegovernmentheldlicensingroundsforprivateoilcompaniesin1990(offshore),1992(onshore)and1995(combined),awardingatotalofninePSAs(AKBN,2012).ThefirstmajoroffshoreoildiscoverieswereannouncedbyAgipontheAdriatiku-4blockandOXY,ShellandPetromanasontheShpiraguoilfieldin2001and2014(AKBN,2012).WhileAlbania’stransitioninthemid-1990ssawadrasticslumpinitsoilproduction,from1.4mmetrictonsayearin1974to1.1mmetrictonsin1990andarecordlowof0.315mmetrictonsby2000(WorldPetroleumCouncil,2003)(AKBN,2012),oilproductionmorethandoubledsince2003asaresultofprivateinvestment,toreach1.279mmetrictonsin2015(AlbaniaEITI,2016).Aprivatecompany,BankersPetroleum,signedaPSAforthePatosMarinzaoilfieldin2004andincreasedproductionto21,000barrelsperday(BankersPetroleum,2017).YetAlbaniaremainsahigh-costoilproducer,implyingthatchangesininternationaloilpriceshaveagreaterimpactonAlbania’soilproductionthaninotherlower-costproducers(IMF,2016).

Whilethegovernmenthaslongplannedfortheprivatisationofthenationaloilcompany,Albpetrol,anditsrefiningsubsidiary,ARMO,progresshasbeenuneven.InOctober2012,thegovernmenttenderedamajoritystakeinstate-ownedAlbpetrolforprivatisation.WhileVetro’sEUR850mbidforAlbpetrolwasmorethantwicetheclosestbidder’s,itsfailuretocompletefirstpaymentbytheFebruary2013deadlineledtothecancelationoftheprivatisation(Reuters,2013).ThetransactionwasneverconcludedandPrimeMinisterEdiRamaformallypostponedAlbpetrol’sprivatisationinDecember2015duetolowoilprices(TiranaTimes,2015)(EBRD,2016).

AlbaniabecameaEuropeanUnioncandidatestateinJune2014,creatingtheimpetustoharmonizeitslawsincludinginmineralconcessionsandoilandgastenders(USGeologicalSurvey,2016).ThecountryisalsogainingimportanceasanenergytransitcountrysinceFebruary2012,whenthen-PrimeMinisterSaliBerishaannouncedthatAlbaniawouldbethefirstcountrytosupporttheTransAdriaticPipeline(TAP).TheTAPisasectionofthebroader3500km-SouthernGasCorridorlinkingAzerbaijan’sgasfieldswiththeEuropeangasnetworkthroughGreece,AlbaniaandtheAdriaticSeatosouthernItaly(Re:Common,2016).DespitepublicoppositiontotheprojectfromsomehostcommunitiesinGreeceandItaly,analystsexpectthepipelinetobecompletedin2019(IMF,2016).

Albaniaisalsoakeyproducerofhydro-electricpower,theprimarysourceofthecountry’selectricity.Whileitsinstalledcapacityisestimatedtobe10,000GWh,itseffectiveproductionhasdeclinedfromapeakof7,674GWhin2010andAlbaniahasremainedreliantonelectricityimportstomeetdomesticdemand(AlbanianInvestmentDevelopmentAgency,2017).Thegovernmentestimatesthatonlyaround35%ofAlbania’shydro-electricpowerproductionpotentialhasbeendevelopedthusfar(AlbanianInvestmentDevelopmentAgency,2017).

ExplanationoftheValidationprocess

InOctober2016,theBoardagreedtheValidationscheduleof30EITIimplementingcountries,includingtheAlbania.TheEITIInternationalBoardagreedatits35thBoardmeetinginAstana,KazakhstanthatAlbania’sValidationwouldcommenceon1stApril2017(Board,2016).

ValidationisanessentialfeatureoftheEITIimplementationprocess.ItisintendedtoprovideallstakeholderswithanimpartialassessmentofwhetherEITIimplementationinacountryisconsistentwiththeprovisionsoftheEITIStandard.ItalsoaddressestheimpactoftheEITI,theimplementationof



activitiesencouragedbytheEITIStandard,lessonslearntinEITIimplementation,aswellasanyconcernsstakeholdershaveexpressedandrecommendationsforfutureimplementationoftheEITI.

TheValidationprocessisoutlinedinchapter4oftheEITIStandard3.Ithasfourphases:

1. PreparationforValidationbythemulti-stakeholdergroup(MSG)

2. InitialdatacollectionandstakeholderconsultationundertakenbytheEITIInternationalSecretariat.

3. IndependentqualityassurancebyanindependentValidatorwhoreportsdirectlytheEITIBoard

4. Boardreview.

TheValidationGuideprovidesdetailedguidanceonassessingEITIRequirements,andmoredetailedValidationprocedures,includingastandardisedprocedurefordatacollectionandstakeholderconsultationbytheEITIInternationalSecretariatandstandardisedtermsofreferencefortheValidator.

TheValidationGuideincludesaprovisionthat:“WheretheMSGwishesthatvalidationpaysparticularattentiontoassessingcertainobjectivesoractivitiesinaccordancewiththeMSGworkplan,theseshouldbeoutlinedupontherequestoftheMSG”.TheAlbEITIMSGdidnotrequestanyissuesforparticularconsideration.

InaccordancewiththeValidationprocedures,theInternationalSecretariat’sworkontheinitialdatacollectionandstakeholderconsultationwasconductedinthreephases:

1.DeskReview

Priortovisitingthecountry,theSecretariatconductedadetaileddeskreviewoftheavailabledocumentationrelatingtothecountry’scompliancewiththeEITIStandard,includingbutnotlimitedto:

• TheEITIworkplanandotherplanningdocumentssuchasbudgetsandcommunicationplans;

• Themulti-stakeholdergroup’sTermsofReference,andminutesfrommulti-stakeholdergroupmeetings;

• EITIReports,andsupplementaryinformationsuchassummaryreportsandscopingstudies;

• Communicationmaterials;

• Annualprogressreports;and

• AnyotherinformationofrelevancetoValidationavailableonlineorprovidedbytheAlbEITI

3Seealsohttps://eiti.org/validation.



Secretariat.

InaccordancewiththeValidationprocedures,theSecretariathasnottakenintoaccountactionsundertakenafterthecommencementofValidation.

2.Countryvisit

Acountryvisittookplaceon5-10June2017.AllmeetingstookplaceinTirana,Albania.TheSecretariatmetwiththemulti-stakeholdergroupanditsmembers,theIndependentAdministratorandotherkeystakeholders,includingstakeholdergroupsthatarerepresentedon,butnotdirectlyparticipatingin,themulti-stakeholdergroup.InadditiontomeetingwiththeMSGasagroup,theSecretariatmetwithitsconstituentparts(government,companiesandcivilsociety)eitherindividuallyorinconstituencygroups,withappropriateprotocolstoensurethatstakeholderswereabletofreelyexpresstheirviewsandthatrequestsforconfidentiallywererespected.ThelistofstakeholdersconsultedinoutlinedinAnnexD.

3.Reportingonprogressagainstrequirements

ThisreportprovidestheInternationalSecretariatinitialassessmentofprogressagainstrequirementsinaccordancewiththeValidationGuide.Itdoesnotincludeanoverallassessmentofcompliance.

TheInternationalSecretariat’steamcomprised:OlianaValigura,AlexGordy,PabloValverdeandSamBartlett.



PartI–MSGOversight

1.OversightoftheEITIprocess

1.1Overview

ThissectionrelatestostakeholderengagementandtheenvironmentforimplementationofEITIincountry,thegovernanceandfunctioningofthemulti-stakeholdergroup(MSG),andtheEITIworkplan.

1.2Assessment

GovernmentengagementintheEITIprocess(#1.1)

Documentationofprogress

Publicstatement:On27December2008,PrimeMinisterSaliBerishaissuedOrderNr.156establishingtheInter-InstitutionalWorkingGrouptoprepareAlbania’sEITICandidatureapplication(CabinetofMinisters,2008).TheDecreeincludedaninvitationforcompaniesandcivilsocietytoparticipateintheEITIprocess.On16January2009,SaliBerishawrotealettertoEITIChairmanPeterEigenregardingAlbania’sdecisiontoimplementtheEITI(SaliBerisha,2009).ThecommitmentwasreiteratedbyDeputyMinisterofEconomy,TradeandEnergyNeritanAlibaliattheEITIGlobalConferenceinDoha,Qataron16-17February2009(EITI,2009).TheEITIBoardadmittedAlbaniaasEITICandidatecountryduringits9thmeetinginWashingtonDC,UnitedStates,inMay2009(EITI,2009).Thegovernment’sstrongcommitmentwasrepeatedattheEITIGlobalConferenceinLimathroughpublicstatements,interviewsandevents(MinistryofEnergyandIndustry,2016),(MinistryofEnergyandIndustry,2016).AttheEITIGlobalConferenceinLimainFebruary2016,DamianGjiknuri,MinisterofEnergyandIndustryreaffirmedthattheGovernmentofAlbaniasupportstheEITIprocessandtheeffortstodisclosethebeneficialownersofextractivecompanies(Alb-EITI,2017).

AlbaniahasparticipatedintheOpenGovernmentPartnership(OGP)since2011.Its2012-2013OGPNationalActionPlanincludedacommitment(number3.3)tocontinueimplementingtheEITIandtoattainEITICompliantstatuswiththe2009EITIRules(OGPAlbania,2012),althoughsubsequentOGPNationalActionPlansdidnotrefertoAlbania’sEITIimplementation.

Seniorlead:DeputyMinisterofEconomy,TradeandEnergyEnnoBozdo,wasappointedinDecember2008toleadtheInter-GovernmentalWorkingGroupfromthegovernment’ssideandtheMinistryhascommittedseniorstafftocoordinateandsupportEITIimplementation(MinistryOfEconomy,TradeandEnergy,2009).TheAlbanianEITInationalsecretariatwasestablishedbytheDecisionoftheCouncilofMinisterson7July2010(CouncilofMinisters,2010).FollowingrecommendationsfromAlbania’sValidationundertheEITIRules,PrimeMinisterSaliBerishaissuedDecreeNr.71on21July2011establishingtheMulti-StakeholderGroupanddefiningitsrolesandresponsibilities(Prime-Minister,2011).AccordingtotheDecree,theMSGischairedbytheDeputyMinisterofEconomy,TradeandEnergyandconsistsofrepresentativesfromgovernment,companiesoperatingintheextractiveindustriesandcivilsociety.InSeptember2013,thenewgovernmentwasrestructuredandtheMinistryofEnergyand



Industry(MEI)wascreatedasthegovernmentinstitutionwithresponsibilityforoverseeingtheextractiveindustriesinAlbania.TheMEIplaysakeyandproactiveroleinthepromotionoftheEITIactivities,includingbyhostingthenationalsecretariat,providingtelecommunicationandutilityservices,aswellasprovidingninestaffmembersforAlbEITI.MinisterofEnergyandIndustryDamianGjiknuripromotestheEITIbytakingpartinpressconferences,forumsandotherpublicevents.4InNovember2013,DeputyMinisterofEnergyandIndustryIlirBejtjawasappointedasthenewMSGChair(Alb-EITI,2013).HehasbeenactivelyinvolvedinEITIimplementationandchairedallMSGmeetingssince2013.

Activeengagement:Thegovernment’sengagementinthedesign,implementation,monitoringandevaluationoftheEITIprocesshasbeenconsistentlystrongthroughoutAlbania’simplementationoftheEITI.ThesevengovernmentmembersoftheMSGincludeDeputyMinisterofEnergyandIndustryIlirBejtja,theMSGChair,aswellasrepresentativesfromtheMinistryofFinance(MoF),MinistryofJustice(MoJ),GeneralDirectorateofTaxes(GDT),AlbanianGeologicalService(AGS),NationalAgencyofNaturalResources(AKBN)andtheMEI.GovernmentrepresentativeshavebeenactivelyengagedincoreMSGactivitiessuchasdraftingandcommentingonEITIworkplansandannualactivityreports,EITIreportingtemplatesandEITIReports.AnanalysisofMSGmeetingminutesconfirmsthatseveraloftheseactivitieshavebeeninitiatedbygovernmentrepresentativesontheMSG.5TheMSGgovernmentrepresentatives,inparticularrepresentativesoftheMEI,AKBN,AGSandGDT,usuallyattendallMSGmeetings.AMoFrepresentativedidnotattendanyofthemeetingsinceQ22016duetointernalstaffchangeswithintheMinistry,althoughanewMoFrepresentativewasappointedtotheMSGinMay2017,afterthecommencementofValidation.

Governmentrepresentativeshaveregularlyparticipatedinnationalandinternationalcapacity-buildingeventsandconferences6,raisingawarenessofEITIimplementationanddisseminatingfindingsfromthe2013-2014and2015EITIReportsintheircommunicationwiththemediaandbroaderpublic.7Representativesfromlocalgovernments,theMEIandsecretariatstaffhavebeenengagedinEITIdisseminationactivitiesinregionshostingextractivesactivities;attendanceofnationalgovernmentrepresentativesattheseeventsappearstohavebeenlessconsistentthanthatoftheAlbEITISecretariatandlocalgovernments,butmoreconsistentthantheindustryandcivilsocietyconstituencies(seeRequirement7.1).TheAlbaniagovernment,includingMEIandtheAlbEITISecretariat,hasalsofacilitatedstudytoursandpeerlearningeventsfordelegationsfromKosovo,includinginOctober2013(RepublicofKosovo,2013).

GovernmentparticipationinEITIreportinghasbeensomewhatuneven,althoughmostgovernmententitieshavetendedtorespondtorequestsfordata,albeitwithsomedelayonthepartofcertainkeyinstitutions.Thus,whiletheMoF,GDTandCustomsServicehavetendedtoconsistentlyreportonatimelybasis,otherbodieslikeAKBNandAlbpetrol,twonon-budgetarygovernmententities,havetendedtoprovideonlypartoftheinformationrequested.The2015EITIReporthighlightsthatAKBNprovidedonlylimitedinformation,refusingforinstancetoprovidecopiesofitsfinancialstatementstotheIAandMSG(seeRequirement4.9),(AlbaniaEITI,2016).Nonetheless,theMEIappearstohaveproactivelyfolloweduptoencourageallmaterialgovernmententitiestoreport,includingthroughlettersto

4http://www.albeiti.org/press-conference-eiti-report-2013-and-2014/5http://www.albeiti.org/multi-stakeholder-group/msg-meetings/6http://www.albeiti.org/training-sessions-good-governance-of-natural-resources/7AlistofinterviewsrelatedtotheEITIwithgovernmentofficialsisavailablehere[linktointernal/googledrive]



governmententitiesfromDeputyMinisterofEnergyandIndustryBejtja.

Thegovernmenthasalsosoughttocreateanenablingenvironmentforcompanies’EITIreporting,byincludingrequirementstoparticipateinEITIreportinginamendmentstotheLawonMiningin2009andtheLawonHydrocarbonsin2015.ThegovernmenthasexpressedsupportforadraftLawonTransparencyinExtractiveIndustriesalignedwiththeEUTransparencyDirectiveandenshriningkeyEITIrequirementsinnationallegislationandroutinegovernmentreporting.TheMoFhasalsosupportedadraftLawonAccountingandFinancialReporting,whichwouldintegratecertifiedEITIreportingincompanies’statutoryrequirementsforreportingtogovernment.

WhiletheJune2013generalelectionscausedatemporaryslow-downinEITI-relatedactivities,withdelaysinappointmentofnewgovernmentMSGmembersandfewerMSGmeetings,thepaceofimplementationrecoveredin2015.InSeptember2013,thenewgovernmentestablishedtheMEItooverseethemining,hydro-power,oilandgassectorsinAlbaniaandtheMinistryhassincetakentheleadinEITIimplementation,providingashareoffundingfortheEITIfromitsannualbudget.

Stakeholderviews

Statementsofsupport:Acivilsocietyrepresentativeconsideredthatthegovernment’sinitially-strongcommitmenttotheEITIhaddeclinedovertheyearsandnotedthatthegovernmentdidnotappeartohavereaffirmeditspubliccommitmenttoEITIimplementationinthepasttwoyears.Nonetheless,severalCSOMSGmembershighlightedthattheMSGChairwasalwayssupportiveoftheEITIandhadtakenpersonalresponsibilityforensuringthatimplementationstayedontrackafteraslowstarttoEITIreportingpriortoAlbania’sfirstValidationundertheEITIRules.Governmentandindustrystakeholdersdidnotexpressanyparticularviewsonthegovernment’spublicstatementsofsupportforEITI.

Seniorlead:Allstakeholdersconsulted,includingMSGmembers,consideredthatDeputyMinisterofEnergyandIndustryBejtjaprovidedaneffectiveandsufficientlyseniorgovernmentleadforEITIimplementation.However,severalrepresentativesfromallthreeconstituenciesandsecretariatstaffexpressedconcernaboutthesustainabilityofthissupportfollowingfuturelegislativeelections,consideringthattheprospectsforEITIimplementationwerecloselytiedtotheseniorlead’spersonaldevotiontoEITIimplementation.TheIAandsecretariatstaffhighlightedtheMSGChair’skeyroleinovercomingbarrierstoEITIreporting,bothintermsoffollowingupwithnon-reportingcompaniesandgovernmententitiesandinfollowinguponEITIrecommendations.

Engagement:Acompanyrepresentativeconsideredthatthegovernmentengagementhadincreasedovertheyearsandthatcoordinationamongstpreviously-unrelatedgovernmententitieshadmarkedlyimprovedasaresultoftheircollaborationonEITI.SeveralgovernmentandcivilsocietyMSGmembersnotedthatgovernmentparticipationinMSGmeetingswasuneven,withinstitutionsliketheMEIandGDTparticipatingmoreconsistentlythanotherslikeAKBN.TheserepresentativesalsonotedthatinputtokeyEITIdocumentsliketheannualworkplananddraftEITIReportsfromgovernmentagencieslikeAKBNwasnotusuallyreceivedbytheMSG.

AnindustryMSGmembernotedthatgovernmentMSGmemberstendedtorepresenttheirownnarrowinterestsandcompetencies,withatendencytoonlyprovidefeedbackonareasofexpertise.Itwas



notedthatwhilegovernmentMSGmembersattimesdiscussedissuesofrelevancetoindustry,theyusuallyappearedresistanttotheideaofenactinganyreformsgiventhattheywereboundbytheirpositionsandthepoliticsinvolved.SeveralgovernmentrepresentativeshighlightedthechallengesinsecuringparticipationinEITIreportingfromcertaingovernmententitieslikeAKBNandAlbpetrol,consideringthattheseinstitutionsdidnotalwaystaketheEITIseriously.SecretariatstaffandtheIAnotedthatAlbpetrol’scooperationwithEITIreportinghaddeclinedbetweenthe2013-14andthe2015EITIReports,duetoAlbpetrol’scriticismofsomeaspectsofthe2013-14EITIReportrelatedtothepricingofAlbpetrol’scrudeoilsales.

SecretariatstaffemphasisedthatMEIprovidedpartialfundingtotheEITI,coveringroughlyonethirdofAlbEITI’sannualfundingneeds(alongsidetwothirdsfromtheWorldBank).Thisfundingcoveredsecretariatstaffsalaries,administrativeprocurement,transportation,officespaceandotherfacilities.

InitialassessmentTheInternationalSecretariat’sinitialassessmentisthatAlbaniahasmadesatisfactoryprogressinmeetingthisrequirement.Despitedelayslinkedtothepoliticaltransitionin2013,thereareregular,publicstatementsofsupportfromthegovernment,aseniorindividualhasbeenappointedtoleadontheimplementationoftheEITIandseniorgovernmentofficialsarerepresentedontheMSG.EvidenceincludingMSGmeetingminutesshowthatthegovernmentisactivelyandeffectivelyengagedinthedesign,implementation,monitoringandevaluationoftheEITI.Stakeholdersnotethatalthoughengagementfromselectgovernmententitieshasattimesbeenweak,thecurrentrepresentationontheMSGshowsthatthegovernmentistakingtheprocessseriouslyandgovernmentstakeholderswereeffectivelyengagedinallaspectsofimplementation.However,governmentrepresentatives’participationindisseminationandoutreachactivitiesappearstohavebeenrelativelyinconsistent,albeitonaparwithengagementfromotherconstituenciesontheMSG(seeRequirement7.1).LocalgovernmentunitsareactivelyengagedinpromotingtheEITIandgeneratingpublicdebate.TheMEIhoststheAlbEITIsecretariat,employssecretariatstaffandcontributesroughlyathirdofEITIimplementationfunding.

TheMSGshouldalsoensuremoreconsistentparticipationofgovernmentrepresentativesindisseminationactivities.

IndustryengagementintheEITIprocess(#1.2)


Activeengagement:Albania’sEITIreportingcoversthemining,oilandgassectorsaswellashydropower.Theoilandgasindustryconsistsofthefollowingmainplayers:state-ownedAlbpetrol,Shell,BankersPetroleum,TransatlanticAlbania,TransoilGroupDeganëShqipëri,SherwoodInternationalPetroleumandPhoenixPetroleum.BankersPetroleum,whichoperatesEurope’slargestonshoreoilfieldofPatos-Marinza,accountsforroughly89%ofAlbania’stotaloilproduction.Theminingsector,consistingprimarilyofchromium,limestoneandotherconstructionminerals,includesmostlysmall-andmedium-sizedcompaniesandcontributesatotalofonly0.8%ofthenationalbudget.Thelargesthydropowerproducersincludestate-ownedAlbanianElectricalPowerCorporation(KESH),TransmissionSystemOperator(OST)andElectricityPowerDistributionOperator(OSHEE)alongsideprivateinvestors(AlbaniaEITI,2016).



Foreign-investedextractivescompanieshavebeensupportiveofEITIimplementationfromtheearlieststages,includingthroughpressreleasesfromForeignInvestorsAssociationinAlbania8(FIAA)(FIAA,2012)(Anon.,2011)..9InOctober2016,AlbEITIandFIAAsignedaMoUtocoordinatetheindustryconstituency’sengagementinEITIthroughFIAA.However,FIAAdoesnotrepresentthelocally-ownedextractivescompanies,whichaccountfortheoverwhelmingmajorityofcompaniesincludedinthescopeofEITIreporting.Indeedsome527companiesheldatotalof626mininglicensesin2015.Inaddition,whilehydropowerisincludedinthescopeofEITIreporting,thereisnorepresentationfromthesectorontheMSG.

Industry’sroleinEITIimplementationisdefinedintheMSG’sToRs,includingtheconstituency’sresponsibilitytohelpensurefullparticipationofallmaterialextractivescompanies,toaccuratelydiscloseallpaymentsandrelevantdatatogovernmentandotherstakeholdersinatimelymanneraswellastocommunicatewithotherindustrystakeholdersaboutEITIdevelopments(Alb-EITI,2017).IndustryMSGmembers’participationinMSGmeetingsappearstohavebeenconsistent,withmeetingattendancerecordsshowingthatmostindustrymembershaveparticipatedinthemajorityofMSGmeetings.However,thereisnoevidencethatindustryrepresentativesparticipatedindisseminationactivitiesorusedEITIimplementationtospecificallyaddresstheinterestsofextractivescompanies.

Inaddition,whilemostofthelargercompanieshaveconsistentlyparticipatedinEITIreporting,participationfromsmallerminingcompanieshasprovenmorechallengingdespiteconsistentincreasesinthenumberofcompaniesreportingfrom41in2009to133in2015(seeRequirement4.1).ThenumberofcompaniesparticipatinginEITIreportinghasconsistentlyincreasedfrom41in2009to69in2010,75in2012,103in2013,118in2014and133in2015.However,whilecompanieshavetendedtosubmitEITIreportingtemplates,theyhaveconsistentlynotcompliedwithqualityassuranceproceduresforEITIreportingagreedbytheMSG(seeRequirement4.9).

Enablingenvironment:Thegovernmentappearstohaveprovidedanenablinglegalenvironmentforcompanies’EITIreporting,includingprovisionsmakingEITIreportingmandatoryunderLaw10304ontheminingsectorandLaw7746(amended)onthehydrocarbonssector(Parliament,2010),(Parliament,2015).TherearenolegalprovisionsmakingEITIreportingmandatoryforthehydropowersector(AlbaniaEITI,2016).Article51ofLaw10304ontheminingsectorspecificallywavesanyconfidentialityprovisionsrelatedtolocalandnationaltaxpaymentsintheminingsectorandconfirmsminingcompanies’obligationtodisclosesuchpaymentstotheEITI(Parliament,2010).

Tocircumventconfidentialityprovisionsofthetaxcodeforothercompanies,whichbarthenationalgovernmentfromdisclosingtaxpayerinformationtothirdparties,theGDThasworkedwiththeMSGtodrafttaxconfidentialitywaiversthathavebeensenttomaterialcompaniesonanannualbasis.However,the2015EITIReportnotedthat“lessthan50”companieshadsubmittedsignedwaivers(AlbaniaEITI,2016).Tobridgethisgap,theAlbEITISecretariat,asagovernmententityundertheMEI,signedMoUswitheachreportinggovernmententitytoallowgovernmentagenciestoreportEITIinformationtothe

8http://fiaalbania.al/.TheFIAAactsasAlbania’smembership-basedassociationofforeign-investedcompaniesoperatinginallsectorsoftheeconomy.Theassociationcounted96membersasof1April2017,including12companiesregisteredasoperatingintheenergysectorand13operatinginmining,oilandgas.9http://fiaalbania.al/members-list/



AlbEITISecretariat,withtheIAincopy.Thus,whilethegovernment’sinitialreportingissubmittedtotheAlbEITISecretariat,itistheIAwhofollowsuponthereconciliationandanyadditionaldatacollection(seeRequirement4.9).Thishaseffectivelyallowedthegovernmenttodisclosetherequiredinformationdisaggregatedbytaxpayer,pendingenactmentofthedraftLawonTransparencyintheExtractiveIndustries,whichwouldwavealltaxconfidentialityprovisionsforEITIreportingpurposes.

StakeholderviewsTherewasconsensusamongstMSGmembersandindustryrepresentativesconsultedthatindustryMSGmembersrepresentedforeign-investedcompaniesthatweremembersofFIAA,notlocally-ownedcompanies.TherewasalsoconsensusthattherewasnorepresentationofthehydropowersectorontheMSG.

AformergovernmentMSGmembercommendedindustryrepresentatives’activeandvocalcontributionstoEITIdiscussionsandactivities,whichwereconsideredtorepresentcompanies’concerns.AcivilsocietyrepresentativeconsideredthatindustryMSGmemberswereactiveandshowedtheirprofessionalcompetence.SeveralMSGmembersfromallconstituenciesconfirmedthatMSGmembersfromtheFIAAhadconsistentlybeenrepresentedontheMSGsincethestartandhadnevermissedasingleMSGmeeting.However,severalgovernmentandcivilsocietyrepresentativesexpressedconcernthatsomecompanieswererepresentedonlyatajuniorlevelorbytheirPublicRelationsdepartment,whichmeanttheyhadnomandatetofollowuponMSGdecisionsortotakedecisionsonbehalfoftheircompanies,letalonethebroaderconstituency.

TheIAconsideredthatcompanieswerecommittedtoEITIreporting,butthattheytendedtoseetheirparticipationasaformofcomplianceanddidnotseemtorecognisethevalueinimplementationtoidentifyandovercomechallengesinsectorgovernance.TheIAnotedthatthattherewereanumberofareaswhereEITIreportingcouldbeparticularlyusefulforcompanies,includinginclarifyingambiguitiesinthefiscalregime,openingupthelicensingprocessandprovidingadiagnosticofthereliabilityofcompanyreporting.

Withregardstothelackofcomprehensivereportingbyallcompanies,noneoftheindustryrepresentativesconsultedconsideredthatitwastheindustryconstituency’sresponsibilitytofollowupwithnon-reportingcompanies.Allrepresentativesconsulted,includingindustryMSGmembers,consideredthatthiswasthegovernment’sresponsibilityinlinewithprovisionswithminingandhydrocarbonslegislation.Noneofthestakeholdersconsulted,includingtheIA,couldexplainwhyindustryMSGmembersagreedtothesamequalityassuranceproceduresforEITIreportingeveryyearwhennoneofthecompaniesevercompliedwiththeagreedprocedures.

InitialassessmentTheInternationalSecretariat’sinitialassessmentisthatAlbaniahasmadesatisfactoryprogressinmeetingthisrequirement.Thebiggestmining,oilandgascompaniesareactivelyandeffectivelyengagedintheEITIprocess,bothasprovidersofinformationandinthedesign,implementation,monitoringandevaluationoftheEITIprocess.FIAAusestheEITItoadvocateforenablingenvironmentforcompaniesandinvestors,andcontributestopromotingpublicdebate.However,thelackofEITIrepresentationofthelocally-ownedminingcompaniesisaconcern.Inaddition,thelackofindustryinputtokeyEITIdecisionssuchasmechanismsforensuringthereliabilityofEITIinformationneedstobeaddressed.Thereare



clearlegalprovisionsrequiringEITIreportingforallmining,oilandgascompaniesinAlbania,thatenablethe110largestextractivetaxpayerstoreportin2016.Althoughcomprehensivereportingfromallmaterialcompaniesischallenging(seeRequirement4.9).

Tostrengthenimplementation,theindustryconstituencyisencouragedtoensurethatitsMSGmembershipisrepresentativeofthestructureofthemining,hydropower,oilandgassectorsandthattheregularityandseniorityofindustryparticipationatMSGmeetingsiscommensuratewiththeMSG’sneedtotakeinformeddecisionsandfollow-uponpastactionpoints.TheMSGshouldensurecomprehensivereportingfromallmaterialcompanies.

CivilsocietyengagementintheEITIprocess(#1.3)


AvibrantcivilsocietyemergedinAlbaniaduringthepost-Communisttransitioninthe1990s,playinganimportantroleparticularlyrelatedtoawareness-raisingandadvocacyonfreedomofexpression,humanrights,corruptionanddemocraticpractice(CIVICUS,2010).WhiletheredonotappeartobelegalbarrierstocivilsocietyparticipationinEITIimplementation,thereislittleevidencethatthisspacehasbeenusedinpracticebyNGOs.

Expression:ThereisnoevidencetosuggestlegalorregulatoryconstraintsoncivilsocietyorganisationsabilitytofreelyexpresstheirviewswithregardstotheEITIprocess.Article22ofAlbania’s1998ConstitutionguaranteesfreedomofspeechforallcitizenswhilePartIIoftheConstitutionprovidesforfundamentalhumanrightsandfreedomofthepress(ParliamentofAlbania,1998).Accordingtoa2016reportbyBertelsmannStiftung’sTransformationIndex(BTI),themediaplaysanactiveroleinexposingcasesofpoliticalcorruption,althoughitalsohighlightsthatjournalistsareattimesusedbybusinessandpoliticianstoimprovetheirmediacoveragethroughpaidcontent(BertelsmannStiftung,2016).FreedomHouseratesAlbaniaaspartlyfreeanddoesnotnoteanybarrierstofreedomofexpression,eitherstatutorilyorinpractice,inrelationtooil,gasminingissues(FreedomHouse,2017).TheAnti-CorruptionResourceCentrehasassessedcivilsocietyasbeingabletoopenlyengageinpublicdebateandcriticismofthegovernment(Anti-CorruptionResourceCentre,2011).TheUSDepartmentofState’s2016HumanRightsReportonAlbaniahighlightedincidentsofviolenceandintimidationagainstmembersofthemediaandconsideredthatjournalistspracticedsomelevelofself-censorshiptoavoidharassmentandpressurefrompublishersandeditors(USDepartmentofState,2016).TheEuropeanParliamenthasalsoraisedconcernsoverself-censorshipbytheAlbanianmedia(BalkanInsight,2016).However,thereisnoevidenceofbarrierstopressfreedomorself-censorshipamongstCSOswithregardstomining,oilandgasorotherEITI-relatedissues,andtherearenumerousexamplesofcivilsocietycriticisinggovernmentoversightofthesectors,includingprotestsandstrikes(IndustrialUnion,2007)(Reuters,2011).

MinutesfromMSGmeetingsshowthatCSOsareabletospeakfreelyabouttheEITIprocesswithoutrestraintorcoercion,includingcriticisingbothgovernmentandindustryconstituencies.MSGCSOmembershaveexpressedstrongviewsonissuesincludingsocialpayments,beneficialownershipdisclosure,subnationaltransfers,environmentalissuesandMSGgovernanceatseveralMSGmeetingsthroughoutthe2013-2017period(AlbEITI,2016),(AlbEITI,2016).TheInternationalSecretariatmaderepeatedrequestsfromCSOsofevidenceofpublicpronouncementsbyCSOsonissuesrelatedtonatural



resourcesgovernanceorotherEITI-relatedissuesbutwasnotprovidedwithanysuchdocumentation.Assuch,whilethereisextensiveevidenceavailableonlineonCSOs’abilitytospeakfreelyandcriticallyaboutextractivesgovernanceissues,thereisonlyverylimitedevidenceofCSOsdiscussingEITIissuespubliclyormakinguseofEITIinformationbeyondminutesofMSGmeetings.

Operation:Thereisnoevidenceofanylegal,regulatoryoradministrativeobstaclesaffectingtheabilityofcivilsocietyrepresentativestoparticipateintheEITIprocess.RegistrationofNGOsisarelativelysimpleprocessregulatedbythe2001LawonNon-ProfitOrganisations,the2001LawonRegistrationofNon-ProfitOrganisationsandAlbania’sCivilCode(ICNL,n.d.)(ParliamentofAlbania,2001).Non-profitsandNGOscanberegisteredbyanyperson,includingjuridicalentitiesandforeigncitizens,bydeposingaregistrationapplicationattheTiranaDistrictCourt.GiventhatDistrictCourtsinothertownsarenothabilitatedtoreceivesuchapplications,severalinternationalCSOsanddevelopmentpartnershavehighlightedtheneedtotraveltothecapitalTiranaasapotentialadministrativeobstacleforthosebasedoutsidethecapital(EU,2013)(TACSOAlbania,2016).ThedocumentsrequiredtoregisteranNGOaredefinedinArticle22oftheLawonRegistrationofNon-ProfitOrganisationsandincludetheregistrationapplication(includingtheNGOtype,objectives,fieldofactivity,founderandleadersdetails,structure,governingbody,organisationaddressandlegalrepresentativedetails),theNGO’sfoundationdocumentsandcharterofregulations(CouncilofMinisters,2001).ForbranchesofforeignNGOs,therequireddocuments(inAlbanian)includeregistrationapplication,thefoundationdocuments,charterandevidenceoftheNGO’sdecisiontoopenanAlbanianbranch(IMF,2016)(CouncilofMinisters,2001).ClosinganNGOalsorequiresrepresentativestotraveltotheTiranaDistrictCourttoobtainaformaldecision(ICNL,n.d.).Asnon-profits,NGOsareexemptedfromtaxesondonations,membershipduesaswellasfromprofittaxbutarestillliabletopaygeneralconsumptiontaxeslikeValue-AddedTax(VAT).10ThereisnoevidencethatanygroupthathasattemptedtoregisteraNGOorothernon-profitfocusingonextractivesissues,governanceortransparencyhaseverbeendeniedorfacedchallengesinregisteringaNGO.AllCSOsthathaveengagedinEITI,bothasMSGmembersorasCSOsparticipatinginnominationofMSGmembers,appeartohavebeendulyregisteredwithoutadministrativedelay.

Thereisevidencethat,whiletherearenolegaloradministrativebarrierstoNGOssecuringfundingfrombothdomesticandinternationalsources,civilsocietyfacesresourceandcapacitychallengesthataffectfinancialandadministrativesustainability(Anti-CorruptionResourceCentre,2011).Accordingtoa2010surveyconductedbyCIVICUSfortheCivilSocietyIndex(CSI)inAlbania11,amere16.1%oforganisationswereconsideredtobesufficientlystaffed,whilemanyCSOsworkedonavolunteerbasisduetoNGOs’overwhelmingrelianceforfundingonforeigndonors(57%)andthegovernment(17.8%)(CIVICUS,2010).AccordingtotheBalkanCivilSocietyDevelopmentNetworklocalfundraising12isconsideredchallengingduetoalackoftraditionandincentivesforprivate-sectorcontributions(BalkanCivilSocietyDevelopmentNetwork,n.d.).SeveralCSOMSGmembershavepubliclyraisedconcernsaboutconstraintsinaccessingfundingfromtheWorldBankortheGovernmentforEITI-relatedactivities(AlbEITI,2016).AccordingtotheWorldBank’sgrantagreementwiththeGovernmentofAlbaniadated21December2015,MSG

10http://www.bridgewest.eu/article/register-non-profit-organization-albania11http://www.civicus.org/12ThemainforeigndonorstocivilsocietyaretheEuropeanCommission,USAID,UNDP,OSCE,theSwissStateSecretariatforEconomicAffairs(SECO),GIZandtheWorldBank.InternationalNGOsliketheOpenSocietyFoundationAlbania(OSFA)andKonradAdenauerStiftung(KAS)providemorelimitedsourcesoffunding.Theonlylocalentitythatprovidesfunding,fromthegovernment,istheAgencyfortheSupportofCivilSociety.



membersarenoteligibletobidforgrant-fundedEITIactivitiestoavoidanyconflictofinterest(WolrdBank,2015).ThenatureofotherobstaclesfacedbycivilsocietyinraisingfundsforEITI-relatedactivitiesfromotherdonorsisunclear.Nonetheless,a2015USAIDSustainabilityIndexreportemphasisedimprovementsinrecentyearsinthelegalenvironmentandfinancialsustainabilityofAlbaniancivilsociety,linkedtotheestablishmentofaNationalCouncilforCivilSociety(seebelow)andgovernmentfundingforNGOs(USAID,2015).

Association:ThereisnoevidencetosuggestthattherearerestrictionsorlimitationsonNGOsintermsoftheirabilitytoassociate,communicateandcooperatewithothernationalorinternationalNGOs.Albania’sConstitutionandlegalframeworkprovideforfreedomsofassemblyandassociation,anditappearsthatthegovernmentgenerallyrespectstheserightsinpractice(USDepartmentofState,2016).AccordingtotheTiranaDistrictCourttherewere6,855CSOsregisteredasoftheendof2014,althoughthetaxauthoritiesrecordedonly2,427CSOsthatregularlypayedtaxes(e.g.VAT)andhencewereconsideredoperational(USAID,2015).Accordingtothe2010CSI-CIVICUSsurvey,civilsocietyisrelativelywell-structured,withfunctionalinternalstructures,activeinteractions,capacitiestonetworkandgoodinfrastructure(CIVICUS,2010).Whilethesurveydatesfrom2010,itsdescriptionofthesituationstillappearspertinent.Ontheotherhand,thesurveynotesthatcitizenstendtobescepticalofcivilsocietyandperceiveitasasourceoffinancialbenefits,oftendrivenbydonorsandfundingopportunities(CIVICUS,2010).CivilsocietyinAlbaniaisdiverseandincludesdifferentorganisationsrangingfromNGOsdedicatedtowomen,minoritygroups,anti-corruption,professionaltradeunions(e.g.miners),educationalinstitutions,thinkstanks,environmentalgroups,socialservicedeliveryorganisations,youthorganisations,religiousgroupsandthemedia(CIVICUS,2010).However,theCSI-CIVICUSreporthighlightsthepublicperceptionofcivilsocietyandmediaorganisationsbeingpartisan,withroughlyaquarterofNGOsasmembersofpoliticalorganisations(CIVICUS,2010).

TherearecurrentlyfourCSOsrepresentedontheMSG:theAlbanianCentreforInstitutionalDevelopment,theCentreforDevelopmentandDemocratizationofInstitutions,theCentreforTransparencyandFreeInformationandtheMinersUnionofBulqiza.ThefifthCSOMSGmember,MadlinaPukafromtheCentreforResearchCooperationandDevelopmentinVlore,resignedinMarch2016uponbeingappointedtoapositioninlocalgovernmentandhasnotbeenreplacedsince(seeRequirement1.4).ThefourNGOsdirectlyrepresentedontheMSGregisteredanon-profitassociationcalledAlbanianNetwork-ExtractiveIndustryTransparencyInitiativeinJanuary2016,whichhasitsownstatutesandcodeofconduct(AlbNet-EITI,2016).TherearenolocalaffiliatestotheglobalPublishWhatYouPay(PWYP)networkinAlbania.Thereisevidenceoffrequent,ifinformal,contactbetweencertainCSOMSGmembersandPWYPinternationalandCSOMSGmembershaveparticipatedinregionalworkshopsorganisedbyPWYPandNRGI(PWYP,2016)(PWYP,2015)(NRGI,2015).

TheAlbNet-EITIstatutesprovideitsmainobjectivesandresponsibilities,butdoesnotindicatetheNGO’smembershipsize.ThemainobjectivesincludeprovidingfullsupporttotheEITIprocessinAlbania,campaigningontransparencyandaccountabilityofgovernmentandcompaniesthroughtransparencyofrevenuesandcontracts,increasingpublicawarenessonthebenefitsfromtheuseofnaturalresources,influencinglocalgovernmentdecision-makingwithregardstocommunitydevelopmentinextractivesregions,thequalityofeducation,cultureandhumanrights,expandingthemembershipandconductingvariousstudiesrelatedtotheEITI(AlbNet-EITI,2016).Inadditiontothese,theNGO’sstatutesstipulatecoalitionmembers’responsibilitiesincludingactiveparticipationinAlbania’sEITIimplementation,organisingworkshops,conferences,symposiumsandotherformsofdiscussionsrelatedtoEITI,



promotingmediaspacefordiscussionanddevelopmentofpublicextractivespolicies,organisingawareness-raisingactivitieswithlocalgovernmentsandcivilsociety,membershipofotherinternationalorganizationsworkingonrelatedissues,providingtechnicalassistancetocentralandlocalgovernmentsaswellascompaniesonEITIimplementationandpreparingpublicationsaboutEITI(AlbNet-EITI,2016).ThereisnodocumentaryevidenceofsuchactivitiessincetheNGO’sformationinJanuary2016.

BesidesthefourNGOssittingontheMSG,otherCSOshaveexpressedinterestintheEITI,asevidencedthroughPWYPcapacitybuildingworkshop(CentreforDevelopmentandDemocratisationofInstitutions,2015).However,thereisnoevidenceofanyoutreachbyCSOMSGmemberstomapAlbanianCSOsfocusedonextractives,governanceortransparencyissues.InApril2015,theCentreforDevelopmentandDemocratizationofInstitutionsconductedaCSOsworkshopforroughly30CSOsfromTirana,Bulqize,Pogradec,PatosandVlorewithsupportfromPWYPandtheMEItobroadenCSOengagementandbuildcapacityforusingtheEITI(CentreforDevelopmentandDemocratisationofInstitutions,2015).ThereisnoevidenceofsubsequentEITI-relatedengagementwiththese30CSOsaftertheworkshop,includingfromCSOMSGmembers.TherearehoweveranumberofNGOswithpotentialinterestsinEITI-relatedissues,includingCSOparticipantsinAlbania’sOGP13efforts(TransparencyInternationalAlbania,OpenDataAlbania,Mjaft!Movement,InstituteforDemocracyandMediation,CitizensAdvocacyOfficeandtheNetworkforOpenSocietyinAlbania)(Anti-CorruptionResourceCentre,2011).

AccordingtotheCSO’scodeofconduct,CSOMSGmembersshouldconsultwithandregularlyreportbacktotheirconstituencyoflocalcommunities,networksandotherNGOs.ThecoderequiresthatMSGmembersprovidesufficientinformationtothenetworkstoallowopportunitiesformeaningfulinputtoMSGdeliberationsandtoholdpreparatorymeetingstocoordinateandagreeacommoncivilsocietypositionandrecommendationsonMSGmeetingagendaitems(CSOsCodeofConduct,2015).

Engagement:Civilsocietyisinvolvedinthedesign,implementation,monitoringandevaluationoftheEITIthroughparticipationinMSGmeetings,howeverthereislittledocumentaryevidenceoftheirengagementindisseminationandoutreach.TheminutesofMSGmeetingspointtoactiveengagementinMSGdiscussionsovertheyearsanditisclearthatthereiscapacityamongstwidercivilsocietytoengageinquestionsrelatedtonaturalresourcegovernance.ThereisevidenceofseveralCSOMSGmembershavingexpressedtheirviewsonsocialpayments,beneficialownershipdisclosures,sub-nationaltransferof5%royalties,environmentalissuesandMSGgovernanceinMSGmeetingsinthe2013-2017period(AlbEITI,2016),(AlbEITI,2016).However,thereisnoevidencethatCSOsMSGmemberswereactiveoutsideMSGmeetingsandusedtheEITIdataforadvocacy,researchordisseminationtogenerateinformedpublicdebate.Inaddition,sincetherenewalofCSOMSGmembershipinApril2015,thereisevidencethatcoordinationbetweenMSGmembershasdeclinedandthereisnodocumentaryevidenceofconsultationsbetweenCSOMSGmembersoutsideofMSGmeetingsasidefromanecdotalevidenceofinformalandadhocphoneconversations.

The2016EITIworkplan’sthirdnationalobjectiverecognisestheimportanceofsupportingcivilsociety’srepresentationofAlbaniancitizensindiscussionswiththegovernment(Alb-EITIWorkplan,2016).OneofAlbEITI’skeyobjectivesistopromotetheestablishmentofanenvironmentthatencouragescivilsociety’s

13https://www.opengovpartnership.org/countries/albania



independence,efficiencyandsustainability(Alb-EITIWorkplan,2016).Oneoftheworkplan’sactivitiesrelatestostakeholdermappingandconsensus-buildingforcivilsocietyaboutEITIimplementation,althoughtheworkplandoesnotincludeotheractivitieslinkedtoCSOcapacitybuilding.AlthoughtheEITIworkplanincludesactivitiesaimedatbuildingcapacityforcivilsociety,thereisnoevidencethattheseactivitieshavebeencarriedoutorthatcivilsocietyhasactivelysoughttoaddressanycapacitychallenges.

Accesstopublicdecision-making:Therehavebeenanumberofrecentlegalreformstostrengthencivilsocietyinputtodecision-making.Law119/2014ontheRighttoInformationadoptedin2014guaranteestherighttoaccesspublicinformationandprovidesthelegalframeworkregulatingaccesstopublicinformation(ParliamentofAlbania,2014).In2014,theParliamentadoptedLaw247/2014onPublicNotificationandConsultationtoregulatetheobligationtoconsultdraftlaws,strategiesandotherpolicieswithcitizens(BalkanInsight,2014)(MinistryofEnvironment,2015).AccordingtoArticle9ofLaw247/2014,allcitizensandforeignresidentsareentitledtorequestinformationaboutpublicconsultation,includingaccesstodraftlegislation,proposetheinitiationofre-draftingoflegislationbypublicauthoritiesandsubmitcommentsandrecommendationsondrafts.AnonlineplatformwasestablishedbytheMinistryofInnovationandPublicAdministrationtofacilitatethesemechanisms(CouncilofEurope,2016).Article21ofLaw247/2014regulatesthechannelsfornotificationandreceiptofcommentsandsetsspecificdeadlinesforprocessingrequests,withclearappealsmechanisms(within30daysofenactment)involvingeithertheheadofthepublicbodyresponsibleforthespecificregulationortheCommissionerforFreedomofInformationandDataProtection(CouncilofEurope,2016).

The2015USAIDSustainabilityIndexreporthighlightedthegovernment’sapprovalofanationalpolicyin2015toprovideanenablingenvironmentforcivilsociety,coveringpriorityareasincludingpublicfunding,government-CSOcooperation,thelegislativeframeworkfortheregistrationandoperationofCSOs,thedevelopmentofvolunteeringandfinancialreportingandthetaxtreatmentofCSOs(USAID,2015).Thegovernment’sLaw119/2015,enactedin2015,institutionalisedcooperationanddialoguebetweencivilsocietyandthegovernmentbycreatingaNationalCouncilforCivilSociety(NCCS)(USAID,2015).However,thefactthattheNCCSischairedbytheMinisterofSocialWelfareandYouthhasgeneratedsomescepticismabouttheNCCS’independenceamongstsomeCSOs(USAID,2015).

ThereishoweverlittleevidenceofcivilsocietyusingtheEITIprocesstopromotepublicdebate.TheAlb-EITISecretariathiredtheEuroSupportconsultancyforareviewofnationallegislationrelatedtoEITIanddraftingofaLawonTransparencyintheExtractiveIndustries.ThereisnodocumentaryevidencethatCSOMSGmembersprovidedinputorcommentedonthedraftlaw,norofanycivilsocietyanalysisofthedraftlegislationorEITI-relatedadvocacyinthe2015-2017period.

ThereisequallylittleevidencethatCSOMSGmemberswereactiveoutsideMSGmeetingsnorusedtheEITIdataforadvocacy,researchanddisseminationleadingtopublicdebate.Therearenopressreleases,statementsorpublicationsmadebyCSOMSGmembersexpressinganyviewsonEITI-relatedorbroadernaturalresourcegovernanceissues.MSGmeetingminutesfrom6May2016showthatacivilsocietyrepresentativesuggestedthepreparationofashadowEITIReporttoinvestigateissuesnotfullycoveredbyAlbania’sEITIReports,suchasthesubnationaltransferofroyaltiestoextractivesregionsaswellassocialandenvironmentalexpenditures(AlbEITI,2016).WhilepositivelyreceivedbyotherMSGmembersandtheMSGChair,whoofferedsupportinsecuringfundingforsuchefforts,thereisnoevidenceofCSOs’follow-uponthediscussiontopreparesuchareport(AlbEITI,2016).Despiterepeatedrequestsfor



evidenceofpublicpronouncementsonissuesrelatedtonaturalresourcegovernanceorotherEITI-relatedissues,theInternationalSecretariatdidnotreceiveanyevidencefromCSOrepresentativesconsulted.

Stakeholderviews

Expression:AllCSOMSGmembersconsultedconfirmedtheywereabletospeakfreelyinpublicandtherewerenoobstaclestotheirfreedomofspeechaboutanyEITI-relatedissues.AnindustryMSGmemberconfirmedthatCSOswerehighlycriticalontheMSG,whichwasconsideredhelpfulinthatthiscriticaloutlookhelpedimprovethequalityofimplementation.CivilsocietyrepresentativesofftheMSGnotedthattherewerenoissuesaffectingfreedomofspeechinAlbania.WhileseveralCSOsconsideredthatjournalistsattimespracticedaformofself-censorship,thiswasascribedtothefactthatthemediawaspoliticisedandthatnewspapersbelongedtoindividualbusinessmenorpoliticians,whichmeantthatjournalistsdidnottendtoexpresscriticalviewsofissuesrelatedtotheirowners.Theserepresentativesalsonotedthatjournalistsoftencateredcontenttotheprioritiesoftheiradvertisers,althoughtheyconcededthatthiswasalsosometimesthecaseinotherEuropeancountries.Noneofthejournalistsconsultedconsideredthattherewasanyissuethatcouldnotbecoveredinpublicforanyreason.AgovernmentrepresentativesaidthatcivilsocietyfacednorestrictionsinfreelyexpressingtheirviewsonextractiveindustrygovernanceandhighlightedthatCSOMSGmemberswereoftenvocalandhighlycriticalofbothgovernmentandcompaniesatMSGmeetings.Developmentpartnersconsideredthattherewerenorestraintsoncivilsociety’sabilitytofreelyexpresstheircriticalviewsandthattherewasanenablingenvironmentforfreedomofexpressioninAlbania.

Operation:CivilsocietyrepresentativesofftheMSGconsideredthattherewerenolegalofpracticalobstaclesforNGOstooperate,butthattherequirementforfoundersofaNGOtovisittheTiranaDistrictCourtwaschallenging(intermsoftraveltimesandcost)forsomeactivistsbasedoutsidethecapitalcity.ItwasnotedthatopeninganNGOwasnotchallengingandwouldcostapproximatelyUSD100,althoughanotherCSOrepresentativenotedthatlegalandnotarialfeescouldaddanotherUSD200-300tothecostofestablishingaNGO.OneCSOMSGmemberexplainedthatitwaspossibletoavoidmostofthelegalcostsbypreparingtheNGO’sstatutesandotherdocumentationsin-house,providedtheNGOfoundershadlegalexpertise.UpondiscussionofthetotalnumberanddiversityofCSOsactuallyoperatinginAlbania,CSOrepresentativesofftheMSGhighlightedthelackofclarityabouttheactualnumberofNGOsthatwereactuallyoperational.TheyhighlightedthatwhiledatafromtheAgencyforCivilSocietySupportshowedthattherewere7,000NGOsregisteredwiththeTiranaDistrictCourt,datafromtheGeneralDepartmentofTaxationshowedonly3,000NGOspayingtaxes(e.g.VAT).Inaddition,agovernmentofficialexplainedthatNGOscouldvoluntarilyregisteronthedatabaseofNGOsmaintainedbytheAgencyforCivilSocietySupport,onlyaround1,000CSOshaddonesotodate.SeveralCSOsofftheMSGexplainedthatthelargernumberofNGOsregisteredattheTiranaDistrictCourtwaslikelyduetothecostofclosingaNGO,whichrequiredfounderstotraveltotheTiranaDistrictCourtandobtainacourtdecisionclosingtheNGO,andthatmostfoundersjustlettheirNGOfalldormantratherthanofficiallyclosingit.OtherCSOsconsulteddidnotconsiderthetimeandcostofclosingaNGOtobeaparticulardisincentivetoclosinganorganisation.

AllCSOMSGmemberslamentedwhattheyconsideredtobehighbarrierstoaccessingfunding.OneCSOMSGmembernotedthatunsuccessfulfundraisingbyCSOswasthemainbarriertocivilsocietyundertakingEITIdisseminationandoutreachoutsideTirana.Whenaskedtodescribefundraisingeffortstodate,someCSOMSGmembersconcededthattheyhadnotmetwithanyofthedonorspresentin



AlbaniaonEITI-relatedprojectsspecifically,nordevelopedconcreteproposalstoapplyforfunding.However,severalCSOMSGmembersconsideredthatthelackofCSOfundingforEITI-relatedactivitieswasduetoadefamationcampaignwagedbytheAlbEITISecretariattocomplicateCSOs’EITI-relatedfundraisingeffortsanddiscreditCSOMSGmemberswithdevelopmentpartners.OneCSOMSGmembernotedthatwhilehehadsuccessfullyfundraisedforEITI-relatedactivitiesinthe2011-2012period,hehadfeltdemotivatedthatotherCSOshadusedthesefundswithoutraisingadditionalfundsoftheirown.SeveralCSOMSGmembersnotedthattheyhadongoingprojectsfundedbyforeigndonors,includingontransparencyinthepublichealthsector.SecretariatstaffexplainedthattheyhadsoughttointroduceCSOMSGmemberstopotentialdonorsamongstthedevelopmentpartnercommunityinTirana,butconsideredthatCSOshadnotproactivelyfolloweduponinitialcontacts.SeveraldevelopmentpartnersconfirmedthattheyhadfundingavailableforCSOs,particularlyontransparencyandgovernanceissues,andconsideredthatthereweresufficientfundraisingopportunitiesforCSOsinAlbania.SomedonorsnotedthattheyhadnevermetwiththeCSOsrepresentedontheMSGandhadnotreceivedanyapplicationsforEITI-relatedactivities.OnedevelopmentpartnerhighlightedthatafewNGOshadreceiveddonorfundingfortheirEITIworkin2011-2012butthattheseNGOsdidnotappeartohavebeenactiveinEITI-relatedactivitiessincethen.WhileseveralindustryrepresentativesconsideredthatCSOsalwaysappearedinterestedandproposedideasfornewprojects,itappearedthatCSOswereinterestedinseekingfundingoftheirownprojectsandthiscouldbeconsideredaconflictofinterestforNGOsseekingtobenefitfromtheirMSGpositions.

Association:CivilsocietyMSGmemberssaidtheyhadalistofaround100NGOsthatwereinterestedintheEITIbutthattheseCSOshadnotbeencontactedsince2015.Indeed,themembersexplainedthattheNGOsmembersofAlbNet-EITIhadnotyetbeennotifiedthattheorganisationhadbeenregisteredinJanuary2016.CivilsocietyrepresentativesofftheMSGdidnotknowtheirrepresentativesontheMSGandnotedthatCSOMSGmembershadneverbeenincontactwiththempriortotheirparticipationinstakeholderconsultationsforAlbania’sValidation.OneCSOnotedthattheirinitialcontactwithCSOMSGmembersaboutEITI,wheretheCSOshadsoughttoestablishaworkingrelationshiponEITIissues,hadbeenunsuccessfulbecauseoneCSOMSGmemberhadbeenparticularlyunfriendlyandappearedtoaggressivelyprotecttheirplaceasaCSOMSGmemberratherthanopeninguptoengagementwithotherCSOswithinterestsinEITI.SecretariatstaffexplainedthattheyhadtriedtoestablishcontactsbetweenCSOMSGmembersandotherCSOsandacademicsthatwereinterestedintheEITI,butthatthishadnotbeensuccessfulasCSOMSGmembershadreportedlynotshowninterestinoutreachtootherCSOs.SecretariatstafflamentedtheCSOs’accusationthatthesecretariatwasinterferingwithcivilsociety’sindependencethroughsucheffortsandexplainedthatthesecretariathadimmediatelydesistedfromsucheffortsasaconsequence.Industryrepresentativesconsulteddidnotexpressanyparticularviewsaboutcivilsocietyassociation,eitheringeneralorinconnectiontotheEITI.

Engagement:CSOrepresentativesoftheMSGnotedthatNGOsnotrepresentedontheMSGseemedtohaveonlylowgeneralawarenessoftheEITIandconsideredthatthemainfocalpointonEITIissueswastheAlbEITISecretariat,notCSOMSGmembers.WhilesomeoftheseCSOsexpressedinterestinmoreengagementwithEITI,theyquestionedthevalueofgrass-rootsmobilisationinrelationtoEITIandconsideredthatthegovernmentshouldbetheonetoactandorganisethecivilsocietyconstituencyinrelationtoEITI.OneCSOrepresentativenotedthatwhilehewaswellinformedabouttheEITI,hewasnotawareofthepossibilityofbeingrepresentedontheMSG.AllCSOsofftheMSGconfirmedthatCSOMSGmembershadnotreachedouttothemorthebroaderconstituency.SecretariatstaffcommentedthatCSOMSGmembersdidnotseemtohavethegoodpracticeofconsultingwiththeirbroaderconstituency



onEITI-relatedissuesandthatCSOMSGmembersprimarilyviewedtheirEITIengagementasparticipatinginMSGmeetings,notinotheraspectsofEITIimplementation.SecretariatstaffnotedthatwhilethefifthCSOMSGmember(MadlinaPukafromVlore)hadbeenproactiveuntilherresignationin2016,thelackofanyreplacementforherpositionhadleftavoid.

OnegovernmentrepresentativeconsideredthatcivilsocietyontheMSGhadnotbeenactive.OneCSOMSGmemberhighlightedtheobjectionshehadraisedontheMSGin2015thatCSOs’viewswerenotconsideredinMSGdeliberationsandthatthishadconstrainedCSOs’operatingspace.However,thegovernmentalofficialconsideredthatthereasonfortheseallegationswasthatCSOMSGmembershadnotreceivedanyWorldBankfundingundertheMDTFgrantsupportingEITIimplementationdespitetheseCSOsaskingforfundingfortheirparticipationontheMSG.TheofficialhighlightedtheWorldBank’sclearpolicyonexcludingMSGmembersfrombiddingforprojectsfundedbytheMDTFbutnotedthattheEITIworkplanofferedopportunitiesforCSOsincludingworkshops,capacitybuildingeventsandtravelexpensesforCSOs.

Aconsultantthatdevelopeda2016-2017EITIcommunicationstrategyforCSOshasnotedthatAlbanianCSOs’advocacyandlobbyingcapacitiesdidnotchangenoticeablyin2015,despitetheirinvolvementinseveraladvocacyinitiatives.WhilelaudingCSOs’essentialroleontheMSG,inrepresentingcommunitiesandhighlightingchallengingissues,theconsultanthighlightedtheneedforagenuineanalysisandworkplantoimproveCSOinvolvementinEITIbeyondtheirparticipationinMSGmeetingstoinvolveNGOsnotdirectlyrepresentedontheMSG(Alb-EITI,2016).

Accesstopublicdecision-making:DespiteextensiveconsultationswithCSOsontheiruseofEITIinformationinadvocacycampaigns,CSOMSGmembersnotedthattheyhadonlyinfrequentlyusedanydatafromEITIReportsintheirotherwork.DespiterepeatedrequestsforevidenceofanyuseofEITIdata,CSOsconsulteddidnotprovideanydocumentstotheInternationalSecretariat.OneCSOrepresentativeontheMSGconsideredthatEITIreportingwasnotsufficientlytimelytosupportCSOs’advocacy,notingthat2015datawasoflittleinterestin2017(seeRequirement4.8).Thereishoweverevidenceofcivilsocietyhavinghadaccesstopublicdecision-makinginothermatters.OneCSOMSGmembernotedthatcivilsocietyhadsuccessfullytakenpartinadvocacycampaignsfortheenactmentoftheFreedomofInformationLawin2014.However,CSOMSGmembersnotedthattheyhadmadenoparticularcommentstothedraftLawonTransparencyinExtractiveIndustriesandhadnotplannedanyrelatedadvocacycampaigns.SecretariatstaffwerecriticalofCSOs’fulfilmentoftheirroleinEITIimplementation,consideringthatCSOsdidnothaveaclearvisionofhowtheywishedtousetheEITI,didnottendtoshareinformationabouttheirplansorappearedtouseEITIdatainanyway.StaffconsideredthattheCSOswerelargelyinactiveintermsofregionalEITIoutreachanddisseminationandthatcompaniesappearedmoreactivethancivilsocietyinthisregard.

Initialassessment

TheInternationalSecretariat’sinitialassessmentisthatAlbaniahasmademeaningfulprogressinmeetingthisrequirement.Thereisnoevidenceofanylegal,regulatoryorpracticalbarrierstocivilsociety’sabilitytoengageinEITInortotheirabilitytofreelyoperate,communicateandcooperatewiththebroaderconstituency.MSGmeetingminutesandstakeholderconsultationsshowednoconstraintsoncivilsociety’srightsorabilitytobeactivelyengagedintheEITI.YetthereislittleevidencetoshowthatCSOshaveusedthisspacetobefully,activelyandeffectivelyengagedinEITIimplementationasidefrom



voicingcriticalviewsatMSGmeetings.WhilefundingconstraintsandlackofeffectiveCSOengagementpreventscivilsocietyfromfullyandeffectivelyinfluencingthedesignandimplementationoftheEITI,thereislittleevidencetosuggestthatcivilsocietyorganisationshastakenstepstomobilisefunding.

Inaccordancewithrequirement1.3.a,thecivilsocietyconstituencyshoulddemonstratethattheyareablefully,activelyandeffectivelyengagedintheEITIprocess.Specifically,civilsocietyshouldensurethattheyareabletofullycontributeandprovideinputtotheEITIprocessandthattheyhaveadequatecapacitytoparticipateintheEITI.Inaccordancewithrequirement8.3.c.i,thecivilsocietyconstituencyshoulddevelopanddiscloseanactionplanforaddressingthedeficienciesincivilsocietyengagementdocumentedintheinitialassessmentandvalidator’sreportwithinthreemonthsoftheBoard’sdecision,i.e.by<BoardDecision+3months>.TheconstituencymaywishtoundertakeanindependentreviewofcivilsocietyengagementintheEITIinAlbania,broadeningtheengagementwithCSOswithpotentialinterestsinEITIimplementation.Undertakingacapacityneedsassessmentandformulatingactionstoaddresscivilsocietycapacityconstraintsarecrucial,notleasttounlockfundingfromdevelopmentpartnersandotherrelevantparties.ThecivilsocietyconstituencyisencouragedtodevelopandagreeonguidelinesthateffectivelysetouttheprocessbywhichrepresentativesontheMSGwillbeselectedandheldaccountable.

MSGgovernanceandfunctioning(#1.4)

DocumentationofprogressMSGcompositionandmembership:The17-memberMSGwasestablishedbyPrimeMinisterialDecree71/2011on31July2011.NeitherDecree71/2011northeMSG’sownToRsprovideforalternatestoMSGmembers.ThesevengovernmentmembersincludeDeputyMinisterofEnergyandIndustryIlirBejtja,theMSGChair,andrepresentativesfromtheMoF,MoJ,GDT,GeologicalAlbanianService,AKBNandMEI.Industry’sfiveMSGrepresentativesincludeAlbchrome,ANTEACement,BankersPetroleumLtd,theFIAAandShellUpstreamAlbania.CivilsocietyhasfiveMSGseats,althoughtheresignationofoneCSOMSGmemberin2016hadnotledtoherreplacementasofthestartofAlbania’sValidationon1April2017.TheotherfourCSOMSGmembersincluderepresentativesfromthreeTirana-basedNGOs14andalocalworkers’union,theMinersUnionfromBulqiza.

TheMSG’scompositionissetoutinArticle7oftheMSG’sJanuary2017TermsofReference(ToRs)(Alb-EITI,2017).TheToRssettermlimitsformembershipandnotethatgovernmentmembers’appointmentissubjecttotheirgovernmentpositionratherthanbeingnominative(Article11).MSGmembersfromtheothertwoconstituenciesareallowedtoserveforaperiodof3years,withtheirreplacementonlyundertakenonagradualbasistoensurethepreservationoftheMSGconstituency’sinstitutionalmemory.TheToRsalsoallowMSGmemberstobere-appointedbytheirconstituencyiftheirperformancehasbeenconsidered“satisfactory”(Alb-EITI,2017).

Civilsocietyrepresentation:CivilsocietyontheMSGisrepresentedbySamiNezaoftheCentreforTransparencyandFreeInformation,IlirAliajoftheCentreforDevelopmentandDemocratizationsofthe

14TheCentreforTransparencyandFreeInformation,CentreforDevelopmentandDemocratizationofInstitutionsandAlbanianCentreforInstitutionalDevelopment.



Institutions,AnilaHajnajoftheAlbanianCentreforInstitutionalDevelopmentandBakiBajraktarioftheMinersUnionBulqiza.TheMSG’sToRsspecifythatrepresentativesfromcivilsocietywillbeselectedfromthe“NationalNetworkofCivilSocietyforEITI”butdoesnotincludeprovisionsonMSGmembers’selection.Order71/2011onlyrequirestheNetworktosubmitnamesofitsMSGrepresentativestotheAlbEITISecretariat.WhiletheToRssuggestthatcivilsocietyisfreetoelecttheirmembersaccordingtotheirowncriteria,therearenofirmrulesandproceduresfortheselectionofcandidates.ThenominationprocessforcivilsocietyheldinApril2015wassupportedbyPWYPandtheAlbEITISecretariat.PWYPconductedathree-dayworkshopon19-21April2015foraround30CSOsfromTiranaandregionshostingextractivesactivities(Bulqiza,Pogradec,PatosandVlore),whichincludeddiverseparticipantsfromorganisationsfocusingonyouth,media,democraticgovernance,environment,miningandoillabourunions.Priortotheworkshop,theCentreforDevelopmentandDemocratisationofInstitutionsconductedoutreachinTiranaandtheregionstomapoutrelevantcivilsocietyactors.TheoutgoingCSOMSGmembersagreedthatthetworepresentativeswhohadnotattendedMSGmeetingsfortheprevioustwoyearswererequiredtorelinquishtheirseats.WorkshopparticipantsagreedfortheotherthreeCSOMSGmemberstostayonintheirpositionstopreserveinstitutionalmemoryandbuildnewmembers’capacities.TheparticipantsnominatedfivecandidatesforthetwoseatsandselectedBakiBajraktarifromtheBulqizaChromeMiningUnionandMadlinaPukafromanenvironmentalnetworkoperatinginPatosandVlore.WhileMadkinaPukaandRexhepResuli(fromtheoilworkers’union)consistentlytiedinthreeroundsofvoting,ResuliconcededtheMSGseattoPuka(CentreforDevelopmentandDemocratisationofInstitutions,2015).

Industryrepresentation:Industry’srepresentationontheMSGincludesAdriatikGolemifromBankersPetroleumLtd,SaimirBokafromAlbchrome,PerparimAlikajfromtheFIAA(HeadofitsCommitteeonIndustryandMining),DritanDervishajfromANTEACementandTurkerSengonulfromShellUpstreamAlbania.Thereisnoevidenceofanominationprocessforselectingindustry’srepresentationontheMSG.PriortothesignatureofaMoUinOctober2016betweenAlbEITIandFIAAtostrengthencooperationandtheconstituency’scoordination,therewerenocriteriaforselectingindustryMSGmembers.InMay2011,thegovernmentsentaninvitationtoparticipateintheMSGtofourofthelargestextractivescompanies(AlbpetrolSha,BankersPetroleum,BeralbaCompanyandACRCompany).15TheletteralsoinvitedthesecompaniestoseekothermeasuresforinvolvingthelargestpossiblenumberofparticipantsinMSGmeetings.Thereisnoevidencetoclarifytheevolutionofindustry’sMSGrepresentationsincetheirinitialnominationtothepresentday.WhiletheMSG’sToRsconfirmthattheindustryconstituencyisfreetoselectitsownMSGmembersaccordingtotheirowncriteria,therearenofirmrulesandproceduresforselectionandelectionofcandidates(Alb-EITI,2017).TherearehoweverconcernsthatindustryrepresentationontheMSGonlyreflectsforeign-investedcompaniesinthemining,oilandgassector,withnorepresentationforthemajorityofminingcompaniesthatarelocally-ownedoranyprivatehydropowercompany(seeRequirement1.2).

Governmentrepresentation:ThefivegovernmentrepresentativesontheMSGareIlirBejtja,DeputyMinisterofEnergyandIndustry,DritanSpahiufromtheMEI,SajmirLaçejfromtheMoF,EldaSpassefromtheMoJ,BorjanaShakafromGDT,NikollKazafromtheGeologicalAlbanianServiceandAzbiArapifromAKBN.WhilethenumberofgovernmentMSGmemberswasreducedfromtheoriginalsixnamedin

15LetterfromNeritanAlibali,DeputyMinisterofEconomy,TradeandEnergy,tocompaniesandcivilsocietytoparticipateintheEITIMSG,26April2011,http://www.albeiti.org/wp-content/uploads/2014/04/Zgjerimi_MSG_26-04-2011.pdf



Decree71/2011(whichincludedarepresentativefromtheMinistryofEconomy,TradeandEnergy),thereisnoevidenceofadocumentformalisingthischange(CabinetofMinsiters,2011).TheMSG’snewToRsagreedin2017(paragraphVII/b)onlyconfirmthatgovernmentMSGmembersareappointedbytheheadsoftheirrepresentativeinstitutionswithin15daysofreceivingtherequestfornewrepresentativesfromtheAlbEITISecretariat(Alb-EITI,2017).

Termsofreference:TheAlbEITIMSG’sToRsareclearandpublic(Alb-EITI,2017).MinutesoftheMSG’s31January2017meetingprovideevidencethattheToRswereextensivelydiscussed,withcivilsocietyrepresentativesexpressingconcernaboutprovisionsforannualperformanceassessmentsofallMSGmembers.16TheToRsincludespecificlanguageontheMSG’sresponsibilitytoregularlyreviewandupdatetheAlbEITIworkplan,appointtheIA,agreethescopeofEITIimplementationandparticipateinoutreachanddissemination.Articles4,8and9oftheToRsdescribetheMSG’smandates,powersandfunctions,includingresponsibilitiesforensuringsustainedpoliticalcommitment,mobilisingnecessaryresources,settingthestrategicdirectionofimplementation,assessingandremovingbarrierstoimplementation,settingthescopeofEITIimplementationandensuringthattheEITIisintegratedintonationalreformprocesses.TheToRsalsoconfirmtheMSG’sresponsibilitiesforagreeingafully-costedworkplan,productionofEITIReports,annualreconciliationofpayments,ToRsfortheIA,oversightofthesecretariat,aswellasforoutreach,disseminationandawarenessbuilding,althoughtheydoincludespecificprovisionsfortheMSGtoapprovetheappointmentoftheIA.Inpractice,itistheAlbEITISecretariatthatprocurestheIndependentAdministratorandtheMSGendorsesit.

DuringthecourseoftheInternationalSecretariat’sstakeholderconsultations,itbecameclearthattheversionofthe2015EITIReportontheAlbEITIwebsite(inJune2017)wasdifferenttothatapprovedbytheMSGinFebruary2017anddifferentfromtheversionpublishedontheAlbEITIwebsiteatthecommencementofAlbania’sValidationon1April2017.TheJune2017versionofthereporthaddifferencesindiscrepanciesandtheMSGwasnotawareofthis.AlbEITISecretariatstaffandtheIAexplainedthattherevisionswereduetothelatearrivalofreportingtemplatesfromsomecompanies,whichhadalteredtheresultsofreconciliationandthattheIAhadamendedthe2015EITIReportasitwaslayingoutthepublicationforprinting,buthadnothighlightedthechangestotheAlbEITISecretariat.

Representation:TheMSG’sToRsoutlinetheMSG’sroles,responsibilitiesandrights,includingtheneedforMSGmemberstoundertakeoutreachwiththeirbroaderconstituencies(Article8.e).Article8.falsoincludesprovisionsforMSGmemberstocommunicateandraiseawarenessabouttheEITIwhileArticle8.gprovidesfortheMSGtooverseeandevaluateworkplanimplementation.Article9.1stipulatesthatgovernmentrepresentativesarerequiredtoprovidepoliticalleadershipandsupport,ensurefullparticipationofnationalandlocalgovernmententities,ensurefullparticipationofextractivescompanies,encouragefullparticipationofcivilsociety,providealegalbasisforEITIimplementationanddisclosegovernmentrevenuesandrelevantdatainanaccurateandtimelymanner.Article9.2stipulatesthatindustryMSGmembersarerequiredtohelpensurefullparticipationbyextractivescompanies,disclosepaymentsandrelevantdataandcommunicatetoindustrystakeholdersaboutEITIdevelopments.Article9.3stipulatesthatcivilsocietyrepresentativesarerequiredtocommunicateandconsultwidelywithadiverserangeofstakeholders,buildcapacities,ensurefullparticipationofrelevantCSOsandmonitordisclosuresfromgovernmentandextractivescompanies(Alb-EITI,2017).However,thereisno

16http://www.albeiti.org/year-2017/



documentaryevidenceofMSGmembers’efforts(fromanyconstituency)toundertakeoutreachtobroaderconstituenciesorcanvasstheiropinioninpractice.

Internalgovernanceandprocedures:Article13oftheMSG’sToRsstatesthattheMSGshouldmeetonceeveryquarterandmoreoftenifnecessary(Alb-EITI,2017).Inpractice,theMSGappearstohavemetsixtimesin2014,eighttimesin2015,fourtimesin2016andonceinthefirstquarterof2017,althoughmeetingshavenotconsistentlybeenheldeveryquarter.17AgendasandrelevantdocumentationshouldbecirculatedamongtheMSGmembersoneweekaheadofameeting.TheMSG’sToRsdonotexplicitlyprovideforanyMSGmembertotableanissuefortheMSG’sdiscussion,althoughArticle14notesthatanyMSGmember’scomplaintswouldbetreatedopenlyduringMSGmeetings(Alb-EITI,2017).

Decision-making:TheToRsdefinetherulesfortheMSG’sdecision-making,whichisrequiredtobebyconsensusor,incaseconsensuscannotbeachieved,bysimple-majorityvote.Article13oftheMSG’sToRsprovidesfordecisionstobetakenbyemailonano-objectionbasisininstanceswheresuchdecisionsarenotconsideredtorequireaformalMSGmeeting,providedrelevantpapersfordecisionarecirculatedamongMSGmemberspriortothedecisionbycircular(Alb-EITI,2017).ThereisnoevidenceofanyMSGdecisionseverhavingbeentakenbyvoteinthe2013-2017period,althoughthereisevidenceofseveralkeyMSGdecisionshavingbeentakenviaemailcircular.

Record-keeping:Article15oftheMSG’sToRsveststheAlb-EITISecretariatwithresponsibilityforpreparingandcirculatingmeetingminutesandsetsaone-weektimelimitforcommentsondraftminutes,whichareapprovedonano-objectionbasis.ItalsorequiresthesecretariattoreporttheimplementationstatusofpastMSGdecisionsatsubsequentMSGmeetings.TheMSGhaskeptminutesofallmeetingstodate,whichareavailabletogetherwiththefivetechnicalworkinggroupmeetingsontheAlb-EITIwebsite18.ThekeyMSGdecisionsarelistedontheAlbEITIwebsite,whichshouldbehighlightedasgoodpracticeintermsofhighlightingtheMSG’sdecisions.

CapacityoftheMSG:Article6oftheToRsoutlinesgeneralprinciplesofengagementbetweengovernment,industryandcivilsocietyintheMSG.Thisincludesareasofconsultation,capacitybuildingandempowermentasameansofincreasingknowledgeofglobalbestpracticesandstimulatingsharingofknowledgethroughongoingdialogue(Alb-EITI,2017).MinutesoftheMSGmeetingsdocumentthatthethreeconstituencieshavebeenengagedintechnicaldiscussionsrelatedtoreportingtemplatesaswellasparticipatedincapacitybuildingworkshopslocallyandabroad.ThereisevidenceoffundingconstraintsforCSOs,althoughtheseappeartobeasaresultofineffectivefundraisingeffortsratherthananystatutoryorpracticalconstraintstoCSOs’fundraising(seeRequirement1.3).

Perdiems:TheMSGdoesnotfollowapracticeofperdiemsforMSGmemberstoattendanyEITI-relatedactivities,includingMSGmeetings.Article9oftheToRsconfirmsthattheMSGhasnopolicyfortheallocationof“dietsofroyaltiesandperdiem”forEITI-relatedactivitiesandthatMSGmembers’commitmentispurelyonavoluntarybasis(Alb-EITI,2017).

17ForafulllistofMSGmeetingminutesforthe2014-2017period,see:http://www.albeiti.org/multi-stakeholder-group/msg-meetings/18Alb-EITIwebsite,http://www.albeiti.org



Attendance:Article11.4oftheMSG’sToRsrequiresannualperformanceappraisalsatthestartofeachyearforallMSGmembersbytheMSGChair,withtechnicalsupportfromtheAlb-EITISecretariat,addressingissuessuchasmeetingattendance,meetingminutes,presentations,platformsandothermaterialsusedtomeasure“therealcontributionofeachmemberoftheMSG”.Theseappraisalsarerequiredtofocusonthequalityofparticipationasmeasuredthroughtheannualworkplanimplementation,with30%weightingallocatedtoattendanceatMSGmeetingsandotherevents,30%tothelevelofengagementinconsultativeprocessesandinthedraftingofkeyEITIdocumentsand40%tothemember’scommitmenttocommunicationactivitiesanddisseminationofEITI-relatedinformation.TheToRsrequirethereplacementofMSGmembersthatachievelessthana60%performanceappraisal,throughprocessesdesignedbytheirownconstituencies(Alb-EITI,2017).ThereisevidencefromMSGmeetingminutes,includingon31January2017,ofstrongcivilsocietyoppositiontothisprovisionoftheToRs.19Inpractice,attendanceatMSGmeetingsappearstohavebeenconsistentforallthreeconstituencies,althoughthelevelofparticipationhasvariedacrossdifferentmembersofeachconstituency.

Nationalsecretariat:Thenationalsecretariat–AlbEITI–ishostedbyMEIandconsistsofninestaffmembers.TheMEIemploysthesecretariat’sstaffandfundssalaries,administrativeprocurement,transportation,officespaceandotherfacilities.TheheadofthesecretariatisDorinaCinari.TheworkplanactivitiesarecoveredbytheWoldBankfunding.TheSecretariatistheprocuremententityforthefundingandisresponsibletoevaluatebidsforEITI-relatedtenders.ThereisevidenceinMSGmeetingminutesofCSOcriticismsofthisprocurementstructure,givenconcernsoverthelackofarolefortheMSGinselectingtheIAforEITIReports.

Article10oftheMSG’sToRsstatesthattheAlb-EITISecretariatisarepresentativeofthestate,whileArticle11notesthatthesecretariatisresponsiblefortrackingmeetingattendanceandpreparingminutesofmeetings,presentations,platformsordifferentmaterialsrequiredtoassesseachMSGmember’scontributiontoEITIimplementation(Alb-EITI,2017).

StakeholderviewsMSGcomposition:AgovernmentrepresentativeconsideredthattheMSG’scompositionwasadequateforeffectiveoversightofEITIimplementationandthattherightinstitutionsandorganisationswererepresentedontheMSG.

IntermsofcivilsocietyrepresentationontheMSG,severalcompanyrepresentativesexpressedconcernthatthediversityofCSOsinAlbaniawasnotadequatelyreflectedontheMSGandthattheopinionsoflocalcommunitieswerenotrepresentedontheMSG,despitetheirimportance.DespiteextensiveconsultationswithCSOsbothonandofftheMSG,theInternationalSecretariatwasnotprovidedwithdocumentaryevidenceofanyregularcontactsbetweenCSOMSGmembersandotherNGOsnotdirectlyrepresentedontheMSG.

Intermsofindustryrepresentation,secretariatstaffconfirmedthattherehadneverbeenanychangestothecompaniesrepresentedontheMSG,althoughsomecompanieslikeBankersPetroleumhadreplaced




theirrepresentativeswithPRofficersinpracticeduetomiddlemanagement’stimeconstraints.StaffalsohighlightedthatShellAlbaniahadjoinedtheMSGinFebruary2017,followingabilateralmeetingbetweenaShellAlbaniarepresentativeandtheAlb-EITISecretariat.SeveralindustryrepresentativesbothonandofftheMSGconsideredthattheirrepresentationontheMSGcouldhavebeenmoreeffective.SecretariatstaffnotedthattheOctober2016MoUbetweenAlbEITIandFIAAhadmadeiteasiertocooperatewiththeindustryconstituencysinceitinstitutionalisedtheconstituency’scoordinationmechanisms.

Intermsofgovernmentrepresentation,secretariatstaffexplainedthatgovernmentrepresentativeswereappointedbasedontheirpositionsandthustendedtochangeoften,withrepresentativesfromMoF,GDTandCustomshavingchangedseveraltimesandtheMoJrepresentativechangingfrequently.SecretariatstaffalsonotedthatitwasseenastheAlb-EITISecretariat’sroletotrackchangesingovernmentfunctionsinordertofollowupwithrelevantgovernmententitieswhentheirMSGrepresentativewasremovedfromfunctionsinordertosecurethenewMSGmember.

Termsofreference:SecretariatstaffnotedthatproceduresforthenominationofMSGmemberswerenotspecifiedwhentheMSGwasinitiallyestablishedin2011,althoughtheMSG’snewToRsin2017specifiedelectionandevaluationproceduresforMSGmembersinordertobettergoverntheEITIprocess.StaffconfirmedthattheMSGdiscussedthedraftToRsextensivelyandhadapprovedthefinaldraftviacircularonano-objectionbasis,onceMSGmembers’initialcommentshadbeenincluded.SeveralCSOMSGmembersnotedthattheMSGhadheldextensivediscussionsonthedraftToRs,lasting4-5hours,andthatmostoftheCSOs’concernshadbeenaddressedasidefromtheannualperformanceappraisals.AnindustryMSGmemberconsideredthattheMSG’sToRsmettherequirementsoftheEITIandprovidedasafespacefordiscussiononEITIimplementation.

Withregardstotheannualperformanceappraisals,theMSGChairnotedhisconcernsabouthisresponsibilityforevaluatingmembers’performanceandconsideredthathewouldhavepreferredtoleaveperformanceappraisalstoeachconstituency.However,henotedthattheassessmentprocedureshadbeenintroducedgiventhatMSGmemberswerenotseenassufficientlyactiveandappeareddistractedduringMSGmeetings.HeemphasisedthatMSGmembershadnotyetbeenassessed,highlightingthattherepeatedabsenceoftheCSOMSGmemberfromBulqizawouldhavewarrantedhisreplacementbutthattheMSGChairhadwishedfortheconstituencytoresolvethischallengebeforeproceedingwiththeassessments.TheMSGChaircalledforCSOMSGmemberstoresolvethisissuewithintheirconstituency,byforinstancereplacingthememberwithaTirana-basedNGOtofacilitateattendance.

Representation:TherewaswidespreadrecognitionamongstMSGmembersconsultedthatthestructureoftheMSGwasnolongerreflectiveofthescopeoftheEITIStandardandMSGmembersrecognisedtheneedtorestructuretheMSGtoensureitsrepresentationofallrelevantstakeholders.SecretariatstaffexplainedthatAlbpetrolwasnotrepresentedontheMSGbecauseSOE-relatedEITIreportingrequirementswerenon-existentundertheEITIRuleswhentheMSGwasoriginallyestablishedin2011,andthatthegovernmentplannedtoprivatiseAlbpetrolatthetime,asitstilldoes.SecretariatstaffstatedthattheywereconsideringenlargingtheMSGtosevenrepresentativesperconstituency.

IndustryMSGmembersnotedthattheyrepresentedtheeightlargestforeign-investedextractives



companiesinAlbania,butthattheywerenotintouchwiththehundredsoflocalcompaniesoperatingintheminingsectororwithanyhydropowercompanies.SeveralFIAArepresentativenotedthattheyplannedtoundertakewideroutreachtolocally-ownedminingcompaniesinordertoparticipatebothinFIAA,theEITIandpotentiallyontheMSG.

CivilsocietyMSGmembersconcededthattheyrepresentedaroundsevenNGOsfromTiranaandwerenotincontactwithotherCSOsinAlbania.Indeed,foundersoftheAlbNet-EITINGOnotedtheyhadnotyetformallynotifiedtheroughlyhundredCSOstheyconsideredpotentialmembersofthenewcoalitionthattheNGOhadbeenestablishedinJanuary2016(seeRequirement1.3).DifferentCSOMSGmembersblamedeachotherforthelackoffollow-upwiththebroaderCSOconstituencyandthereappearedtobenocoordinationbetweenthefourCSOMSGmembers’outreachactivities.

SeveralCSOMSGmembersconsideredthatgovernmentrepresentationwasinconsistentontheMSGandthatlong-standingmembersdidnotplayactiverolesintheEITI.MSGmembersandsecretariatstaffhighlightedthelackofattendanceofMoJrepresentativesforinstance,andcalledfortheinclusionofrelevantentitiesliketheDepartmentofCustoms.SeveralkeyagenciesliketheOfficeoftheSupremeStateAudithadneverpreviouslybeencontactedbyAlb-EITI,althoughstakeholdersfromallconstituenciesexpressedmixedviewsabouttheauditor’spoliticalindependence(seeRequirement4.9).

Internalgovernanceandprocedures:AllMSGmembersconsulted–bothformerandcurrent–confirmedthatallMSGdecisionshadalwaysbeentakenbyconsensus,withnoinstanceofvoting.SeveralgovernmentMSGmembersandsecretariatstaffconsideredthattheMSG’srolesandresponsibilitieswerewelldescribedinitsToRs,butwerenotfollowedinpractice,withmostMSGmembersseenasinactive.

Record-keeping:Themajorityofstakeholdersconsulted,includingthoseofftheMSG,praisedtheAlb-EITISecretariat’sworkindocumentingminutesoftheMSG,circulatingthemforapprovalandpublishingonline.Stakeholdersalsoapplaudedthesecretariat’sprofessionalismindraftingmajorpaperssuchasworkplans,annualprogressreportsandToRs.However,reactionsfromCSOMSGmembersonthesecretariat’srecordkeepingandmeetinglogisticsweremixed.Onememberlaudedthesecretariat’srecordingofdetailedmeetingminutes,withcirculationofdraftminuteswithinaweekforapprovalbytheMSG,andpriorcirculationofrelevantdocumentswellaheadofMSGmeetings.Ontheotherhand,twoothermemberscriticisedthesecretariatfornotcirculatingdocumentsorminutesofMSGmeetings,andquestionedtheaccuracyofmeetingminutesdespitetheirdetailednature.

Perdiems:AllstakeholdersconsultedconfirmedthattheMSGdidnotpracticeperdiems.AllCSOsontheMSGcriticisedthelackofreimbursementoftravelcostsforattendingMSGmeetings,whichwereaparticularissuefortheCSOrepresentativefromtheminingregionofBulqiza.MSGmembersfromotherconstituenciesconsideredthatitshouldbeCSOs’responsibilitytoraisefundingfortheirmeaningfulparticipationinEITI,includingforattendingMSGmeetings.SecretariatstaffandgovernmentofficialsconfirmedthatthetermsoftheWorldBankgrantfundingtoAlb-EITI,whichaccountedfortwo-thirdsofimplementationcosts,didnotallowforthepaymentofperdiems.TheMSGChairexplainedthattherewasnobudgetlinetocovercivilsocietyrepresentatives’expenses.

Attendance:SecretariatstaffhighlightedthatwhileMoFandMoJrepresentativeontheMSGhad



changedfrequently,noneofthemtendedtoattendanyMSGmeetings.TheIAnotedthatonlyaroundhalfofMSGmemberswerepresentwhentheIApresentedthedraft2015EITIReport.SeveralCSOsnotedthatwhilegovernmentandcompaniesmostlyattendedmeetings,theywerenotusuallyactive.

Nationalsecretariat:AnindustryrepresentativenotedthattherewereunresolvedtensionsbetweencivilsocietyandtheAlbEITISecretariat,butconsideredthattheindustryconstituencyhadgoodrelationswiththeAlbEITISecretariat,asevidencedbythe2016MoUwithFIAAthatwasseenasbeingconcludedwithAlbEITIasastateinstitution.Agovernmentofficialandadevelopmentpartnerbothcommendedthesecretariatforitsperformanceandfiduciarycapacitiesinthemanagementofitsfunds.AdevelopmentpartnerhighlightedtheWorldBank’spriorprocurementreviewofallrecruitmentsandprocurementattherequestoftheAlbEITISecretariat.SecretariatstaffconfirmedthattheAlbEITIbudgetwassubjecttofourformsofcontrol,includingWorldBankpre-andpost-hocaudits,MEIauditandthePM’santi-corruptionunit.ThesecretariatpublishesallfinancialinformationontheAlbEITITransparencyProgram20webpage.However,severalCSOscalledforthenationalsecretariattobemoretransparentabouttheallocationandfundingofprojectsandconsideredthatthereshouldbestrongeroversightbyMSGmembersofallAlbEITIprojects.

Initialassessment

TheInternationalSecretariat’sinitialassessmentisthatAlbaniahasmademeaningfulprogresstowardsmeetingthisrequirement.TheMSGhasbeenformedandincludesself-appointedrepresentativesfromeachstakeholdergroupwithnosuggestionofinterferenceorcoercion,althoughthelackofrepresentationforthediversityofAlbanianextractivesindustryandcivilsocietyontheMSGisaconcern.TheMSGhasadoptedclearToRsthataddressmostofRequirement1.4oftheEITIStandard.WhiletheToRslackprovisionssuchasappointingtheIA,engaginginValidationandexercisingtherighttotableanissuefordiscussion,itseemstheseprovisionsarelargelyfollowedinpractice.WhiletheMSG’sToRssuggestthatcivilsocietyandcompaniesarefreetoelecttheirmembersindependentlyaccordingtotheircriteria,therearenoclearly-definedproceduresfortheselectionofMSGmembersasidefromthecivilsocietyCodeofConduct,whichdoesnotappearimplemented,andthegeneralMoUbetweenAlb-EITIandFIAA,whichdoesnotclarifyselectionprocedures.WhileMSGmembersappeartoregularlyattendMSGmeetingsandkeepadequaterecords,thereislittleevidenceofMSGparticipationindisseminationandoutreachactivities,whichareledbythesecretariat.Whilecapacityappearsstrongamonggovernmentandindustry,thereislimitedevidencethatcivilsocietyMSGmembershavesufficientcapacity,particularlyfinancial,tocarryouttheirduties.Overall,itappearsthattheAlb-EITISecretariatleadsEITIimplementation,withlimitedoversightbytheMSG.

Inaccordancewithrequirement1.4.a.ii,theMSGshouldensurethatitsproceduresfornominatingandchangingmulti-stakeholdergrouprepresentativesarepublicandconfirmtherightofeachstakeholdergrouptoappointitsownrepresentatives.Tostrengthenimplementation,thegovernmentisencouragedtoensurethatrelevantstateentities,suchasthenationaloilcompanyAlbpetrolgivengapsinreportingonstateparticipation(seeRequirement2.6),arerepresentedontheMSGandthattheirlevelofseniorityiscommensuratewiththeneedfortheMSGtotakeinformeddecisionsandfollowuponagreedactions.Inaccordancewithrequirement1.4.b.iiand1.4.b.iii,theMSGshouldundertakeeffectiveoutreach

20http://www.albeiti.org/transparency-program/



activitieswithcivilsocietygroupsandcompanies,includingthroughcommunicationsuchasmedia,websiteandletters,informingstakeholdersofthegovernment’scommitmenttoimplementtheEITI,andthecentralroleofcompaniesandcivilsociety.MembersoftheMSGshouldliaisewiththeirconstituencygroups.Inaccordancewithrequirement1.4.b.vi,theMSGshouldensureaninclusivedecision-makingprocessthroughoutimplementation,particularlyasconcernsindustryandcivilsociety.Governmentandcompanyconstituenciesareencouragedtoensurethattheirrepresentatives’attendanceatMSGmeetingsisconsistentandofsufficientlyhighleveltoallowtheMSGtotakedecisionsandfollowuponthem.ThegovernmentmayconsiderinvitingAlbpetroltotheMSG.ItisalsorecommendedthattheMSGtoreviewevaluationproceduresforitsmembersthatallconstituencieswouldagreetofollow.

Workplan(#1.5)


Publiclyaccessibleworkplan:TheMSGhasagreedaworkplanforEITIimplementationover2016-2019,publishedontheAlb-EITIwebsite.21Whiletheworkplanwasapprovedbycircularon17February201622,theMSGandsecretariatsubsequentlycontinuedrevisionsoftheworkplan,keepingtrackoffulfilledactivities.Forthepurposeofthisassessment,theInternationalSecretariathasconsideredtheversionoftheworkplanfor2016-2019availableontheAlbEITIwebsiteon1April2017.

Objectivesforimplementation:Theworkplanliststhefollowingfournationalprioritiesrelatedtonaturalresourcegovernanceandprovidesadetailedexplanation(summarisedbelow)ofhowtheobjectiveswillbeimplementedinrelationtotheEITIprocess:

1.Naturalresourcegovernance

TheprocessshouldcomplywiththeEITIStandardbyproducinghigh-qualityandtimelyannualEITIreports.TheMSGshoulduseEITIreportingtoaddresslegalandfiscalshortcomings,tocontributetothedevelopmentofnationalstrategiesandtoleadtosectoralreforms.TheEITIReportsshouldfocusonthesubnationallevelandenvironmentalissues,andintroducethehydropowersector,whichisstrategicallyimportantforthegovernment.

2.Opendata

EITIreportingshouldbeconsistentwiththegovernment’spolicyonopendatathatenablestimelyaccess,amachine-readableformatandreusability.Thereportingshouldbecostefficientandensureautomatedroutinedisclosuresthroughgovernmentalsystems.

3.Supporttocivilsociety

Thegovernmentshouldmaintainanenablingenvironmentforcivilsocietythatstimulatesefficient,

21www.albeiti.org22http://www.albeiti.org/multi-stakeholder-group/msg-meetings/year-2016/



active,sustainableandindependentengagementwiththeAlbanianEITIprocess.

4.Fightagainstcorruption

Thisobjectiveincludesthreeareas:(1)reformingthenationallegalframeworkforbettermanagementofnaturalresourcesbyintroducinglegalandregulatoryamendmentstotheexistingframeworkthatgovernstheextractiveindustries;(2)buildingalegalbasisandstakeholders’capacitiestoenablebeneficialownershipdisclosures;(3)increasingstakeholders’engagementandgeneratingpublicdebateonthegovernanceofnaturalresourcesthroughtargetedcommunicationefforts.

Measurableandtime-boundactivities:Theworkplanincludesmeasurableandtimeboundactivitiestoachieveagreedobjectives.Thetimelineforactivitiesisclearandindicatesspecificdeadlines(monthlybasis).

Activitiesaimedataddressinganycapacityconstraints:Activity11focusesoncapacity-building,includingworkshopsforMSGmembersonenhancingtheirroleintheextractiveindustries,theEITIStandardandbeneficialownershipdisclosures.Italsoplansfortailoredworkshopsfordifferentstakeholders(MSGmembers,nationalsecretariatandseparatelyforgovernmentandcompanyrepresentatives)ontopicsrangingfromfiscaltermstothelegalframework,localcontent,theenvironment,taxation,GISmappingandcadastralsystems,arbitrageandinternationalcontracts.TheworkplanalsoincludesactivitiesonmappingandconsensusbuildingforcivilsocietyengagedinEITI(#3)andoncapacitybuildingforMSGmemberstosupportimplementationofthebeneficialownershiproadmapin2017-2018(#13).

ScopeofEITIreporting:Activity4includesactivitiesaimedatidentifyingbarrierstoEITIdatacollectionfromgovernmententities,includingtheirEITIdatacollectionandprocessingsystems.Italsoaddressesopendataandincludesplanstoexploremainstreamingopportunities.Activity7referstopublishingEITIReportscovering2015-2018andincludestheMSG’sapprovaloftheIA’sToRs,agreementonthereportingscope,procurementoftheIAanddisseminationoftheEITIReporttothewiderpublic.However,theworkplandoesnotfurtherelaborateonanyMSGeffortstoextendthescopeordetailofEITIreportinganditisunclearwhethertheMSGhasresponsibilityforapprovingselectionoftheIAorcommentingondraftsofkeydocumentssuchastheinceptionreportortheEITIReport.

Legalorregulatoryobstacles:Activity4coverstheMSG’splanstoundertakelegalandregulatoryreviewsandthedraftingoflegalamendmentsforadoptionin2018.Activity13onbeneficialownershipreportingplansforalegalreviewandthedraftingofamendmentstoexistinglawsandregulations.

Follow-uponEITIrecommendations:WhileActivity7plansfortheprocurementofconsultancyservicestoassistgovernmentagencieswithimplementationofrecommendationsfromEITIreports,theworkplandoesnotoutlineplansfortheMSGtodiscussrecommendationsfrompreviousEITIReportsorValidation.

Costingsandfunding:Theworkplanidentifiessourcesoffundingandspecifictechnicalassistanceneedsrelatedtoparticularactivities.WhilethegovernmenthasprovidedlimitedfinancialsupporttoEITIimplementation,theWorldBankhasprovidedapproximately80%offunding,initiallythroughtheEITIMulti-DonorTrustFund(MDTF)andthroughtheExtractivesGlobalProgrammaticSupport(EGPS)MDTFsince2016accordingtosuccessiveAlb-EITIworkplansandinformationfromtheAlb-EITISecretariat.Someactivitiesdonotrequirefundingorfundingsourcesarenotidentified.



Stakeholderviews

AllMSGmembersconfirmedthattheAlbEITISecretariatusuallydraftedafirstversionoftheworkplanandcirculateditforcomments,whichwereusuallyaddressedinfinalversionsofworkplans.TheMSGChairsaidthattheworkplanobjectivesweredefinedbasedonthescopeofworksuggestedintheWorldBank’sfundingagreement,highlightingthatthegovernment’sobjectiveswerethehydropowerandoilandgassectors,alongsideotherprioritiesincludingagriculture,watermanagementandtheenvironment.

AnindustryMSGrepresentativenotedthattheFIAAalwaysdiscussedthedraftworkplanandotherEITI-relatedissuesinternally,outsideofMSGmeetings,althoughtheircommentsontheMSGwerenotalwaysfullyconsideredorincludedintheworkplan.However,mostofMSGmembersconsultedconfirmedthattheyhaddulyapprovedtheworkplan.

However,civilsocietymembersexpressedmixedviewsontheworkplan.SeveralCSOMSGmembersreportedlyprovidedcommentstotheworkplan,whileanothersaidthathehadneverseenanEITIworkplanbefore.OneCSOMSGmembersaidthattheAlbEITISecretariathadunilaterallyrevisedtheworkplaninearly2017withoutconsultingtheMSG,addingsomeactivitiesthatdidnotinvolveMSGmembers.

Initialassessment

TheInternationalSecretariat’sinitialassessmentisthatAlbaniahasmadesatisfactoryprogresstowardsmeetingthisrequirement.AlbaniahasanupdatedEITIworkplanfor2016-2019,whichispubliclyaccessible.Theworkplancontainsobjectivesalignedwithnationalpriorities,aswellasactivitiesandactionsaimedatensuringtheobjectivesaremet.Theworkplanincludesabroadtimelineforachievingtheobjectives,aswellascostingsandproposedfundingsources.WhilethereisacasethatAlbaniahasgonebeyondtheminimumrequirementgiventheinclusionofhydropowerinthescopeofEITIimplementation,thewiderconstituenciesdidnottakeactivepartindevelopingtheworkplannordidtheytakepartinoverseeingtheimplementationofactivities.Inpractice,theworkplaniswellmanagedandfollowedbythenationalsecretariat,albeitwithlimitedparticipationfromMSGmembers.

TheMSGisencouragedtoagreeaworkplanthatislinkedtonationalprioritiesandthatistheproductofwideconsultationwithstakeholders.Clearerlinkstonationaldiscussionsandprioritieswillencouragemoreactiveparticipationbyallstakeholdergroupsandhelpmobiliseadditionalresources.TheMSGshouldaddressthefinancialsustainabilityofEITIimplementationoverthemediumterm.



Table1–Summaryinitialassessmenttable:MSGoversight

EITIprovisions Summaryofmainfindings

InternationalSecretariat’sinitialassessmentofprogresswiththeEITIprovisions(tobecompletedfor‘required’provisions)

GovernmentoversightoftheEITIprocess(#1.1)

ThegovernmentiscommittedtotheEITI.AseniorindividualhasbeenappointedtoleadontheimplementationoftheEITIandrelevantgovernmentofficialsarerepresentedontheMSG.

Satisfactoryprogress

Companyengagement(#1.2)

Oil,gasandminingcompaniesareactivelyandeffectivelyengagedintheEITIprocess,bothasprovidersofinformationandinthedesign,implementation,monitoringandevaluationoftheEITIprocess.Hydro-powercompaniesparticipateonavoluntarybasis.


Civilsocietyengagement(#1.3)

ThereisanenablingenvironmentforcivilsocietyparticipationinAlbania.Civilsocietyisinvolvedinimplementation.However,capacityconstraintsareaffectingtheirabilitytobefullyandeffectivelyengagedinthedesign,implementation,monitoringandevaluationoftheEITIprocess.

Meaningfulprogress

MSGgovernanceandfunctioning(#1.4)

TheMSGhasbeenformedandincludesself-appointedrepresentativesfromeachstakeholdergroupwithnosuggestionofinterferenceorcoercion.TheMSGmeetsfrequentlyandattendanceandrecordkeepingappearsadequate.Whilecapacityisstrongamonggovernmentandcompanies,thereislimitedevidencethatcivilsocietyMSGmembershavesufficientcapacitytocarryouttheirduties.

Meaningfulprogress

Workplan(#1.5) The2016AlbEITIworkplanisinlinewithprovisionsof




Requirement1.5.Ithasclearobjectiveslinkedtonationalprioritiesfortheextractivesector,aswellasmoredetailedactionsandtimelines.Theexecutionofthecurrentworkplanappearstobeontrack.

Secretariat’srecommendations:

1. TheMSGshouldensuremoreconsistentparticipationofgovernmentrepresentativesindisseminationactivities.

2. Tostrengthenimplementation,theindustryconstituencyisencouragedtoensurethatitsMSGmembershipisrepresentativeofthestructureofthemining,hydropower,oilandgassectorsandthattheregularityandseniorityofindustryparticipationatMSGmeetingsiscommensuratewiththeMSG’sneedtotakeinformeddecisionsandfollow-uponpastactionpoints.TheMSGshouldensurecomprehensivereportingfromallmaterialcompanies.

3. Inaccordancewithrequirement1.3.a,thecivilsocietyconstituencyshoulddemonstratethattheyareablefully,activelyandeffectivelyengagedintheEITIprocess.Specifically,civilsocietyshouldensurethattheyareabletofullycontributeandprovideinputtotheEITIprocessandthattheyhaveadequatecapacitytoparticipateintheEITI.Inaccordancewithrequirement8.3.c.i,thecivilsocietyconstituencyshoulddevelopanddiscloseanactionplanforaddressingthedeficienciesincompanyengagementdocumentedintheinitialassessmentandvalidator’sreportwithinthreemonthsoftheBoard’sdecision,i.e.by<BoardDecision+3months>.TheconstituencymaywishtoundertakeanindependentreviewofcivilsocietyengagementintheEITIinAlbania,broadeningtheengagementwithCSOswithpotentialinterestsinEITIimplementation.Undertakingacapacityneedsassessmentandformulatingactionstoaddresscivilsocietycapacityconstraintsarecrucial,notleasttounlockfundingfromdevelopmentpartnersandotherrelevantparties.ThecivilsocietyconstituencyisencouragedtodevelopandagreeonguidelinesthateffectivelysetouttheprocessbywhichrepresentativesontheMSGwillbeselectedandheldaccountable.

4. Inaccordancewithrequirement1.4.a.ii,theMSGshouldensurethatitsproceduresfornominatingandchangingmulti-stakeholdergrouprepresentativesarepublicandconfirmtherightofeachstakeholdergrouptoappointitsownrepresentatives.Tostrengthenimplementation,thegovernmentisencouragedtoensurethatrelevantstateentities,suchasthenationaloilcompanyAlbpetrolgivengapsinreportingonstateparticipation(seeRequirement2.6),arerepresentedontheMSGandthattheirlevelofseniorityiscommensuratewiththeneedfortheMSGtotakeinformeddecisionsandfollowuponagreedactions.Inaccordancewithrequirement1.4.b.iiand1.4.b.iii,theMSGshouldundertakeeffectiveoutreachactivitieswithcivilsocietygroupsandcompanies,includingthroughcommunicationsuchasmedia,websiteandletters,informingstakeholdersofthegovernment’scommitmenttoimplementtheEITI,andthecentralroleofcompaniesand



civilsociety.MembersoftheMSGshouldliaisewiththeirconstituencygroups.Inaccordancewithrequirement1.4.b.vi,theMSGshouldensureaninclusivedecision-makingprocessthroughoutimplementation,particularlyasconcernsindustryandcivilsociety.Governmentandcompanyconstituenciesareencouragedtoensurethattheirrepresentatives’attendanceatMSGmeetingsisconsistentandofsufficientlyhighleveltoallowtheMSGtotakedecisionsandfollowuponthem.ThegovernmentmayconsiderinvitingAlbpetroltotheMSG.ItisalsorecommendedthattheMSGtoreviewevaluationproceduresforitsmembersthatallconstituencieswouldagreetofollow.

5. TheMSGisencouragedtoagreeaworkplanthatislinkedtonationalprioritiesandthatistheproductofwideconsultationwithstakeholders.Clearerlinkstonationaldiscussionsandprioritieswillencouragemoreactiveparticipationbyallstakeholdergroupsandhelpmobiliseadditionalresources.TheMSGshouldaddressthefinancialsustainabilityofEITIimplementationoverthemediumterm.



PartII–EITIDisclosures

2. Awardofcontractsandlicenses

2.1Overview

ThissectionprovidesdetailsontheimplementationoftheEITIrequirementsrelatedtothelegalframeworkfortheextractivesector,licensingactivities,contracts,beneficialownershipandstateparticipation.

2.2Assessment

Legalframework(#2.1)


Legalframework:The2015EITIReportprovidesanoverviewofthelegalframeworkfortheoilandgassector(2015EITIReport,p.26),andfortheminingsector(2015EITIReport,pp.49-52),includingbriefdescriptionsandlinkstorelevantgovernmentwebsites(MEIandAKBN)forsummariesofsector-specificlawsandregulations.Thereportalsoalludestoinvestmenttreatieswith“manycountries”andprovidesalink23tothefulllistofthese(2015EITIReport,p.103).

Governmentagencies’roles:Thereportprovidesacursoryoverviewofthemaingovernmentagencies24involvedintheextractiveindustriesandlinkstoavailablewebsites,wheredetaileddescriptionsofeachagency’srolesandresponsibilitiesareavailable(2015EITIReport,pp.15-18).Albania’smembershipoftheEuropeanUnion’sRegionalEnergyCommunitysince2006isalsodescribed(2015EITIReport,p.18).ThereportprovidesacursorydescriptionoftherolesofMEI,AKBNandtheGeologicalService(SHGJSH)inapprovingmininglicensesaswellasofthePublicProcurementAgencyinoverseeingmininglicensebiddingrounds(2015EITIReport,pp.49-51).

Fiscalregime:Thereportprovidesanoverviewofthefiscaltermsintheoilandgassector,includingadiagramofupstreamoilandgasrevenues,thevalueofkeyoilandgasrevenuesin2015anddescriptionsofallkeyoilandgasrevenuestreams25(2015EITIReport,pp.32-35).WhilenotingthatthespecifictermsofoilandgasPSAsarenotpublic,thereportprovidesalinktoaMEIwebpage26forthemaintermsandconditionsofPSAs(2015EITIReport,p.26).The2015EITIReportdescribesthefiscalframeworkintheminingsector,includingregulationssettingfinancialguaranteesforinvestmentplansandenvironmental

23http://investmentpolicyhub.unctad.org/IIA/CountryBits/2#iiaInnerMenu24MinistryofEnergyandIndustry,NationalAgencyofNaturalResources,AlbanianGeologicalSurvey,AlbanianEnergyRegulator,AgencyforConcessionandPPP,MinistryofEnvironment,State-ownedentitiesintheenergyandresources.25royalty,taxonprofit,VAT,paymentsforsocialandhealthinsuranceandpersonalincometax,personalincometax,thestate’sshareofoilproduction,signatureandtrainingbonuses.26http://www.energjia.gov.al/al/publikime/blloqet-e-lira-te-kerkimit



rehabilitationplans(2015EITIReport,pp.49-51).Anoverviewofthetaxesandfees27applicabletotheminingsectorisalsoprovided(2015EITIReport,pp.53-54).

Degreeoffiscaldevolution:The2015EITIReportdescribesstatutorysubnationaltransferstolocalgovernmentunits(LGUs)thathostextractivesproduction,originallyimplementedin2008atarateof25%ofroyaltiesandamendedin2014to5%ofroyalties(effectiveasof2015)(2015EITIReport,pp.75-76).TheprocessforcollectingandtransferringthesesubnationaltransferstoLGUsisdescribed(2015EITIReport,p.75).Thereportalsohighlightsinefficienciesinthetransitiontothereformedsubnationaltransfersystemin2015,itsfirstyearofimplementation(2015EITIReport,p.76).

Reforms:Thereportlistsreformsintheminingsectorincludingatwo-thirdsreductioninminingroyaltiesinNovember2014(2015EITIReport,p.53)andbrieflydescribesreformstothePetroleumLawintroducedbytheMEIinDecember2016(2015EITIReport,p.26).

The2013-14EITIReportdescribesthelegalenvironmentforoilandgas(2013-14EITIReport,p.22),miningandquarrying(2013-14EITIReport,p.40)andhydro-electricity(2013-14EITIReport,p.54),withlinkswhererelevant,aswellastheapplicablefiscalregimes(2013-14EITIReport,pp.37,49,69-70).Thedegreeoffiscaldevolutionisdescribed(2013-14EITIReport,p.74),alongsidetherolesofrelevantgovernmentagenciesandseveralreformsenactedin2015(2013-14EITIReport,pp.16-19).

StakeholderviewsStakeholdersconsulteddidnotexpressanyparticularviewsonthecomprehensivenessandaccuracyofthe2015EITIReport’scoverageofthelegalenvironmentandfiscalframeworkfortheextractivesindustries.OneindustryMSGrepresentativesconsideredthattheexplanationofthelegalenvironmentinthe2013-14EITIReportwasmorecomprehensivethaninthe2015EITIReport,giventhatithadreflectedsomeofindustry’sconcernsovercertainlegalambiguities.

Severalrepresentativesfromgovernment,civilsocietyanddevelopmentpartnershighlightedthefragmentedregulatorystructuregoverningtheextractivesindustries,splitbetweentheMEI,AKBNandAlbpetrol.Severalcivilsocietyrepresentativesconsideredthatthefragmentationofgovernmententitieswithresponsibilityforoverseeingthesectorwasaconsciousattempttohideinformationfromthepublic.SeveralgovernmentandcivilsocietymembersexplainedthattherewasahistoryoffrictionbetweenAKBNandAlbpetrol,giventhepoliticizednatureofthetwoorganisations’management.AJanuary2017reportbyEurosupportexplainedthattherolesandresponsibilitiesofeachministryisdescribedontherespectiveministry’swebsiteandencouragedAlbEITItoconsiderprovidinganupdatedreviewofthelegalenvironmentandfiscalregimeforthemining,oilandgassectorsontheAlbEITIwebsite(Eurosupport,2017).

Severalindustry,governmentanddevelopmentpartnerrepresentativesexplainedthatthereweresignificantambiguitiesinthefiscaltermsformining,oilandgas.Theissueofroyaltycalculationswashighlightedasachallengebytheserepresentatives,whonotedthatcompaniesstillpaidroyaltieseven

27Includingdescriptionsofallkeyminingrevenuestreams(royalties,taxonprofits,VAT,paymentsforsocialandhealthinsuranceandpersonalincometax,personalincometax,taxondividend).



whentheymadenoprofit.Inaddition,severalcompanieshadstruggledwiththeissueofcostrecoveryinoilandgasPSAs,withanumberofcasesreferredtointernationalarbitration.ThesestakeholdershighlightedinconsistenciesbetweenthestatutoryfiscaltermsfromtheHydrocarbonsLaw,whichconsistedofonlytwopages,andthefiscaltermsofcertainoilandgasPSAs,whichwereapprovedbyDecisionofCouncilofMinistersandincludedstabilisationclauses.TheUSDepartmentofStatehasusedstronglanguageregardingAlbpetrolas“aconsistentsourceofreportsofcorruption,predatoryinterpretationofregulations,andinefficiencyinthehydrocarbonsector”(USDepartmentofState,2016).

Severalgovernmentanddevelopmentpartnerrepresentativeshighlightedanumberofrelevantreforms,bothplannedandongoing.AseniorgovernmentofficialexplainedthattheongoingreviewoftheHydrocarbonsLawwasaimedatensuringitsconsistencywiththetermsofexistingoilandgasPSAs.AdevelopmentpartnernotedthatboththeUSandUKEmbassieswerepreparingtechnicalassistanceforreformingtheregulatoryframeworkforoilandgas.TheUSDepartmentofState’sBureauofEnergyResourceswaspreparingtorolloutanEnergyGovernanceandCapacityInitiative(EGCI)28forAlbaniainthesecondhalfof2017tore-examinethefiscalstructureoftheoilandgasindustry,potentiallymovingfromacostrecoverymodeltoatax-and-royaltymodel,andformaninter-governmentaltaskforceonoilandgas.TheproposedEGCIwouldalsoprovidetechnicalsupportforupgradingthegovernment’staxandauditcapacityinrelationtotheoilandgassectorandensuringthatalloilandgaslicenseswereawardedthroughopentendersratherthandirectnegotiations,whichwereseenasopaque.

InitialassessmentTheInternationalSecretariat’sinitialassessmentisthatAlbaniahasmadesatisfactoryprogressinaddressingthisrequirement.The2015EITIReportincludesanoverviewofrelevantlaws,governmententities,fiscaltermsinthemining,oilandgassector,thedegreeoffiscaldevolutionandbriefcommentaryoncurrentreforms.

Tostrengthenimplementation,theMSGmaywishtoexplorethepotentialofusingEITIreportingtohighlightinconsistenciesinAlbania’slegalenvironment,fiscalframeworkandregulatoryresponsibilitiesinthemining,oilandgassectors.TheMSGmaywishtolinkEITIreportingtoplannedtechnicalassistanceinthemining,oilandgassectorstoensurethatEITIimplementationservesasadiagnostictosupportongoingandplannedreforms.

Licenseallocations(#2.2)

DocumentationofprogressIntheminingsector,holdersofexplorationandproductionlicensesarerequiredtoobtainminingpermitsannuallyfromMEI,inlinewithLaw10081of23February2009(2015EITIReport,p.52).Inoilandgas,alllicense-holdersarerequiredtoconclude“petroleumsharingagreements”(PSAs),similartoproduction-sharingcontracts,withthegovernmenteitherthroughAKBNorthroughAlbpetrol(2015EITIReport,p.26).

Awards/transfers:Inoilandgas,itappearsfromthelistofPSAs(inAppendices5and6)andfromthelist

28https://www.state.gov/documents/organization/264507.pdf



ofexplorationlicenses(inAppendix7)thatnooilandgasPSAswereawardedoramendedin2015,althoughthe2015EITIReportdoesnotclearlystatewhetheranyoilandgaslicenseswereawardedortransferredin2015(2015EITIReport,pp.139-140,141).Thereisevidenceinthemediaofanoilandgasexplorationlicense(BlockD)beingallocatedtoShellandPetromanasinJuly2015(WorldOil,2015).

ThereportstatesthatMEIannouncedcompetitivebidsfor77miningareasin2015andgranted50mininglicensesforchromium(14),limestoneandotherconstructionminerals(40),iron-nickelandnickel-silicate(4)andgravelandtarsands(4)(2015EITIReport,p.52).However,Appendix8providesalistof62mininglicensesawardedthroughcompetitivebiddingin2015(2015EITIReport,pp.142-144).Thereasonsforthediscrepancyinreportingofmininglicenseallocationsin2015arenotdescribedinthereport.The2015EITIReportdoesnotrefertowhethertherewereanytransfersofmining,oilandgaslicensesin2015.ThereportprovidesanoverviewoftheMEI’spubliclyaccessiblemining,oilandgaslicenseregisters,andalink29toaPDFlistoflicensesontheMEIwebsite(2015EITIReport,pp.101-102).TheAlbEITIwebsitealsoprovidestwolistsoflicenses,coveringmining30andoilandgas31,althoughthelistofmininglicenseswaslastupdatedon3November2015.BasedonacomparisonofthemininglicenseslistedonthewebsitesofAlbEITI32andMEI33,itappearsthat12mininglicenseswereawardedintheperiod3November–31December2015.

Award/transferprocess:Foroilandgas,thereportreferstotheprocessforoilandgaslicenseawards(andlinkstotherelevantwebpages),involvingMEI34,AKBN35andAlbpetrol36(2015EITIReport,p.27).Thethreewebpagesprovidegeneraldescriptionsofthestatutoryprocessforawardinglicenses.ThereportconfirmstheneedforministerialapprovalandprovidesalinktoMEI’sinformationonfreeexplorationlicenses37(2015EITIReport,p.27),wheretherearelinkstotheministerialdecisionsawardingexplorationlicenses.AnoverviewoftheprocessesforconcludingPSAsinareasrespectivelyadministeredbyAKBNandAlbpetrolisprovided,includingtheneedforministerialapproval(2015EITIReport,p.27).Inaddition,thereportstatesthat,incasesoftwoormoreapplicantsforthesameoilblock,AKBNorAlbpetrolshouldsubmitpreliminaryevaluationstoMEIforapprovalbeforenegotiationsstart(2015EITIReport,p.27).

FollowingthecreationofAKBNasthesectorregulatorin2006,AlbpetrolisrequiredtoconcludeanagreementwithMEIforanyoilandgaslicenseonwhichitconcludesaPSAwithanoilandgascompany.The2015EITIReportprovidesanoverviewoftheprocessforconcludingsuchlicenseagreementsbetweenAlbpetrolandMEI(2015EITIReport,p.28).TheprocessforconcludingalicenseagreementisgovernedbythesamerulesasnormalPSAsandrequiresministerialapproval(2015EITIReport,p.28).Intermsofoilandgaslicensetransferprocedures,Table4statesthattheMEI’sapprovalwasrequiredforTransatlanticPetroleum’sacquisitionofStreamOilandGas’sAlbaniaoperationsinSeptember2014(2015EITIReport,p.29),butthereportdoesnotprovidemoredetailsonthestatutoryprocessfortransferring

29http://www.energjia.gov.al/files/userfiles/minierat2/2016/RREGJ._LEJEVE_SHKURT_2016_Aktive.pdf30http://www.albeiti.org/mining-register/31http://www.albeiti.org/petroleum-licenses/32http://www.albeiti.org/mining-register/33http://www.energjia.gov.al/files/userfiles/minierat2/2016/RREGJ._LEJEVE_SHKURT_2016_Aktive.pdf34http://www.energjia.gov.al/al/publikime/blloqet-e-lira-te-kerkimit35http://www.akbn.gov.al/rregullore-per-procedurat-e-miratimit-te-marreveshjeve/36http://www.albpetrol.al/marreveshjet-hidrokarbure/baza-ligjore/37http://www.energjia.gov.al/al/publikime/blloqet-e-lira-te-kerkimit



oilandgaslicensesorequitystakesinPSAconsortia.

Inrelationtostatutorymininglicenseawardprocedures,the2015EITIReportdescribestheprocessforallocatinglicensesboththroughcompetitivebiddingroundsandforadhocnegotiationsona“firstcomefirstserved”basis,withcompetitiveandopenbiddingareassetinthenationalannualminingplan(2015EITIReport,pp.51-52).Thereportalsoclarifiesthatannualminingpermitsarealsorequired,inparalleltolonger-termmininglicenses(2015EITIReport,p.52).Table7providesanoverviewoftheterms(durationandsurface)ofthetwotypesofmininglicenses(explorationandproduction)(2015EITIReport,p.49).Theprocessforsubmittingandapprovingannualinvestmentandenvironmentalrehabilitationplansisdescribed(2015EITIReport,pp.49-50).

Regardingtheactualproceduresfollowedforawardingthemininglicensesgrantedin2015inpractice,thereportstatesthat“noadditionalinformationwithregardtothebidevaluationprocessandnon-winningapplicantsisdisclosedforthepurposeofthisreport”(2015EITIReport,p.52).Appendix8providesinformationonthetermsofthe62licensesawardedin2015butdoesnotdescribetheprocessforallocatingthem(2015EITIReport,pp.142-144).Giventhatthereportprovidesdatesofapplicationforonly33ofthe62mininglicensesawardedin2015(2015EITIReport,pp.142-144),itisonlypossibleforreaderstomakegeneralassessmentsofthetimeframeforawardinglicensesforroughlyhalfofthemininglicensesawardedin2015.

Technicalandfinancialcriteria:The2015EITIReportprovidesacursoryoverviewofthestatutorytechnicalandfinancialcriteriausedinawardingoilandgaslicenses,“includingknow-how,technology,personnel,andpreviousexperiencesinthesectorandatthesametimepossessfinancialresourcestofinanceaviableinvestmentexplorationanddevelopment(…)aswellasabilitytopositivelyaffectthesurroundingcommunities”(2015EITIReport,p.27).WhilenotingthatthespecifictermsofoilandgasPSAsarenotpublic,thereportprovidesalinktoaMEIwebpage38forthemaintermsandconditionsofPSAs(2015EITIReport,p.26).ThisMEIwebpagedoesnotprovideacomprehensiveanddetailedlistofthetechnicalandfinancialcriteriaassessed,althoughitstatesthatrequirementsincludetheprovisionofthreeyearsofauditedfinancialstatementsaspartoftheapplication.39

Formininglicenses,thereportdescribesthecontentofbidnotices,theweightingofgeneraltechnicalandfinancialcriteria,andthebidevaluationprocess(2015EITIReport,pp.51-52).However,thereportstatestheIAwasunsuccessfulinsecuringalistofthetechnicalandfinancialcriteriausedspecificallyinawardingthemininglicensesin2015(2015EITIReport,p.102).

Thereportdoesnotprovideinformationontechnicalandfinancialcriteriausedforassessinglicensetransfersinthemining,oilandgassectors.

Licenseawardeeinformation:Theidentityofthe62mininglicenseawardeesin2015isprovidedinAppendix8(2015EITIReport,pp.142-144).Thereportdoesnotindicatewhetheranynewoilandgaslicenseswereawardedin2015anddoesnotrefertoanylicensetransfersinthemining,oilandgas

38http://www.energjia.gov.al/al/publikime/blloqet-e-lira-te-kerkimit39http://www.energjia.gov.al/files/userfiles/Publikime2/Binder1-1.pdf



sectors,evenifthelistofPSAsandoilandgasexplorationlicensesinthe2015EITIReportdoesnotseemtoindicateanyoilandgaslicenseawardsortransfers(2015EITIReport,pp.139-140,141).

Non-trivialdeviations:The2015EITIReportstatesthat“thecontractingauthorities”didnotreportanydeviationsfromtheapplicablelegalandregulatoryframeworkgoverninglicensetransfers,butthattheIAdidnotverifywhethertherewereanydeviationsbecauseitwas“notenabledtoperformthistask”(2015EITIReport,p.162).Whilethereporthighlightsmininglicenseawardsin2015,itdoesnotprovideinformationondeviationsinthestatutorylicenseallocationproceduresinpracticeforanyofthe62mininglicensesawardedin2015.ThereportnotesthattheIAreceivedinformationonbidroundsin2015butnotonthebidcriteriausedtoevaluatebidsorbiddernameswheremorethanoneapplicantsubmitteditsproposal(2015EITIReport,p.102).

Thereportdoesnothighlightanydeviationsfromstatutoryawardproceduresinoilandgaslicensesawardedpriorto2013,statingonlythattheIA“understoodthatalmostallpetroleumagreementswereallocatedthroughadhocnegotiationsproceduresuptoAugust2013,(…)werequestedbutdidnotreceivefromMEIinformationontechnicalandfinancialcriteriausedinallocatingtheseagreements”(2015EITIReport,p.102).

Earlier,thereportstatedthat“almostall”PSAssigneduntiltheendof2015wereawardedthoughad-hocnegotiations,withthemaintechnicalandfinancialtermsnotdisclosedforpublicaccess(2015EITIReport,p.27).

Comprehensiveness:Thereportprovidessomeinformationonoilandgaslicensesawardedin2016,althoughsomenegotiationsforlicenseawardsandtransferswereongoing,butnotconcluded,in201540(2015EITIReport,p.28-29).However,thereportdoesnotrefertoanyoilandgaslicensesawardedortransferredpriortoorafter2015.

Biddingprocess:The2015EITIReportstatesthatMEIawarded50mininglicensesin2015throughcompetitivebidding(2015EITIReport,p.52),butthatnoinformationonthebidevaluationprocesscouldbeprovided,norlistofunsuccessfulbidders.ThelistofareasallocatedandwiningapplicantsareshowninAppendix8(2015EITIReport,pp.142-144),althoughthisincludes62winningmininglicensebidsratherthanthe50mentionedearlierinthereport(2015EITIReport,p.52).Thegeneralprocessofcompetitivebiddingisdescribed,withcompetitiveandopenbiddingareassetintheannualminingplan(2015EITIReport,pp.51-52).“Competitivebidsaregrantedforareaswhereknowngeologicalandrecoveredreservespresentsignificanteconomicinterest.”Thereportexplainsthatbidnotices,ToRandbidevaluationcriteriaarepublishedonthewebsitesofMEI41andthePublicProcurementAgency42,and

40MEIstartedallocationproceduresforon-shoreexplorationblocks4,5,C,Panaja,Dumre,Joni-5andRodoniin2015.Byend2015,MEIwasnegotiatingwithPetromanasAlbaniaandShellUpstreamAlbaniaforaPSAforexplorationblock4,althoughthiswasnotfinalisedatthetimeofthe2015EITIReport’sdrafting.Byend-2015MEIwasalsonegotiatingwithNavitasPetroleumLimitedforDumreblock.On15March2016,MEIandAKBNsignedaPSAwithAlbanidesEnergyforexplorationblocknumber8,aPSAapprovedbya26April2016CounciloftheMinistersDecision,withthePSApublishedinofficialgazette63/2016.In2016,PetromanasAlbaniaGmbHsolditspetroleumoperationstoShellUpstreamAlbaniaB.V.andfiledforliquidation.InSeptember2014,TransatlanticPetroleumLtdacquiredStreamOil&GasinAlbania,atransactionapprovedbyMEI.InFebruary2016,TransatlanticPetroleumsolditssharestoGBCOil.InFebruary2016,PetromanasAlbaniasolditsoperationsandPSAforexplorationblocks2and3toShellUpstreamAlbania.41http://www.energjia.gov.al/42http://www.app.gov.al/



provideslinkstotheagencies’generalwebsites.Thereportalsodescribesthecontentofbidnotices,theweightingofgeneraltechnicalandfinancialcriteria,andthebidevaluationprocess(2015EITIReport,pp.51-52).However,Section11.3.6notesthattheIAcouldnotobtaininformationonthebidcriteriausedtoevaluatebidsineachroundformininglicenseesawardedin2015northenamesofunsuccessfulbidders(2015EITIReport,p.102).

Commentaryonefficiency:Thereisnoadditionalinformationonlicenseallocationortransferprocedures,butthereisageneralreferencetotheinefficiencyandlackoftransparencyinthelicenseallocationprocess.ThereporthighlightstheinternationalinvestmenttreatiessignedbyAlbaniaandreferstoacomprehensivelist43,notingthattheseagreementsincluderequirementsontransparencyoflicensingandprocurementproceduresandthat“lackoftransparencyandineffectiveprocessesforallocationlicenseescouldexposetheCountryagainstinternationalarbitrationclaims”(2015EITIReport,p.103).

The2013-14EITIReportdescribedthetwosystemsforawardingmininglicenses,adhocnegotiationsandcompetitivebidding(2013-14EITIReport,p.29),andthenewregulationsfromMay2015(2013-14EITIReport,p.41),includingtechnicalandfinancialcriteria(2013-14EITIReport,p.42)andinformationabouttherecipientsofmininglicensesin2015(2013-14EITIReport,pp.261-262),althoughthebidcriteriaformininglicensesawardedin2013-14weresimilarlynotprovided.Thenewregulationsenactedinlate2015fortheawardofoilandgaslicensesweredescribed(2013-14EITIReport,p.30),includingthetechnicalandfinancialcriteria.Thereportprovidedalink44tothetermsandconditionsforapplyingforanoilandgasPSA,butnotedthatthetechnicalandfinancialcriteriausedduringadhocnegotiationsforallPSAsawardedupto2015werenotavailable(2013-14EITIReport,p.31).The2013-14EITIReportalsoincludedarecommendationonstrengtheningthelicensingsystem.

StakeholderviewsStakeholdersfromdifferentconstituenciesexpressedstarklydifferentviewsregardingthetransparencyoflicenseallocationproceduresinthemining,oilandgassectors,althoughtherewasconsensusamongststakeholdersconsultedthatAlbaniahadahistoryofopaquelicenseallocationsandthatthishadbeenanemotiveissueinthepast.AseniorgovernmentofficialnotedthatthecreationofAKBNasaquasi-independentsectorregulatorhadmarkedasignificantimprovementinstrengtheningoversightoflicenseallocations,notingthatpastpracticesofallocatingoilandgaslicensesandPSAsbasedon“clientelism”werenolongerpossible.SecretariatstaffexplainedthatAlbEITIhadundertakensignificantworkonclarifyinglicenseallocationproceduresduetopastambiguitiesinthelicenseallocationprocess.However,severalCSOMSGmembersgenerallyarguedthatthereweresignificantdeviationsfromstatutorylicenseallocationprocedures,albeitwithoutspecificexamplesdespiteextensiveconsultationsonthetopic.Severaldevelopmentpartnershighlightedconcernsoverdeviationsfromtherequirementforpublicconsultationspriortoawardinghydro-powerconcessions,notingspecificexampleswherepublicconsultationsappearedtobefakegiventheselectionofspecificindividualsfortheconsultations.However,nospecificexamplesofdeviationsfromlicenseallocationproceduresinthemining,oilandgassectorswereprovided.OnegovernmentMSGmemberquestionedwhytheissueofdeviationsfromstatutorylicenseallocationprocedureswouldberelevanttoEITIreportingandconsideredthatsuchassessmentswerebeyondthescopeoftheEITI.Theofficialexplainedthattherecouldbenodeviations

43http://investmentpolicyhub.unctad.org/IIA/CountryBits/2#iiaInnerMenu44http://www.energjia.gov.al/files/userfiles/Publikime2/Binder1-1.pdf



fromallocationproceduresineitherminingoroilandgas,giventhattheofficialsinchargeofsuchallocationswouldbeprosecutedforanydeviations.

Mininglicenses:TheIAexplainedthatthereferenceto50mininglicensesawardedinthefulltextofthe2015EITIReportwasamistakeandconfirmedthatthenumberofmininglicensesawardedin2015wasinfact62.BoththeIAandMEIrepresentativesconfirmedthattherewerenomininglicensesawardedthroughadhocdirectnegotiationsin2015,beyondthe62awardedthroughcompetitivebidding.Thegovernmentrepresentativeexplainedthattherehadbeeninstancesofmininglicenseawardsthroughdirectnegotiationsinthepast,includingtwominingproductionlicensesin2001.Inaddition,governmentrepresentativesandtheIAnotedthatthegovernmentcoulddecidetoawardmininglicensesthroughdirectnegotiationsincasesofnational“socialoreconomic”importance,forinstancewheretheminingcompanycommittedtoinvestindownstreamprocessing,butthatsuchproductionlicensesweregrantedforthreeyearsratherthantheusual25-yearperiod.Theofficialconfirmedthattherewerenosuchcasesin2015.

Intermsofthetechnicalandfinancialcriteriaformininglicenseawards,theIAandagovernmentrepresentativeexplainedthatthespecificcriteriawereincludedinthebidcriteriacommunicatedonlytobidparticipantswhentheyappliedthroughthededicatedportalatthepublicprocurementagency45,butthatthesewerenotaccessibletothegeneralpublic(andonlyavailabletoparticipantsforthedurationofthetender)norsummarisedontheMEIwebsite.TherepresentativesconfirmedthatspecificbidcriteriadifferedaccordingtothespecifictenderbuttheIAnotedthatitwasnotprovidedaccesstothespecificbidcriteriaduringtheirwork,despiteseveralrequests.Agovernmentofficialnotedthatwhiletechnicalcriteriausuallystayedthesameforalltenders,thefinancialcriteriadiffereddependingonthesizeandgeologicalcharacteristicsofthelicensesonoffer.TheIAnotedthatitintendedtocheckwhetherthesewereindeedavailabletobidparticipantsduringfuturebiddingrounds(whiletheywereopen).WhiletheIAnotedthatithadhighlightedthisgaptotheMSG,ithadonlybeentoldthatMSGmembers“wouldlookintoit”.SecretariatstaffconfirmedthattheyhadaskedMEItoprovideinformationontheactualprocessforawardingmininglicensesin2015butthatMEIhadnotcooperatedonthisissue.Agovernmentrepresentativeexplainedthattherewasastricttwo-monthtimeframeforthegovernmenttoprocessmininglicenseapplications.

AJanuary2017reportbyEurosupportexplainedthatthetechnicalandfinancialcriteriausedforassessingmininglicenseawardsonafirst-come-first-servedbasiswerecodifiedinDecision942dated17November2010(Eurosupport,2017).Formininglicensesawardedthroughcompetitivebidding,Law145/2013requiredbidcriteriatobepublishedalongsidetenderdocumentsonthePublicProcurementAgency’swebsite.Detailsofthebidtermsandunsuccessfulbiddersareavailableuponrequestforoneyearfollowingtheconclusionofthetender,followingrequirementsofpoint7.4ofDCM320of21April2011.ThereportalsostatesthatthetransferofmininglicensesismanagedinlinewithDecision362of29April2011andthatanyinterestedpartycanrequestinformationontheprocessfortransferringaparticularlicenseinlinewithFreedomofInformationLaw119/2014.WhiletheEurosupportreportconsideredthatinformationmandatedunderRequirement2.2wasavailableinthepublicdomaininAlbania,italsorecommendedthatinformationonmininglicensebidsbekeptformorethanoneyearandthatallinformationonbiddingroundsbefreelyaccessibleontheMEIwebsite.Thiswouldrequireamending

45www.app.gov.al



point7.2ofDCM320of21April2011.ThereportalsorecommendsthattheMEIprepareapublicsummaryreportoftheproceduresfollowedfortheallocationofeachmininglicenseawardedonafirst-come-first-servedbasis.Thiswouldrequireamendmentofparagraph11ofDecision942of17November2010(Eurosupport,2017).

Withregardstonon-trivialdeviationsfromthestatutoryproceduresforthe62mininglicensesawardedin2015,theIAexplainedthatithadconsistentlyaskedtoreviewthebidevaluationreportsbothforthe2013-14EITIReportandthe2015EITIReport,butthatithadnotbeengivenaccesstothesedocuments.TheIAnotedthatithadreliedontheMEI’sopinionthattherehadbeennodeviationsfromstatutoryproceduresformininglicenseawardsinitsassessmentunderRequirement2.2.WhiletheIAhadundertakenindependentresearchbasedonpublicmediaandthegovernment’sofficialgazetteforanynewsonmininglicensesandconcessions,ithadnotconsultedwithanyofthecompaniesthathadreceivedanyofthe62mininglicensesawardedin2015.However,theIAstatedthatithad“encouraged”participatingcompaniestoshareanyconcernsoverthelicensingandsupervisionprocess,throughageneralquestioninthereportingtemplates,butthatithadnotreceivedanyinputfromreportingcompaniesonthisissue.TheIAnotedthatseveralcompaniesreceivingmininglicensesin2015were“material”,i.e.requiredtoparticipateinEITIreporting,andthatitintendedtospecificallyaskaboutanydeviationsfromstatutorylicenseallocationproceduresaspartoftheircorrespondencewithcompaniesinpreparingthenextEITIReport,covering2016.Severaljournalistshighlightedthatalargenumberofmininglicensesappearedtohavebeenawardedwithrecordspeedintherun-uptothe2013electionsandthattheyconsideredthistobeareflectionofdeviationsfromstatutoryrules.

Oilandgaslicenses:ExtensiveconsultationsrevealedthattherehadbeennotransferofoilandgaslicensesorchangeintheequitystructureofPSAconsortiain2015.Withregardstooilandgaslicenseallocations,onegovernmentofficialnotedthataconsortiumofShellandPetromanashadreceivedanonshoreoilandgasexplorationlicenseinJuly2015(BlockD),forwhichthereisevidenceinthemedia(WorldOil,2015).AnothergovernmentrepresentativenotedthattherehadbeennonewawardortransferofaPSAinwhichAlbpetrolparticipatedin2015.

Withregardstonon-trivialdeviationsfromlicenseallocationandtransferproceduresinpractice,amongstmoststakeholdersconsultedexpressedconfusionoverthedifferencebetweentransferringalicensebetweentwocompaniesandtheacquisitionofacompany(anditsassets,includinglicenses)byanother.SeveralcivilsocietyanddevelopmentpartnerrepresentativesexpressedconcernoverallegationsofdiscretionaryallocationsofoilandgaslicensesandPSAs.However,nospecificallegationsweremaderegardingtheoneoilandgasexplorationlicenseawardedin2015.OneCSOMSGmemberconsideredthattherehadbeeninstancesofrenegotiatingaPSAwithAKBNafterithadoriginallybeenawarded,highlightingthatsuchamendmentswerenotcoveredinthelaw,butdidnotprovidespecificexamplesofsuchinstances,eveninperiodsoutsidetheyearunderreview(2015).SeveraldevelopmentpartnersexpressedconcernatthefactthatoilandgasPSAshadneverbeenawardedthroughcompetitivetenderandthattherelianceondirectnegotiationsleftroomforexcessivediscretion.Whilethegovernmenthadtriedtoholdabiddingroundin2015,thelackofinterestfromwould-bebiddersmeantthetenderwasunsuccessfulandthatlicenseswereeventuallyawardedthroughdirectnegotiationsaccordingtotheserepresentatives.OnedevelopmentpartnerexplainedthatoneoftheareasoffocusfortheUSDepartmentofState’splannedtechnicalassistancewouldbetoensurethatlicensesandPSAswereneverawardedthroughdirectnegotiationsandwereonlyeverawardedonthebasisofcompetitivebidding.



UpondiscussionofthelengthyperiodforconcludingPSAsnegotiations(eventuallyconcludedin2016),theIAnotedthataMSGrepresentativefromMEIhadexplainedthatnegotiationshadbeenextendedwhenbidderslostinterestduetodeclininginternationaloilprices.HighlightingthatithadnotreceivedinputfromanyotherMSGmemberdespiteraisingthisissue,theIAstatedthatithadnotcontactedcompaniesengagedinthesenegotiationsaspartofpreparingthe2015EITIReportbutthatitintendedtocontactthesecompanies’representativestoassessanynon-trivialdeviationsinpreparingthenextEITIReport,covering2016.

Licensetransfers:TheIAandagovernmentrepresentativeexplainedthattheMiningandHydrocarbonsLawsdidnotallowforthetransfer(orsale)ofmining,oilandgaslicensesawardedthroughcompetitivebidding,i.e.mininglicensesawardedpost-2007.Formininglicensesawardedpriorto2007,agovernmentofficialexplainedthatthelicensecouldbetransferredbetweentwocompanies,subjecttothecompanymeetingtheoriginaltechnicalandfinancialcriteriaforthelicense’sinitialallocationandonlywithformalapprovalfromtheMEI.Incaseswhereacompanysoughttosellitsinterestinaminingoroilandgasoperation,thetransactionwasalsosubjecttotheMEI’sapprovalonthebasisofthenewpartnersorshareholdersmeetingthetechnicalandfinancialcriteriaoftheinitiallicenseallocation.TheIAconfirmedthatsuchrequirementsonlycoveredmergersandacquisitionsbetweenAlbanian-incorporatedcompaniesgiventhatAlbanianauthoritiesdidnothavethecapacitytotracktransactionsexecutedentirelyoffshore(e.g.transactionsbetweentwocompaniesincorporatedoffshore).

Initialassessment

TheInternationalSecretariat’sinitialassessmentisthatAlbaniahasmademeaningfulprogresstowardsmeetingthisrequirement.Whilethe2015EITIReportprovidesalistofmininglicensesawardedin2015,andimpliesthatnonewoilandgaslicensewasawardedin2015,itonlydescribesthestatutorylicenseallocationprocess,includingthetechnicalandfinancialcriteria,butnotanydeviationinpractice.ThereisevidenceofoneoilandgaslicenseallocationinJuly2015.Theprocessfortransferringlicensesisdescribedfortheoilandgassector,butnotformining,andthereportdoesnotclearlystatewhetheranymining,oilandgaslicensesweretransferredintheyearunderreview.Giventhefactthatthemininglicenseswereawardedthroughbidding,thelistofunsuccessfulbiddersandactualbidcriteriaforeachroundshouldhavebeendisclosed.

Inaccordancewithrequirement2.2.a,theMSGshouldensureannualdisclosureofwhichmining,oilandgaslicenseswereawardedandtransferredintheyear(s)underreview,highlightingthetechnicalandfinancialrequirementsandanynon-trivialdeviationsfromtheapplicablelegalandregulatoryframeworkgoverninglicenseawardsandtransfers.

Licenseregisters(#2.3)


Licensesheldbymaterialcompanies:GiventhatalloilandgascompaniesoperatinginAlbaniawereincludedinthescopeofthe2015EITIReport,alloilandgaslicensesareheldbymaterialcompanies.Table4providesalistofnineoilandgascompanies(includingstate-ownedAlbpetrol)andalistoftheirrespectiveoilfields,includinglicenseagreementdates(2015EITIReport,p.29).Appendix8providesalistof62mininglicensesawardedthroughcompetitivebiddingin2015(2015EITIReport,pp.142-144),but



the2015EITIReportdoesnotprovidealistofalllicensesheldbymaterialcompanies,awardedinperiodspriorto2015.ThereportprovidesanoverviewoftheMEI’spubliclyaccessiblemining,oilandgaslicenseregisters,andalink46toaPDFlistoflicensesontheMEIwebsite(2015EITIReport,pp.101-102),althoughithasgapsintheprovisionofdatesofapplicationandlicensecoordinatesinthecadastre.Inaddition,thereportstatesthattheoilandgaslicenseregister“isnotupdatedtoshowchanges/salesofsharesandtransfersofoperationinthesector”(2015EITIReport,p.102).However,theAlbEITIwebsiteprovidestwocomprehensivelistsoflicenses,coveringmining47andoilandgas48,althoughthelistofmininglicenseswaslastupdatedon3November2015.The2015EITIReportdoesnotrefertothelistoflicensesavailableontheAlbEITIwebsite.BasedonacomparisonofthemininglicenseslistedonthewebsitesofAlbEITI49andMEI50,itappearsthat12mininglicenseswereawardedintheperiod3November–31December2015.

License-holdernames:Inoilandgas,Table4providesalistofnineoilandgascompanies(includingAlbpetrol)andalistoftheirrespectiveoilfields(2015EITIReport,p.29).Section11.3.5confirmsthatMEI’scadastreprovidesnamesofoilandgaslicense-holders(2015EITIReport,pp.101-102).InformationonthesixPSAssignedwithAlbpetrolinAppendix5(2015EITIReport,p.139),thefourPSAssignedwithAKBNinAppendix6(2015EITIReport,p.140)andthe24explorationblocksinAppendix7(2015EITIReport,p.141)includesthenameofthecontractingcompany.Inmining,theoverviewofMEI’smininglicensecadastreinSection11.3.5confirmsthatnamesofmininglicense-holdersareincludedandprovidesthelink51toaPDFlistoflicensesontheMEIwebsite(2015EITIReport,pp.101-102).Thelistof62mininglicensesawardedthroughcompetitivebiddingin2015inAppendix8alsoincludesthenamesoflicense-holders(2015EITIReport,pp.142-144).

Licensecoordinates:The2015EITIReportstatesthatcoordinatesofmining,oilandgaslicensesarenotpubliclyavailablethroughtheMEIcadastre(2015EITIReport,pp.101-102,162-163).However,coordinatesforallmininglicensesawardedpriorto3November2015areavailableontheAlbEITIwebsite52,althoughonlyforfouroilandgaslicenses.53Thisimpliesthatcoordinatesareavailableforallmininglicensesasidefromthe12mininglicensesthatwereawardedafterNovember2015,butnotforoilandgaslicenses.

Dates:The2015EITIReport’soverviewoftheMEIlicensecadastrestatesthatthedatesofawardanddurationofeachmining,oilandgaslicenseareprovided,butthatdatesofapplicationarenot(2015EITIReport,pp.101-102).InformationonalloilandgasPSCsinthe2015EITIReportincludesthelicenseagreementdatesforeachoftheoilandgasPSCs(2015EITIReport,pp.29,139-140).Thereportexplainsthatdatesofapplicationareavailableforalloilandgaslicensesawardedfrom2015onwards,butnotforthoseawardedpriorto2015(2015EITIReport,p.162).Thelistof62mininglicensesawardedin2015inAppendix8includesdateofawardandduration,butdatesofapplicationforonly33ofthem(2015EITIReport,pp.142-144).ThereportconfirmsthattheMEIdoesnotpublishinformationondatesof

46http://www.energjia.gov.al/files/userfiles/minierat2/2016/RREGJ._LEJEVE_SHKURT_2016_Aktive.pdf47http://www.albeiti.org/mining-register/48http://www.albeiti.org/petroleum-licenses/49http://www.albeiti.org/mining-register/50http://www.energjia.gov.al/files/userfiles/minierat2/2016/RREGJ._LEJEVE_SHKURT_2016_Aktive.pdf51http://www.energjia.gov.al/files/userfiles/minierat2/2016/RREGJ._LEJEVE_SHKURT_2016_Aktive.pdf52http://www.albeiti.org/mining-register/53http://www.albeiti.org/petroleum-licenses/



applicationformininglicenses(2015EITIReport,p.163).

Commodity:The2015EITIReport’soverviewofMEI’smininglicensecadastreconfirmsthatitincludesthecommodity(ies)covered(2015EITIReport,pp.101-102).However,thereportalsostatesthatwhileMEIprovidesinformationonthecommodity(ies)coveredbymininglicenses,itdoesnotspecifythefulllistofmineralscoveredbyeachcommodity,northeirconcentrations(2015EITIReport,p.163).TheinformationonoilandgaslicensesinthereportindicatesthatthePSCscoverbothcrudeoilandnaturalgas(2015EITIReport,pp.29,139-140).Thereportprovidesthenumberofmininglicensesinproduction,disaggregatedbyeachofthesixgeneralmineralgroups(2015EITIReport,p.41).Thelistof62mininglicensesawardedin2015inAppendix8specifiesthecommoditycoveredforeach(2015EITIReport,pp.142-144).

Licensesheldbynon-materialcompanies:The2015EITIReportreferstothemininglicenseregisterontheMEIwebsite(2015EITIReport,pp.101-102),whereinformationonall626mininglicensesactiveasof2016isavailable.ThisimpliesthatinformationisprovidedonmininglicensesheldbyallminingcompaniesactiveinAlbania,regardlessoftheirmateriality.Inoilandgas,itappearsthattheinformationonthetenPSAsand24explorationlicensesrepresentsalllicensesandPSAsactivein2015.

Publiccadastre/register:TheoverviewoftheMEI’spublicly-accessiblemining,oilandgaslicenseregisters,whichincludesalink54tothePDFlistoflicenses,highlightsgapsintheprovisionofdatesofapplicationandlicensecoordinatesinthecadastre(2015EITIReport,pp.101-102,162-163).Inaddition,itstatesthattheoilandgaslicenseregister“isnotupdatedtoshowchangessalesofsharesandtransfersofoperationinthesector”andthatthecurrentMEIregisterismarkedashavinglastbeenupdatedinFebruary2016(2015EITIReport,p.102).The2015EITIReportdoesnotreviewtheregisterofmining,oilandgaslicensesontheAlbEITIwebsite.

The2013-14EITIReportprovidesinformationonalloilandgasPSAs(2013-14EITIReport,p.31),all626activemininglicenses(2013-14EITIReport,pp.170-260)andall177hydro-electricconcessions(2013-14EITIReport,pp.263-271).InformationonmininglicensesincludedmostinformationmandatedunderRequirement2.3,includinglicensecoordinatesinappendix,commodity(ies)covered,exceptfordatesofapplication.However,licensecoordinatesweremissingforalloilandgasPSAs.

StakeholderviewsTheJanuary2017Eurosupportreporthighlightsthelackofprovisionoflicensecoordinates,datesofapplication,durationoflicensesorcommoditiescoveredinthelicenseinformationprovidedontheMEIwebsite55(Eurosupport,2017).

Mining:SecretariatstaffexplainedthattheinformationonmininglicensesontheAlbEITIwebsitewassourcedfromAKBNandexpresseduncertaintyoverreasonsforanydiscrepanciesbetweeninformationonthewebsitesofAlbEITIandMEI.SecretariatstaffhighlightedthatdatesofapplicationformostmininglicenseswereavailableontheAlbEITIwebsite,butthatthesedateswerenotavailableforolderlicensesgivendeficienciesinthegovernment’sdatamanagementsystemsatthetime.Agovernment

54http://www.energjia.gov.al/files/userfiles/minierat2/2016/RREGJ._LEJEVE_SHKURT_2016_Aktive.pdf55http://www.energjia.gov.al/files/userfiles/minierat2/2016/RREGJ._LEJEVE_SHKURT_2016_Aktive.pdf



representativenotedthatdatesofapplicationforallmininglicenseswereavailablefromtheNationalRegistrationCentrewebsitebutquestionedthevalueofincludingtheseintheEITIReport,consideringthatdatesofapplicationwerebeyondthescopeofEITIreporting.

TheJanuary2017EurosupportreportnotedthatlicensecoordinatesareavailableforallmininglicensesthroughtheNCL’sNationalRegisterfortheLicenseesandPermits56(Eurosupport,2017).HoweverthissiterequiresregistrationandtheInternationalSecretariatwasunabletocreateaprofiletogainaccess,despiteseveralattempts.Severalgovernmentofficialsexplainedthatlicensecoordinateswerepublishedduringcompetitivetenders,butthattheseweretakenofftheMEIwebsiteoncethebiddingroundwascompleted.Adevelopmentpartnernotedseveralinstancesofoverlappingmininglicensesandconsideredthatthisproblemwasduetothefactthatmininglicensecoordinateswerenotalwaysclearandavailabletoall.

TheJanuary2017EurosupportreportrecommendsthattheMEIprovideinformationonthecommoditiescoveredbylicensesandthattheAKBNupdatethemininglicenseregistereverythreemonths,atthesametimeasitpreparesitsquarterlyreportonminingproductionandinvestment(Eurosupport,2017).

Oilandgas:SecretariatstaffexplainedthatdatesofapplicationforoilandgaslicenseswerenotavailabletothepublicandthatattemptstosecurethesedatesfromMEI,AKBNandAlbpetrolhadthusfarbeenunsuccessful.Staffhighlightedconcernsoverthequalityofgovernmentrecord-keeping.AgovernmentofficialstatedthatthereshouldbenobarrierstoAlbEITIsecuringthedatesofapplicationforalloilandgaslicensesfromMEIbutquestionedtherelevanceofthesedates,givenhisconceptionthatthiswasbeyondthescopeofEITIreporting.AnothergovernmentrepresentativestatedthatAKBNonlyhadthedatesofawardforPSAsanddidnothavedatesofapplication.Thetemplateapplicationform57foroilandgasexplorationandproductionlicensesontheMEIwebsiteincludesdateofapplication.

Withregardstocoordinatesofoilandgaslicenses,secretariatstaffexplainedthattheAlbEITIwebsiteprovidedcoordinatesonlyforthefourPSAsthatwereactuallyproducingoilandgas,butnotforothers.AlbEITIhadrequestedcoordinatesofPSAsheldbyAKBNfromtheagencybuthadnotreceivedthem.AgovernmentrepresentativeconfirmedthatcoordinatesforoilandgaslicensesthatwereofferedforcompetitivetenderwerepublishedontheMEIwebsiteduringtheperiodofthebiddinground,butweresubsequentlytakenoffline.

Reforms:SecretariatstaffandtheIAhighlightedtwosignificantreformsrelatedtothemanagementofthemining,oilandgascadastralsystems.Thefirst,mentionedinthe2015EITIReport,concernedAKBN’sestablishmentofaGISsystem,whilethesecond,whichwasnotmentionedinthereport,relatedtothecreationofanintegratedlandusemappingsystembytheStateAuthorityforGeospatialInformation.58

Initialassessment

TheInternationalSecretariat’sinitialassessmentisthatAlbaniahasmademeaningfulprogresstowards

56http://www.qkl.gov.al/Registries.aspx57http://www.energjia.gov.al/files/userfiles/2017/Aplication_form_EN.pdf58http://geoportal.asig.gov.al/en/Default.aspx?AspxAutoDetectCookieSupport=1



meetingthisrequirement.The2015EITIReportprovidesalinktothepublicmining,oilandgaslicenseregister,althoughtherearegapsinthepublicprovisionofdatesofapplicationandcoordinatesforsomemining,oilandgaslicenses.

Inaccordancewithrequirement2.3.b,Albaniashouldensurethatdatesofapplication,awardandexpiry,commodity(ies)coveredandcoordinatesforalloil,gasandmininglicensesheldbymaterialcompaniesarepubliclyavailable,inlinewithpastAlb-EITIrecommendations.Thegovernmentisencouragedtomakethisinformationavailableforlicensesheldbyallcompanies,regardlessoftheirmateriality.

Contractdisclosures(#2.4)

DocumentationofprogressGovernmentpolicy:The2015EITIReportclarifiesthegovernment’spolicyonoilandgascontractdisclosurethroughconfirmationfromMr.DritanSpahiu,MEIDirectorfortheDevelopmentofPoliciesinthePetroleumSectorthattheministry“wouldnotfavourpublicaccesstoPSAsinordernottoaffectthetermsoffuturePSAnegotiations”(2015EITIReport,p.26)andthatdetailedtermsofsignedPSAsareconsideredconfidentialandnotcurrentlydisclosedtothepublic.Thereportdoesnotclarifythegovernment’spolicyoncontractdisclosureintheminingsector.

Actualpractice:The2015EITIReportstatesthatnoPSAcontracthasyetbeenpublished(2015EITIReport,p.26).ThereportstatesthatthegovernmentpublishedtheCouncilofMinisters’decisionawardingthePSAforonshoreexplorationblock8toAkbanidesEnergyinofficialgazette63/2016(2015EITIReport,p.163),althoughthefulltextofthePSAwasnotpublished.ThereisevidenceofatleasttenoilandgasPSAshavingbeenpublishedonNRGI’sResourceContractsportal.59

Accessibility:Thereportdoesnotprovideguidanceonaccessinganymining,oilandgaslicense,statingthatnoPSAhasyetbeenpublished.

The2013-14EITIReportdescribedtheconfidentialityprovisionsofPSAs,mininglicensesandconcessionagreements,butsimilarlydidnotclarifythegovernment’spolicyoncontractdisclosure(2013-14EITIReport,p.22-23).

Stakeholderviews

Policy:Whiletherewasconsensusamongststakeholdersconsultedthatthegovernment’spolicywasnottopublishoilandgasPSAsgivenconfidentialityprovisionsinthecontracts,thereweredifferentviewsonwhetherminingcontractswerepublished.TheIAandseveralgovernmentandindustryrepresentativesconfirmedthattheconfidentialityprovisionsofPSAscoveredthewholecontract,ratherthanspecificclauses,andthatthesecouldonlybebrokenwithconsentfrombothpartiestothecontract.However,secretariatstaffhighlightedthedifferencebetweenthegovernmentnotbeingabletopublishcontractsduetoconfidentialityprovisionsandthegovernment’spolicybeingnottopublishcontracts.Staffnotedthatthegovernmenthadneverstatedthatitwasagainstpublishingcontractsandthatcertainlawyers

59http://resourcecontracts.org/search?q=albania



consideredthatthegovernmentcoulduseitssovereignprerogativetobreakconfidentialityclausesofacontract.However,aseniorgovernmentofficialhighlightedanumberofcaseswherethegovernmenthadlostcasesbroughtbycompaniesatinternationalarbitrationandexplainedthatthegovernmenthadtoproceedcautiouslywithsuchmatters.ACSOMSGmemberexplainedthatcivilsocietyhadrequestedaccesstothefulltextofmining,oilandgascontractsinpreparingthe2013-14EITIReportinordertoassesstheexistenceofmandatorysocialexpenditures.Thereweredifferentviewsonwhetherminingcontractsalsocontainedconfidentialityclauses.Whileagovernmentrepresentativeexplainedthatminingcontractsdidincludesuchclauses,theIAnotedthatitwasnotabletoascertainwhetherthereweresuchconfidentialityclausesgiventhatithadneverhadaccesstoaminingcontract.

Practice:TheIAexplainedthatitwasawareofthepublicavailabilityofthesecontracts,butnotedthatithadnotreceivedanyexplanationfortheirpresenceonlinefromMEIorreportingoilcompaniesdespitehighlightingthisissuetotheminpreparationofthe2015EITIReport.TheIAnoteditsintentiontoaskNRGIwhetherthecontractingpartieshadapprovedthepublicationofthesecontracts,inpreparingthenextEITIReport.Therewassignificantinterestonthepartofallcivilsociety,mediaandlocalgovernmentrepresentativesconsultedingainingaccesstothefulltextofPSAsasameansofmonitoringcompanies’respectofcontractualobligations.Theexamplemostoftencitedwasthatofthe2004PSAwithBankersPetroleum,whichwasnotavailableontheResourceContractswebsite(althoughitstwoamendmentswere).

TheJanuary2017Eurosupportreportstatesthatminingpermitsaredisclosedtothepublicasidefromanyproject-relateddata.Miningcontracts,approvedbyParliamentinlinewithArticle16ofLaw10304,arepublishedintheOfficialGazette60,omittingonlyconfidentialprojectdata.ThemaintermsofminingconcessionsarealsosupposedtobeavailablefromtheAgencyofConcessions’RegisterofConcessions,althoughthereportstatesthattheregisterhasnotyetbeencreated.ThereportnotesthatthereisnorequirementinLaw145/2013topublishthefulltextofminingconcessions,butthatthemainminingconcessionshavebeenapprovedbyParliamentandhavethusbeenpublished.(Eurosupport,2017).

Initialassessment

TheInternationalSecretariat’sinitialassessmentisthatAlbaniahasmademeaningfulprogresstowardsmeetingthisrequirement.The2015EITIReportclarifiesthegovernment’spolicyoncontractdisclosureintheoilandgassector,butnotinmining.Thereportdoesnotcommentonactualcontractdisclosurepracticedespitekeystakeholdersbeingawareofseveralcontractsbeingavailableinthepublicdomain.

Inaccordancewithrequirement2.4.b,AlbaniaisrequiredtodocumentinfutureEITIReportsthegovernment’spolicyondisclosureofcontractsandlicensesthatgoverntheexplorationandexploitationofoil,gasandminerals.Thisshouldincluderelevantlegalprovisions,anyreformsthatareplannedorunderwayaswellasanoverviewofcontractsalreadypublished.

60http://www.qbz.gov.al



Beneficialownershipdisclosure(#2.5)


Governmentpolicy:The2015EITIReportdoesnotclarifythegovernment’spolicyonbeneficialownershipdisclosureinextractivescompanies.

Actualpractice:The2015EITIReportstatesthattheMinistry(presumablyMEI)doesnotmaintainaregisterlistingallbeneficialownersandtheirshareholdings(2015EITIReport,p.78).TheJanuary2017EurosupportprovidesareviewoflawsrelevanttobeneficialownershipinAlbaniaandhighlightsconfusionbetweenlegalandbeneficialownershipintheapplicationofcertainlawsrelatedtoextractiveslicenses(Eurosupport,2017).The2015EITIReportdescribestheapproachtobeneficialownershipdisclosuresadoptedforthe2015EITIReport,withreportingtemplatesincludingrequestsforbeneficialownershipinformationfromreportingcompanies(2015EITIReport,p.78).Withonly31ofthe134reportingentitieshavingprovidedBOinformation,thereportnotesthat“representativesofthereportingentitiescommentedthattheywerenotabletoorauthorisedtoprovidethisinformation”(2015EITIReport,p.78).The2016annualprogressreportprovidesfurtherexplanationforthelackofcompanybeneficialownershipreporting,notingthatcompanies“werenotreadyforthiskindofreporting”andthatthemajorityofcompaniesdidnotsubmittherequiredinformationgiventheirconceptionthatallrelevantcompanyownershipinformationwasalreadyavailablethroughtheNationalRegistrationCentreand“agreatnumberofcompanies”consideringthattheyhadnodetailedinformationonthefullcorporateownershipchain.The17companiesthatdidreportownershipinformationprovidedthesameownersasthoseregisteredintheNRC(Alb-EITI,2017).

TheJanuary2017EurosupportreviewsprovisionsofLawNo.9917,enactedon19May2008tocurbmoney-launderingandterrorismfinancing,whichdefineconceptsof“beneficialownership”and“politicallyexposedperson”alignedwithinternationalnorms,andcallsfortheextensionofsuchtermstocompaniesoperatingintheextractiveindustries.Thereportprovidesalistoflaws61thatrequirereviewandpotentialamendmentinthecontextofAlbEITI’sbeneficialownershipwork(Eurosupport,2017).Thereportalsonotesthatthebeneficialownershipofcompaniesowninglicensesisdisclosedintheapprovalactforeachmininglicense,althoughitconcedesthatthebeneficialownersaresometimesidentifiedascompaniesratherthannaturalpersons.Thereportstatesthatthe“TradeRegister”(theNRC),basedonprovisionsofLaws9901/2008and9723/2007,providesdataonthefoundersofeachcompanyorindividualtrader,butthatthisinformationincludescompaniesratherthannaturalpersonsinsomecases(Eurosupport,2017).

Intermsofreforms,the2015EITIReportstatesthatAlbEITIundertook“legalduediligence”toagreearoadmapforbeneficialownershipdisclosuresbyJanuary2017,starteddraftingregulatorychangesandperformed“enquiriesofthereportingentitiesinordertoreceivefeedbackontheirreadinessto

61LawNo.9901,dated14.4.2008"Onthetradersandtradingcompanies";Lawno.9723/2007“Onnationalregisteringcentre”.LawNo.9917,dated19.5.2008"Onpreventionofmoneylaunderingandfinancingofterrorism";LawNo.9367,dated7.4.2005"Onthepreventionofconflictsofinterestinexercisingpublicfunctions";LawNo.9049,dated10.4.2003"Onthedeclarationandauditofassetstoliabilitiesoftheelectedandcertainpublicofficials";CriminalCodeoftheRepublicofAlbania;LawNo.10,279,dated20.5.2010"Onadministrativeoffenses".



cooperate”(2015EITIReport,p.78).

Albania’sthree-yearbeneficialownershiproadmap62(to2020)providesadescriptionofAlbanianlegislationrelatedtobeneficialownershiptohelpidentifythelawsandregulationsthatmayrequireamendmentsandidentifynextstepsinharmonizingdomesticregulationswithEUDirectivesrelatedtobeneficialownershipdisclosure.Theroadmapforeseestheestablishmentofapublicbeneficialownershipregisterin2018,whichwouldpotentiallybeintegratedintoexistingdatabasesforcorporateregisters.Whiletheroadmapdoesnotidentifytheinstitutionalhomeforapublicbeneficialownershipregister,itplansforextensiveconsultationstoidentifythebest-suitedinstitutionalhome(andmentionstheMinistriesofFinance,EnergyandJusticeaspossiblehomes).Thetotalcostsofimplementationforthethree-yearroadmaparesetatUSD415k.

Legalownersofmaterialcompanies:ThereportstatesthattheNationalRegistrationCentre63providesinformationontheshareholdersandactivityofallcompaniesoperatinginAlbania(2015EITIReport,p.78).TheInternationalSecretariatconfirmedthatthelegalownersofallmaterialcompanieswereavailableontheNRCwebsite.64The2015EITIReportalsodescribeschangesinBankersPetroleum’slegalownershipin2016(2015EITIReport,p.31).

The2013-14EITIReportsimilarlydescribestheMEI’slackofaregisterofbeneficialownersofextractivescompaniesthatwerenotlistedonastockexchange,butnotesthatinformationonlegalownersofallcompaniesincorporatedinAlbaniaisavailablefromtheNRC65(2013-14EITIReport,p.72).

Stakeholderviews

TheIAexplainedthatitundertookconsultationswithgovernmentMSGmembersaswellasMEIrepresentativesaboutthegovernment’spolicyonbeneficialownershipdisclosure,butnoteditsuncertaintyoverwhethertheMSGmembersunderstoodthefullbreadthofworkplannedinAlbania’sthree-yearbeneficialownershiproadmap.Severalstakeholderswhopreferrednottobeidentifiedhighlightedtheuseofnomineeshareholdersinsomeinstances,whichobscuredtheultimatebeneficialownershipofcertaincompanies.TheIAnotedthatitwasalegalrequirementforallcompaniesregisteredinAlbaniatonotifytheNRCofanychangesinlegalownershipwithin15daysofthefact.

Severalcivilsociety,mediaandgovernmentrepresentativesaswellastheIAhighlightedthelegalprovisionsrequiringPolitically-ExposedPersons(PEPs)tocompleteannualassetdisclosurestotheHighInspectorateofDeclarationandAuditofAssetsandConflictofInterests(HIDAACI),althoughtherewasdisagreementoverwhetherthesedisclosureswereaccessibletothepublic.SeveralstakeholdersnotedthattheyhadseenassetdisclosuresofcertainPEPsinthenewspapersandonthe“Transparency”tabofgovernmentwebsites(allgovernmentwebsitesarerequiredtoincludea“Transparency”sectionontheirwebsite).SecretariatstaffconfirmedthatAlbEITIhadnotapproachedtheHIDAACIregardingPEPs’assetdisclosurestodate.TheInternationalSecretariatconfirmedthatassetdeclarationswerenotavailableontheHIDAACIwebsitebutthatassetdeclarationsofsomehigh-levelPEPsappearedtobeavailableonthe

62https://eiti.org/sites/default/files/documents/bo-roadmap-albania.pdf63http://www.qkr.gov.al64http://www.qkr.gov.al/search/search-in-trade-register/search-for-subject/65http://www.qkr.gov.al/nrc/default1.aspx



websitesofindividualgovernmententities.

SeveralgovernmentrepresentativesconsideredthatthenaturalinstitutionalhomeforapublicbeneficialownershipregisterwouldbeeithertheMEIorAlbEITIitself,althoughnoneofthestakeholdersconsultedasidefromsecretariatstaffappearedtohaveconsideredthepossibilityofincludingbeneficialownershipinformationintheexistingNRCportal.

Initialassessment

Implementingcountriesarenotyetrequiredtoaddressbeneficialownershipandprogresswiththisrequirementdoesnotyethaveanyimplicationsforacountry’sEITIstatus.The2015EITIReportdoesnotclarifythegovernment’spolicyonbeneficialownershipdisclosureinextractivescompaniesbutthenamesoflegalownersofallmaterialcompaniesarepubliclyavailableontheNationalRegistrationCentrewebsite.

Tostrengthenimplementation,theMSGmaywishtoconsiderpilotingbeneficialownershipreportingintheforthcomingEITIReportinordertoincreaseawarenessofbeneficialownershiptransparencyandpilotbeneficialownershipdefinitionsandthresholds.AlbEITImayalsowishtoconductbroaderoutreachtothecompaniesontheobjectivesofbeneficialownershiptransparency,aswellasholdconversationswithgovernmentagenciesonhowtomakesuchdisclosuresmandatory.

Stateparticipation(#2.6)


Materiality:The2015EITIReportstatesthatthestateparticipatesinoilexploration,developmentandproductionthroughits“directownership”ofAlbpetrol(2015EITIReport,pp.10,27,135).Appendix4statesthatAlbpetrolwassplitintothreeSOEsin1999:AlbpetrolSh.a.,ARMOSh.a.andServcom(2015EITIReport,p.135).Whileitisclearfromtheresultsofreconciliationthatstateparticipationintheoilandgassectorgivesrisetomaterialrevenues(throughAlbpetroldividends),thereportdoesnotclarifywhetherthestateretainsastakeinARMOorinServcom(andwhethersuchastakegaverisetomaterialrevenuesin2015).The2015EITIReportalsoclarifiesthatnoSOEswereidentifiedasoperatingintheminingsector(2015EITIReport,p.163).

Financialrelationshipwithgovernment:The2015EITIReportdoesnotexplicitlyexplaintherulesandpracticesrelatedtoSOEs’retainedearnings,reinvestmentorthird-partyfinancing,althoughitappearsthatAlbpetroloperateslikeacommercialJointStockCompany(Sh.a)(2015EITIReport,p.135).ThereportprovidesanoverviewofthegovernanceofAlbpetrol(2015EITIReport,pp.135-138)andofplansforitsprivatisation(2015EITIReport,p.138).ThereportdescribesAlbpetrol’sroleasaprimarylicenseeinalloilfieldsdiscoveredupto1993anditsgrantingofrightstoprivateoilcompanies(2015EITIReport,p.10).Therevenuesassociatedwithstateparticipationintheoilandgassectoraredescribed,withthestateentitledtodividendsfromAlbpetrol’sannualfinancialresultsandtaxesapplicabletoallcommercialoilandgascompaniessuchasprofittax,royalty,VAT,etc.Thereportspecifiesthattherearenoothertransferstothegovernmentasidefromdividendsandnormaltaxesandfees(2015EITIReport,p.34).



TheprocessofAlbpetrol’scrudeoilsalesisdescribed66(2015EITIReport,p.136).ItisapparentfromthediagramofoilandgasrevenueflowsprovidedthatAlbpetrolcollectsashareofoilproductionandbonusesfromcompaniesoperatingunderPSA(2015EITIReport,p.79)andthatAlbpetrolpaysdividendstoMEDTTE;royaltiesonexportstotheAlbanianCustomsAdministrate;seventaxesandlevies67totheGeneralDirectorateofTaxes;and(unspecified)localtaxestolocalgovernments(2015EITIReport,p.80).Appendix4presentsinformationfromAlbpetrol’s2012,2013and2014annualauditedfinancialstatements(2015EITIReport,p.138).

Governmentownership:Thereportdoesnotprovideacomprehensiveoverviewofstateequityincompaniesoperatingintheextractiveindustries(particularlyoilandgas).Whilethereportdoesnotexplicitlystatethatthegovernmentowns100%ofAlbpetrol,itrepeatedlyreferstoAlbpetrolasstate-owned(e.g.2015EITIReport,p.135).ThereportstatesthatAlbpetrolholdsexclusiveexplorationandproductionrightstoallexistingproducingoilfieldsandsomeexplorationblocksandthatitisthecontractingpartytoallproducingPSAs(2015EITIReport,p.27).ThereportstatesthatAlbpetrolhadsharesinPSAswithfivecompaniesproducingoilandgas,butalsooperateditsownwellsinBallsh,PatosandKuçovaasof31December2015(2015EITIReport,pp.27,135).ThelistofsixPSAssignedbyAlbpetrolisprovidedinAppendix5(2015EITIReport,p.139).ThereportprovidesanoverviewofARMOSh.a.asanoriginallystate-ownedrefiningcompanyestablishedin1999and85%-privatisedinAugust2008(2015EITIReport,p.21).FollowingsuccessivesalesitisstatedthatHeaneyAssetCorporationnowhaseffectivecontrolthroughindirectownershipof68%ofARMOshares.Itisunclearwhoownstheremaining32%ofshares,norwhetherthegovernmentretainsits15%stakesinceAugust2008.

TheestablishmentoftheAlbanianGasTransmissionOperator(AlbgazSh.a.)in2016isbrieflymentioned(2015EITIReport,p.13),althoughthegovernment’sexactstakeinthecompanyisnotprovided.

Ownershipchanges:Thereportonlyalludestochangesingovernmentownershipinyearspreceding2015,notduringtheperiodunderreview.ThereportstatesthattheCouncilofMinisterstransferredeightexplorationblocks68fromAlbpetroltoMEI,althoughitprovidestwodifferentdatesfortheCouncilofMinister’sdecision(April2014inthefull-textand22April2015inthefootnote69)(2015EITIReport,p.138).

Loansandguarantees:WhilethereportdescribesthedebtaccumulatedbyARMO(2015EITIReport,pp.21-22),itdoesnotspecifythestate’sownershipofARMOin2015noranyloansorloanguaranteesextendedbytheState,oranySOE,toARMO.Morebroadly,the2015EITIReportdoesnotrefertoanyloansorloanguaranteesextendedbythegovernment,oranySOEsuchasAlbpetrol,toanycompanyoperatinginthemining,oilandgassectors,althoughitprovidesextensiveevidenceofloansandguaranteestocompaniesoperatinginthehydro-powersector(2015EITIReport,pp.62,63).

The2013-14EITIReportclarifiesthatthegovernmentretaineda15%equitystakeinARMOSh.a.(2013-14EITIReport,p.17)anddescribesthesamedescriptionoftheprevailingrulesrelatedtofinancial

66withreferencetorulesforpublicauctionssetinOrdern.83of10October2012.67Royaltiesoninternalsales;profittaxes;VAT;socialandhealthinsurance;personalincometax;taxpenalties;taxondividend.68Dumre,Panaja,1,4,5,6,8andCexplorationblocks.69CMDno.335,dated22April2015“OnsomechangestotheCMDno.279dated12April2012.”



relationsbetweenthegovernmentandSOEsasinthe2015EITIReport(2013-14EITIReport,pp.24-28).However,thereportdoesnotrefertoanyloansfromthegovernmentorextractivesSOEstoanyoil,gasandminingcompany,althoughitdidrefertogovernmentloanstocompaniesinthehydro-powersector(2013-14EITIReport,pp.59-60).

Stakeholderviews

Ownership:TheJanuary2017EurosupportreportconfirmedthattherewerenoSOEsoperatingintheminingsectorinAlbania(Eurosupport,2017).TheIAconfirmedthatAlbpetrolwastheonlycompanyoperatingintheextractivesectorinwhichthegovernmentheldover51%stakein2015,giventhatbothServcomandstate-ownedminingcompanyAlbkromhadpreviouslygonebankrupt.TheIAconfirmedthatAKBNcouldnotbeconsideredaSOE,despiteitsstatusasaquasi-independentgovernmententity.TheJanuary2017EurosupportreportstatesthatthereisnoactiveSOEoperatingintheminingsector,butnotesthat“therearesomecompanies,whosesharesareowned100%bystate,suchascompanyAlbakerSh.a.,whichisacompanyunderliquidationprocedureandisnotexercisinganycommercialactivityinmimingsector.”

TheEBRD’sTransitionReportonAlbanianotesthatthegovernmenthassoughttosellitsremaining15%stakeinARMOsince2010(EBRD,2012).However,theIAandseveralgovernmentandcivilsocietyrepresentativesconfirmedthatthegovernmentretaineda15%stakeinARMO.TherewasconsensusamongstMSGmembersconsultedthattheissueofwhetherARMOshouldbeconsideredaSOEforthepurposesofEITIreportinghadnotbeenconsideredbytheMSGinpreparinganyoftheEITIReports.OneCSOMSGmemberconsideredthatARMOshouldbecategorisedasaSOE:whilethegovernmentonlyhelda15%stakelegally,theinvestorholdingtheother85%hadfledthecountryandsinceitwasnotpossibleforARMOtogobankrupt(sincerefiningwasconsideredanationalstrategicsector)thegovernmentwaseffectivelyincontrol.

SeveralgovernmentofficialsandtheIAconfirmedthattherehadbeenachangeinthegovernmententityholdingAlbpetrol’sequity,fromtheMinistryofEconomicDevelopment,Tourism,TradeandEnterprise(MEDTTE)totheMEIaspartofthe“ThirdEnergyPackage”in2016.However,theseofficialsconfirmedthattheMEDTTEstillheldtheequitystakeinARMO.

Intermsofchangesinstateparticipationintheyearunderreview(2015),theIAstatedthattherehadbeennochangeinownership,clarifyingthatitconsideredchangeofownershiptorepresenttransactionsfromthestatetotheprivatesector.However,agovernmentrepresentativeconfirmedthatthetransferofeightexplorationblocksfromAlbpetroltotheMEItookplacein2015andthatthereferenceto2014inthe2015EITIReportwasamistake.TheofficialexplainedthatthegovernmenthadtransferrednineblockstoAlbpetrolaheadofitsplannedprivatisation,butsubsequentlytransferredeightoftheseblocksbacktotheMEIwhentheprivatisationprovedunsuccessful(in2015).ThegovernmenthadleftoneexplorationblockinAlbpetrol’spossessiongiventhatitwasatadvancedstudystagesandexpectedtoconcludeaPSAontheexplorationblockin2017.

Financialrelations:RepresentativesfromcivilsocietyandthemediaexpressedsignificantconcernoverthefinancialmanagementofAlbpetrolandthefinancialrelationsbetweenextractivesSOEsandthestate,albeitwithoutanyspecificallegationsorexamplesasidefromallegationsofpoliticalappointmentstoAlbpetrol’sBoardofDirectors.Severaldevelopmentpartnersnotedrepeatedallegationsoverfinancial



misconductatAlbpetrolinthepressandonthepartofcivilsociety,butnotedthattheyhadnotheardanyspecificallegationsinrecentyears.TheIAexplainedthattherulesgoverningAlbpetrol’sretainedearnings,reinvestmentsandthird-partyfinancingwerecodifiedinthecompany’sArticlesofAssociation,butnotenshrinedinanylaw.TheIAconfirmedthatAlbpetrolissubjecttotheLawonEntrepreneursandCommercialCompaniesanddoesnotbenefitfromany“special”terms,whichtheIAconfirmedthroughAlbpetrol’sfinancialstatementsandconsultationswithaMSGrepresentativewhositsonAlbpetrol’sBoardofDirectorsandAlbpetrolmanagement.SeveralCSOMSGmembersnotedthatcivilsocietyhadraisedtheissueofAlbpetrolfinancialmanagementinpreparingthe2013-14EITIReport,whichtheyconsideredtohavebeenthefirsttimeAlbania’sEITIReportscoveredAlbpetrol,butconsideredthatthe2015EITIReportsimplyrepeatedtheinformationthathadalreadybeendisclosedinthe2013-14EITIReport.

ACSOMSGmemberexpressedconcernoverAlbpetrolretainingmostofitsearningsanddistributingonlyverysmalldividendstogovernment.However,agovernmentrepresentativeexplainedthatdividendsweredecidedbyAlbpetrol’sBoardofDirectorsandconfirmedbytheshareholdersmeeting,whichconsistedmainlyofMEIrepresentatives.TheofficialconfirmedthatminutesofBoardandshareholdermeetingswerenotpublicdocuments.Albpetrol’sdividendshadbeenlowerin2015and2016duetolowerinternationaloilpricesandAlbpetrolneededtoretainmostofitsearningstofinanceitsoperations,accordingtothisrepresentative.

Loansandguarantees:TherewerecontrastingviewsacrossdifferentconstituenciesonwhetherAlbpetrolbenefittedfromasovereignguaranteeonitsthird-partyfinancing.WhileseveralCSOMSGmembersconsideredthatAlbpetrolhadsuchaguarantee,allotherstakeholdersconsultedconsideredthatitdidnot.TheIAexplainedthatithadexaminedAlbpetrol’sfinancialstatementsandconsultedwithitsmanagementtoascertainthatAlbpetroldidnothaveanyloansorguaranteesoutstandingin2015.However,agovernmentrepresentativeexplainedthatAlbpetrolhadprovidedloanstoothercompaniesinthepast,suchastowatercompaniesaswellasAKBN.Theofficialwasuncertainaboutwhethertherewereanysuchactiveloansin2015.

ACSOMSGmemberstatedthattheMSGhadneverdiscussedtheissueofgovernmentloansorguaranteestoARMOinthepast.AseniorgovernmentofficialexplainedthatARMOheldatotalofUSD530mindebt(includingUSD270mindebttobanks)andwascurrentlyinnegativeequityofUSD90m,withthegovernmentexposedto15%ofthisnegativeequity.However,theofficialexplainedthatsincerefiningwasastrategicsector,thegovernmentcouldnotallowARMOtofileforbankruptcyandwouldhavetomakeastrategicdecisionoverthefutureofthecompany.TheIAexplainedthatitdidnothaveaccesstotheRMOprivatisationdocuments,ARMO’sagreementwithcreditorsorthestructureoftheagreementforTPD’suseofFierirefineryandthusincludedonlypublicly-knownfactsaboutARMOinthe2015EITIReport.

TheIMF’sJanuary2016fiscaltransparencyevaluationofAlbaniahighlightedtheextensivesovereignguaranteesprovidedtotheelectricitysector(over80%oftotalsovereignguaranteesin2015)andnotedthattheMinistryofFinance’sdebtmanagementdepartmentpublishedgranulardisclosuresofsovereigndebt,includingguarantees,everythreemonths(IMF,2016).



Initialassessment

TheInternationalSecretariat’sinitialassessmentisthatAlbaniahasmademeaningfulprogressinmeetingthisrequirement.The2015EITIReportdoesnotprovideacomprehensivelistofcompaniesoperatinginthemining,oilandgassectorsinwhichthegovernmentholdsequity,althoughitdoesprovidereferencetotherules(butnotpractices)relatedtothefinancialrelationsbetweenSOEsandthegovernment,albeitonlyconcerningretainedearningsandreinvestment,notthird-partyfunding.TheexistenceofloansorloansguaranteesfromthestateoranySOEtocompaniesoperatinginthemining,oilandgassectorsisunclearinthe2015EITIReport,althoughthereisextensiveinformationonstateloansandguaranteestohydro-powercompanies.

Inaccordancewithrequirement2.6.a,theMSGshouldprovideanexplanationoftheprevailingrulesandpracticesrelatedtoSOEs’retainedearnings,reinvestmentandthird-partyfunding.ThegovernmentshouldalsoensureannualdisclosureofanychangesingovernmentownershipinSOEsortheirsubsidiaries,andprovideacomprehensiveaccountofanyloansorloanguaranteesextendedbythestateorSOEstomining,oil,andgascompaniesinlinewithrequirement2.6.b.



Table2-Summaryinitialassessmenttable:Awardofcontractsandlicenses


InternationalSecretariat’sinitialassessmentofprogresswiththeEITIprovisions

Legalframework(#2.1)

The2015EITIReportincludesanoverviewofrelevantlaws,governmententities,fiscaltermsinthemining,oilandgassector,thedegreeoffiscaldevolutionandbriefcommentaryoncurrentreforms.


Licenseallocations(#2.2)

Whilethe2015EITIReportprovidesalistofmininglicensesawardedin2015,andimpliesthatnonewoilandgaslicensewasawardedin2015,itonlydescribesthestatutorylicenseallocationprocess,includingthetechnicalandfinancialcriteria,butnotanydeviationinpractice.ThereisevidenceofoneoilandgaslicenseallocationinJuly2015.Theprocessfortransferringlicensesisdescribedfortheoilandgassector,butnotformining,andthereportdoesnotclearlystatewhetheranymining,oilandgaslicensesweretransferredintheyearunderreview.Giventhefactthatthemininglicenseswereawardedthroughbidding,thelistofunsuccessfulbiddersandactualbidcriteriaforeachroundshouldhavebeendisclosed.

Meaningfulprogress

Licenseregisters(#2.3)

The2015EITIReportprovidesalinktothepublicmining,oilandgaslicenseregister,althoughtherearegapsinthepublicprovisionofdatesofapplicationandcoordinatesforsomemining,oilandgaslicenses.

Meaningfulprogress

Contractdisclosures(#2.4)

The2015EITIReportclarifiesthegovernment’spolicyoncontractdisclosureintheoilandgassector,butnotinmining.Thereportdoesnotcommentonactualcontractdisclosurepracticedespitekeystakeholdersbeingawareofseveralcontractsbeingavailableinthepublicdomain.

Meaningfulprogress



Beneficialownershipdisclosure(#2.5)

The2015EITIReportdoesnotclarifythegovernment’spolicyonbeneficialownershipdisclosureinextractivescompaniesbutthenamesoflegalownersofallmaterialcompaniesarepubliclyavailableontheNationalRegistrationCentrewebsite.

State-participation(#2.6)

The2015EITIReportdoesnotprovideacomprehensivelistofcompaniesoperatinginthemining,oilandgassectorsinwhichthegovernmentholdsequity,althoughitdoesprovidereferencetotherules(butnotpractices)relatedtothefinancialrelationsbetweenSOEsandthegovernment,albeitonlyconcerningretainedearningsandreinvestment,notthird-partyfunding.TheexistenceofloansorloansguaranteesfromthestateoranySOEtocompaniesoperatinginthemining,oilandgassectorsisunclearinthe2015EITIReport,althoughthereisextensiveinformationonstateloansandguaranteestohydro-powercompanies.

Meaningfulprogress


1. Tostrengthenimplementation,theMSGmaywishtoexplorethepotentialofusingEITIreportingtohighlightinconsistenciesinAlbania’slegalenvironment,fiscalframeworkandregulatoryresponsibilitiesinthemining,oilandgassectors.TheMSGmaywishtolinkEITIreportingtoplannedtechnicalassistanceinthemining,oilandgassectorstoensurethatEITIimplementationservesasadiagnostictosupportongoingandplannedreforms.

2. Inaccordancewithrequirement2.2.a,theMSGshouldensureannualdisclosureofwhichmining,oilandgaslicenseswereawardedandtransferredintheyear(s)underreview,highlightingthetechnicalandfinancialrequirementsandanynon-trivialdeviationsfromtheapplicablelegalandregulatoryframeworkgoverninglicenseawardsandtransfers.

3. Inaccordancewithrequirement2.3.b,Albaniashouldensurethatdatesofapplication,awardandexpiry,commodity(ies)coveredandcoordinatesforalloil,gasandmininglicensesheldbymaterialcompaniesarepubliclyavailable,inlinewithpastAlb-EITIrecommendations.Thegovernmentisencouragedtomakethisinformationavailableforlicensesheldbyallcompanies,regardlessoftheirmateriality.

4. Inaccordancewithrequirement2.4.b,AlbaniaisrequiredtodocumentinfutureEITIReportsthegovernment’spolicyondisclosureofcontractsandlicensesthatgoverntheexploration



andexploitationofoil,gasandminerals.Thisshouldincluderelevantlegalprovisions,anyreformsthatareplannedorunderwayaswellasanoverviewofcontractsalreadypublished.

5. TheMSGmaywishtoconsiderpilotingbeneficialownershipreportingintheforthcomingEITIReportinordertoincreaseawarenessofbeneficialownershiptransparencyandpilotbeneficialownershipdefinitionsandthresholds.AlbEITImayalsowishtoconductbroaderoutreachtothecompaniesontheobjectivesofbeneficialownershiptransparency,aswellasholdconversationswithgovernmentagenciesonhowtomakesuchdisclosuresmandatory.

6. Inaccordancewithrequirement2.6.a,theMSGshouldprovideanexplanationoftheprevailingrulesandpracticesrelatedtoSOEs’retainedearnings,reinvestmentandthird-partyfunding.ThegovernmentshouldalsoensureannualdisclosureofanychangesingovernmentownershipinSOEsortheirsubsidiaries,andprovideacomprehensiveaccountofanyloansorloanguaranteesextendedbythestateorSOEstomining,oil,andgascompaniesinlinewithrequirement2.6.b.



3. Monitoringandproduction

3.1Overview

ThissectionprovidesdetailsontheimplementationoftheEITIrequirementsrelatedtoexploration,productionandexports.

3.2Assessment

Overviewoftheextractivesector,includingexplorationactivities(#3.1)


Intheoilandgassector,the2015EITIReportprovidesanoverviewofthecrudeoilsector,includingnumberofcompaniesoperating70,thelocationofproduction71,stateparticipationandanoverviewofoilproduction,exports,revenuesandemploymentin2015(2015EITIReport,pp.10-11,20-21).AmapofoilandgasdepositsisprovidedinFigure2(2015EITIReport,p.23).Thereportprovidesabriefhistoryofthedevelopmentofoilandgasreservesandalink72toAlbpetrol’swebpageforreservesandcumulativeproduction(2015EITIReport,p.23).Thereportalsoprovidesgeologicalandrecoverableoilreservesbasedonstudiesdatingfrom1985-1990,disaggregatedbyfield(2015EITIReport,p.24).Thereportprovidesanoverviewofthecharacteristicsofeachoilfieldandagenerallink73totheAKBNwebsiteformoreinformationongeologicalformationsandexplorationopportunities(2015EITIReport,p.25)aswellasalow-definitionmapofoilandgaslicenses(2015EITIReport,p.28).AbriefoverviewofoilandgasexplorationundertakenbyBankersPetroleumandShellisprovided(2015EITIReport,pp.30-31).

Inmining,thereportprovidesanoverviewofthesector,includingnumberoflicenses,thevalueof2015miningproduction,theshareofthetwolargestgroupsofmineralsproduced,2015miningemploymentandtheshareofminingrevenuesoutoftotalgovernmentrevenuesandexports(2015EITIReport,pp.12,40-42).Thereportalsoprovidesanoverviewofminingactivitypermineraltype74(2015EITIReport,pp.43-48).Anoverviewofthehydro-powersectorisalsoprovided(2015EITIReport,pp.12-13,56-57).

Exploration:The2015EITIReportprovidesoverviewsofkeycompaniesintheoilandgassector(2015EITIReport,pp.30-31)andgasinfrastructuredevelopmentplans(2015EITIReport,pp.13,37-38).Theoverviewofminingactivitypermineraltypeincludesdescriptionsofsignificantexplorationactivities(2015EITIReport,pp.43-48).

The2013-14EITIReportprovidesanoverviewoftheextractiveindustries(pp.11-15,20-21)butonlyofsignificantexplorationactivitiespriorto2013-14(pp.20-21,32).

70Fiveinproduction,fourinexploration.71SouthernAlbania.72http://www.albpetrol.al/rezervat-gjeologjike/73http://www.akbn.gov.al/74Chromium,copper,iron-nickel&nickel-silica,limestoneandconstructionmaterials,bitumen,gravelandtarsands.



StakeholderviewsWhilestakeholdersconsulteddidnotexpressanyparticularviewsregardingthe2015EITIReport’soverviewoftheextractiveindustries,civilsocietyandindustryrepresentativesexpressedsignificantlydifferentviewsaboutthereliabilityofreservesestimatescollectedbygovernmentandincludedinAlbania’sEITIReports.SeveralCSOMSGmembersraisedconcernsoverthequalityofofficialreservesestimates,consideringthatthegovernmentreliedoncompanies’self-reportingofreserveswithoutadditionalchecks.However,severalindustryrepresentativesbothonandofftheMSGexplainedthatcompanieswererequiredtore-statereservestothegovernmenteverytwoyearsandthatthegovernmentcouldcomparetheseestimatestothegovernment’shigh-qualityreservesestimatescollectedduringtheCommunistperiod(upto1990).Whiletheseindustryrepresentativesconsideredthatthegovernmentdidundertakesomechecksofcompanyreservesreporting,theyalsonotedthatcompanieshadadisincentivetostateaccuratereservesestimatesgiventheimpressionthatthiswouldleadtothegovernmentandotherstakeholdersaskingcompaniesformoremoney.TheIAalsohighlighteddiscrepanciesbetweencompanies’self-reportingandthegeologicaldatathegovernmentholdsfromthe1980s.TheJanuary2017EurosupportreporthighlightstheextensiveinformationontheMEIwebsiterelatedtotheminingsector,includingcomprehensiveinformationonexplorationactivities(Eurosupport,2017).

InitialassessmentTheInternationalSecretariat’sinitialassessmentisthatAlbaniahasmadesatisfactoryprogresstowardsmeetingthisrequirement.The2015EITIReportprovidesanoverviewofthemining,oilandgassectors,includingsignificantexplorationactivities.

Tocontinuestrengtheningimplementation,theMSGmaywishtofollowuponrepeatedrecommendationsfrompastEITIReportsrelatedtoensuringtheaccuracyofofficialreservesestimates.

Productiondata(#3.2)


Volumesandvalues:Intermsofoilandgas,the2015EITIReportprovidestotaloilproductionvolumesandvalue,althoughthevalueof2015oilproductionwascalculatedusingtheaverage2015exportprice(2015EITIReport,pp.11,21).Table4provides2015oilproductiondisaggregatedbyeachofthesixproducingcompanies(includingAlbpetrol)(2015EITIReport,p.29).ThereportstatesthatMEI,AKBNandAlbpetroldidnotreportgasproductionin2015(2015EITIReport,p.21).Thegenerallocationofoilproduction,southernAlbania,isprovided(2015EITIReport,pp.10-11)aswellasthenamesofindividualproducingoilfields(2015EITIReport,p.29).

Inmining,the2015EITIReportprovidesthevalueoftotalmineralproductionin2015,althoughthisincludesthevalueaddedthroughprocessing(2015EITIReport,p.12).Theshareofproductionvaluefrom



thetwomostsignificantmineralsproduced75isprovided(2015EITIReport,p.12).Table5providesthevolumesandvaluesofproductionforfiveminerals76producedin2015,althoughthevalueofproductionofchromiumandferrochromeisprovidedaggregatedforthetwominerals(2015EITIReport,p.41).Thenameofthelocationofproductionforeachtypeofmineralisprovided(2015EITIReport,p.41),alongsidemapsofdepositsofallkeyminerals77(2015EITIReport,pp.43-48).

Otherinformation:Thereportexplainsthatprivateoilandgascompaniesaccountedfor96%ofproductionin2015,mainlyfromthePatos-MarinzaoilfieldsoperatedbyBankersPetroleum,whichaccountedfor89%of2015production(2015EITIReport,p.21).Table2providescumulativeproductionupto2015for12fieldsandalink78toAlbpetrol’swebpageforthisdata(2015EITIReport,pp.23-24).Abriefdescriptionofcausesfordifferentreservesestimatesisprovided(2015EITIReport,p.24).Section11.3.2recommendsthatAKBNprovideacomparisonofproductionreportedbyminingcompaniesandAKBN’sownmeasurementsthroughouttheyear,includingmineralgrade(concentration)andvaluesbasedonlocalmarkettransactionsaswellasexports(2015EITIReport,p.100).ThereporthighlightslimitationstoAKBN’sminingproductionstatistics,giventhatthesearebasedoncompanies’self-reportingwithoutindependentverificationbyAKBN(2015EITIReport,pp.42,81,100).Thereportexplainsthatonly67%ofcompanies(400outof597licenses)reportedproductiontoAKBN,whichcouldnotprovidetheIAwithinformationoncompositionandquality(concentration)ofproductionforthe2011-2015period.ThereportalsostatesthatdomesticproductionvalueswerenotprovidedandthatproductionvalueswerecalculatedusingeitherexportfiguresofAKBN-suppliedpricesformineralsnotexportedorexportfiguresreportedbytheAlbanianCustomAdministrate(2015EITIReport,p.42).

Thereportalsoprovidesanoverviewofhydro-electricoutput(p.70).

The2013-14EITIReportprovidesproductionvolumesandvaluesforcrudeoilandnaturalgas(2013-14EITIReport,p.33)aswellasallkeymineralsproduced(2013-14EITIReport,pp.14,44,48).TheshareofproductionreconciledbetweendisclosuresfromcompaniesandAKBNincreasedfrom70%in2013to85%in2014(2013-14EITIReport,p.43).

StakeholderviewsACSOMSGmemberstatedthatwhileheconsideredextractivesexportdatatobereliable,thereweresignificantconcernsoverthereliabilityofproductiondata.Therepresentativeexpressedconcernattheuseofexportpricesforcalculatingthevalueofproduction.TheIAexplainedthatitwasnotpossibletofindanyreliabledataondomesticpricesandthatexportpriceswerechosenasaproxygiventhatmostoilandmineralsproducedinAlbaniawereexportedandprocessedabroad.TheIAdidnotconsiderthattherewereanysignificantbarrierstodisclosinginformationondomesticpricesandhighlightedthatwhileAKBNhadprovideddomesticpricedataforthe2013-14EITIReport,ithadnotprovidedthisinformationforthe2015EITIReport.

AgovernmentrepresentativenotedthattheCustomsDepartmenthaddisaggregatedinformationon

75Chromiumand“limestoneandotherconstructionmaterials”.76Chromium,ferrochrome,copper,iron-nickel&nickel-silica,andcement.77Chromium,copper,nickel,limestoneandconstructionmaterials.78http://www.albpetrol.al/rezervat-gjeologjike/



exportsofchromeandferrochromegiventhattheyhadtwodifferentcustoms(HNSH)codes,whichimpliedthatthegovernmentalsotrackedproductionvolumesandvaluesofthetwomineralsinadisaggregatedmanner.Theofficialexplainedthattheinclusionofanaggregatevalueforthetwointhe2015EITIReportmusthavebeenanoversight.

TheIAexplainedthatgovernmententitieshadnotprovidedthevolumesandvalueofnaturalgasproductionforthe2015EITIReport,butnotedthatnoneofthenaturalgasproducedwassold.Rather,itwaseitherreinjectedtomaintainoilproductionorsimplyflared.Agovernmentrepresentativeandsecretariatstaffexplainedthatnaturalgasproductionvolumeswerenegligibleandnotcommerciallyviable,ataround12m-13mcumayear.GiventhatallproducingoilfieldswereunderPSAswithAlbpetrol,theIAexplainedthatAlbpetrolwasinapositiontoprovidecomprehensiveinformationonAlbania’stotalnaturalgasproduction.

TheIMF’sJanuary2016fiscaltransparencyevaluationofAlbanianotedthatwhilethebudgetpublishedrevenuefromroyalties,itdidnotpublishannualestimatesforvolumesandvaluesofoil,coalorothermineralproducts,althoughsomelimitedinformationwaspublishedbytheInstituteofStatistics(IMF,2016).

IntermsoftheMSG’sfollow-uponpastEITIrecommendationsaboutthequalityofofficialproductionstatistics,theIAnotedthatAKBNdidnotpossessthetoolsorexpertisetomonitoractualoutputandthatAKBNhadpoorcontroloverdataadministrationandthattheytendedtorelyexcelspreadsheets.TheIAexplainedthatstrengtheningoversightofcompanies’self-reportingofproductionwouldrequiresignificantinvestmentonthepartofAKBN,butnotedthatthedraftLawonTransparencyinPublicAdministrationspreparedbyAlbEITIwouldensuregreatercollaborationbetweengovernmententitiesandlicensees.

InitialassessmentTheInternationalSecretariat’sinitialassessmentisthatAlbaniahasmadesatisfactoryprogresstowardsmeetingthisrequirement.The2015EITIReportprovidestheproductionvolumesandvaluesofallmajormineralsproducedincludingoil,chromium,ferrochrome,copper,iron-nickel&nickel-silica,andlimestone,althoughanaggregateproductionvalueisonlyprovidedforchromiumandferrochrome.Whiletheuseofexportpricestocalculateproductionvaluesisaconcern,giventhegovernment’slackofreportingofdomesticprices(incontrasttopreviousyears),itisnotablethattheMSGhasmadeeffortstoprovideanestimateofproductionvaluesinthe2015EITIReport.Whilethelackofinformationonnaturalgasproductionisalsoaconcern,itappearsthattotalnaturalgasproductioninAlbaniaisnegligibleandnotsold.

Tostrengthenimplementation,theMSGisencouragedtoensurethatfutureEITIReportsprovidedisaggregatedproductionvolumesandvaluesforallkeymineralsproducedintheyear(s)underreview.TheMSGmayalsowishtoworkwithrelevantgovernmententitiestoensurethatinformationondomesticpricesofallmineralsispublishedaspartofroutinegovernmentdisclosures.



Exportdata(#3.3)

DocumentationofprogressInoilandgas,whilethe2015EITIReportprovidestotaloilproductionvolumesandvalue(2015EITIReport,pp.11,21),itonlystatesthatoilproductionis“mostlyexported”foroverseasrefiningandthatoilaccountedfor55%ofextractivesexportsand13%oftotalexportsin2015(2015EITIReport,pp.11,22).Thustheexactvolumesofexportedcrudeoilarenotprovidedinthe2015EITIReport,althoughthevalueofoilexportsisprovideddisaggregatedbyyearfor2011-2015,sourcedfromtheAlbanianCustomsAdministrate(2015EITIReport,p.11).

Inmining,the2015EITIReportprovidesthevalueofminingexportsinabsolutetermsandrelativetototal2015exports,aswellasdisaggregatedforeachofthethree-largestmineralexports79(2015EITIReport,p.42).However,thereportdoesnotprovidethevolumesofexportedminerals.

Otherinformation:Thereportprovidesagraphofthethreemainexportdestinations80(2015EITIReport,p.22).Thegeneralgrowthtrendsincrudeoilexportvaluesareprovidedfor2011-2015(2015EITIReport,p.22).Thereportalsoprovidesanoverviewofhydro-electricexports(2015EITIReport,p.71).

The2013-14EITIReportprovidedtheexportvaluesforallmineralsexports(2013-14EITIReport,p.13),butnotvolumes.

Stakeholderviews

Allstakeholdersconsultedexpressedconfidenceinthereliabilityofofficialexportdata,includingforextractivescommodities.TheIAconfirmedthatthevolumeofoilexportedin2015was991ktons(approximately7.234mbarrels),comparedtototaloilproductionof1.279mtons(approximately9.337mbarrels).TheIAexplainedthat,upto2015,theBallshrefineryproduceddiesel(10ppm)soldonthedomesticmarketandvirginnaphthaexportedforfurtherrefining,whiletheFierrefineryproducedmainlybitumenandpetroleumcoke.TheIAstatedthatithadreceivednoinformationonthevolumesofoilrefinedinAlbaniain2015duringitspreparationofthe2015EITIReport,butnotedthattheMEIhadreportedthatthetworefinerieshadprocessedroughly678ktonsofcrudeoilintheperiod2011-2014,farbelowtotheirinstalledcapacity.

Agovernmentrepresentativeexplainedthatroughly80%-90%ofcrudeoilexportswerehandledbythePortofVlora,withthebalanceexportedthroughthePortofDurres,whilemineralexportswereboththroughthePortofDurresandthroughlandborderswithKosovoandMacedonia.SeveralgovernmentrepresentativesnotedthatboththeCustomsDepartmentandINSTATproducedmonthlystatisticsonoilandmineralexports,includingvolumes,valuesandcountryofdestination(throughtheTradeBalanceReport81).However,thisdatawasonlydisaggregatedbetweencrudeoiland“otherminerals”,withoutdisaggregationbyspecificmineralcommodity.WhileonegovernmentrepresentativenotedthattherewouldbenolegalorpracticalbarrierstotheCustomsDepartmentpublishingexportdatadisaggregated

79Limestone,chromiumandferrochrome.80Malta,Spainandthelargest,Italy.81http://www.dogana.gov.al/c/171/225/291/statistika



byindividualcommodity,notingthattheonlyreasonthiswasnotalreadydonewasthatnoonehadeverasked,anothergovernmentrepresentativenotedthatitwouldnotbepossibleforINSTATtopublishexportdatadisaggregatedbymineralcommodityforthosewherelessthanthreecompaniesproducedaparticularmineral,inlinewithprovisionsofthenationalLawonOfficialStatistics.

Initialassessment

TheInternationalSecretariat’sinitialassessmentisthatAlbaniahasmademeaningfulprogressinmeetingthisrequirement.The2015EITIReportprovidesexportvaluesforcrudeoil,butnotspecificoilexportvolumes,andthevalueofthemainthreemineralexports,butnotvolumesandvaluesofallexportedminerals.

Inaccordancewithrequirement3.3,theMSGshouldensurefutureEITIReportsprovidedisaggregatedexportvolumesandvaluesforallkeymineralsexportedintheyear(s)underreview.TheMSGisencouragedtoclearlysegregateanyfuturetransitnaturalgasfromthedevelopmentoftheTrans-AdriaticPipelineareclearlysegregatedfromAlbania’sbonafideexports.



Table3-Summaryinitialassessmenttable:Monitoringandproduction


InternationalSecretariat’sinitialassessmentofprogresswiththeEITIprovisions

Overviewoftheextractivesector,includingexplorationactivities(#3.1)

The2015EITIReportprovidesanoverviewofthemining,oilandgassectors,includingsignificantexplorationactivities.IntheInternationalSecretariat’sview,Albaniahasmadeeffortstogobeyondtherequirementbyincludingextensiveinformationonthehydro-electricitysector.


Productiondata(#3.2)

The2015EITIReportprovidestheproductionvolumesandvaluesofallmajormineralsproducedincludingoil,chromium,ferrochrome,copper,iron-nickel&nickel-silica,andlimestone,althoughanaggregateproductionvalueisonlyprovidedforchromiumandferrochrome.Whiletheuseofexportpricestocalculateproductionvaluesisaconcern,giventhegovernment’slackofreportingofdomesticprices(incontrasttopreviousyears),itisnotablethattheMSGhasmadeeffortstoprovideanestimateofproductionvaluesinthe2015EITIReport.Whilethelackofinformationonnaturalgasproductionisalsoaconcern,itappearsthattotalnaturalgasproductioninAlbaniaisnegligibleandnotsold.


Exportdata(#3.3)

The2015EITIReportprovidesexportvaluesforcrudeoil,butnotspecificoilexportvolumes,andthevalueofthemainthreemineralexports,butnotvolumesandvaluesofallexportedminerals.

Meaningfulprogress


1. Tocontinuestrengtheningimplementation,theMSGmaywishtofollowuponrepeatedrecommendationsfrompastEITIReportsrelatedtoensuringtheaccuracyofofficialreservesestimates.

2. Tostrengthenimplementation,theMSGisencouragedtoensurethatfutureEITIReportsprovidedisaggregatedproductionvolumesandvaluesforallkeymineralsproducedintheyear(s)underreview.TheMSGmayalsowishtoworkwithrelevantgovernmententitiestoensurethatinformationondomesticpricesofallmineralsispublishedaspartofroutine



governmentdisclosures.

3. Inaccordancewithrequirement3.3,theMSGshouldensurefutureEITIReportsprovidedisaggregatedexportvolumesandvaluesforallkeymineralsexportedintheyear(s)underreview.TheMSGisencouragedtoclearlysegregateanyfuturetransitnaturalgasfromthedevelopmentoftheTrans-AdriaticPipelineareclearlysegregatedfromAlbania’sotherexports.



4. Revenuecollection

4.1Overview

ThissectionprovidesdetailsontheimplementationoftheEITIrequirementsrelatedtorevenuetransparency,includingthecomprehensiveness,qualityandlevelofdetaildisclosed.ItalsoconsiderscompliancewiththeEITIRequirementsrelatedtoproceduresforproducingEITIReports.

4.2Assessment

Materiality(#4.1)

DocumentationofprogressMaterialitythresholdforrevenuestreams:The2015EITIReportconfirmsthattheIAreviewedtheMSG’soriginalmaterialitythresholds,includedintheIA’sToRs,butalsohighlightstheIA’sconcernsoverthedatausedasthebasisforsettingmaterialitythresholds(2015EITIReport,p.85).Whilethereportreferstoaquantitativematerialitythresholdforselectingmaterialrevenuestreams(i.e.asashareoftotalgovernmentrevenues)itonlydoessoingeneraltermsreferringto“substantialrevenueflowstotheStatebudget”(2015EITIReport,p.79).Thereportexplainsthegovernment’sinabilitytodisaggregatetheextractivescomponentsofcommontaxes(i.e.notextractives-specific),giventheTreasurysystem’sinabilitytoprovidemonthlyrevenuedisaggregatedbytaxpayerorindustry(2015EITIReport,p.100).Thereportnotesthatpaymentsselectedforreconciliationrepresentonlythe“significant”paymentstotheStateBudgetandtooff-budgetentitiesincludingAKBN,theAlbanianEnergyRegulator(ERE),KESHandAlbpetrolanddonotincludeallextractivespayments(2015EITIReport,p.14).

Thereportstatesthatallcommontaxeswereexcludedfromthescopeofreconciliation(2015EITIReport,p.80).WhilethereportonlyconfirmsthattheMSGincludedallrevenueslistedunderRequirement4.1.binthescopeofreportingforoilandgas(2015EITIReport,p.79)butnotexplicitlyformining,thelistofrevenuestreamsselectedforreconciliationinclude“commontax”revenuestreamssuchasProfitTax,taxpenaltiesandVATinthescopeofreconciliation(2015EITIReport,pp.79-80).Whilethereportstatesthatlicenseeandentryfeeswereexcludedfromthescopeofreconciliationbasedonthefactthatthey“donotgiverisetosubstantialpaymentsfromthesector”(2015EITIReport,p.80),itdoesnotprovideaspecificquantitativematerialitythresholdforexcludingtheserevenues.Allmaterialmining,oilandgascompanieswerealsorequiredtoreportanyotherpaymentofmorethanUSD50ktothenationalgovernmentandUSD5ktolocalgovernments(2015EITIReport,pp.79-81).

Descriptionsofmaterialrevenuestreams:Thereportprovidesdescriptionsofallmaterialrevenue



streamsinoilandgas82(2015EITIReport,pp.33-35)andmining83(2015EITIReport,pp.53-54).

Materialitythresholdforcompanies:Foroilandgas,the2015EITIReportconfirmstheMSG’sdecisiontoincludealloilandgascompaniesoperatinginAlbaniainthescopeofreporting,namelyeightprivateoilandgascompaniesandAlbpetrol(2015EITIReport,pp.80,89).Formining,thereportstatesthattheMSGselectedmaterialminingcompaniesbasedondifferentannualproductionthresholds84,ratherthanbasedonpaymentstogovernment(2015EITIReport,p.80).Thereportconfirmsthat“nomaterialpaymentsrelatedtominingconcessionagreementswerereportedbylicenseesin2015”(2015EITIReport,p.81).Thereportstatesthattheselectionofmaterialminingcompaniesprovidedareconciliationcoverageof89%of2015estimatedminingproductionvalue,albeitraisingconcernsoverthereliabilityofofficialminingproductiondata(2015EITIReport,p.81).TheMSG’smaterialitydecisionsareclearlyhighlightedunderMSGdecisionsontheAlbEITIwebsite.85

Materialcompanies:The2015EITIReportprovidesalistofallnineoilandgascompanies(includingAlbpetrol),the106miningcompaniesand19hydro-powercompanies,selectedforparticipationinthe2015EITIReport(2015EITIReport,pp.19,91,108-110,127-129).Thetotalnumberofmaterialcompaniesstoodat134inthe2015EITIReport,including115mining,oilandgascompanies.

Materialcompanyreporting:The2015EITIReportstatesthatonly122ofthe134materialcompaniessubmittedEITIreportingtemplates(2015EITIReport,pp.86,96).Whilethereportnotesthatallninematerialoilandgascompaniessubmittedtheirreportingtemplates(2015EITIReport,p.89),italsostatesthatoneoilandgascompany,EmanuelleAdriaticEnergyLtd,didnotreportalthoughitconfirmsthatthegovernmentdidnotreportanyrevenuesfromthecompanyin2015(2015EITIReport,p.89).Thereportalsostatesthatonly100ofthe106materialminingcompaniesreportedandprovidesthenamesofthesixnon-reportingcompanies86(2015EITIReport,p.91).Thereportassessesthematerialityofthesixnon-reportingcompanies’omissionsinaggregate87,butnotdisaggregatedbycompany(2015EITIReport,p.91).However,itispossibletocalculatethematerialityofeachoffourofthesixnon-reportingminingcompanies’omissionsbasedontheresultsofreconciliationinAppendix2,althoughitappearsthatthegovernmentdidnotreportrevenuesfromtheothertwonon-reportingcompanies(2015EITIReport,p.113).Thereasonsfornon-reportingcompanies’refusaltoparticipatearenotprovided,beyondgeneralreferencetotimeconstraints(2015EITIReport,p.89).

Thereportalsoreferstoconfidentialityprovisionsofthetaxcode,whereitexplainstheinclusionoftaxconfidentialitywaiversinthereportingtemplatesforallmaterialcompanies88(2015EITIReport,p.104).

82Royalty,taxonprofit,VAT,paymentsforsocialandhealthinsuranceandpersonalincometax,personalincometax,thestate’sshareofoilproduction,signatureandtrainingbonuses.83Royalties,taxonprofit,VAT,paymentsforsocialandhealthinsuranceandpersonalincometax,personalincometax,taxondividend.84Thethresholdsforselectingmaterialcompanieswere:chromiumcompanieswithover3.000tonsp.a.production;coppercompanieswithover100tonsp.a.production;nickelcompanieswithover10.000tonsp.a.production;limestonecompanieswithover20.000tonsp.a.production;claycompanieswithover100,000tonsp.a.production;andbitumenandbitumensandscompanieswithover10.000tonsp.a.production.85E.g.theselectionofmaterialcompaniesforthe2015EITIReporton29July2016:http://www.albeiti.org/multi-stakeholder-group/msg-meetings/year-2016/86Durici,Kurti,Silbora,NickelMine,Oruçi,andAfrimi–K.87as0.2%oftotalminingrevenuesdisclosedbygovernment.88Reportingtemplatesincludedalettergrantingthelicensee’sexplicitconsent“totherecipientpublicentitiesforreportingofinformationonlicenseeswhichclassifiedasconfidentialundergoverninglaws,regulationsandagreements”and“toallowpublicationoftheconcerningcashflowsbypaymentsstreambylicenseeonadisaggregatedlevelintheEITIreport.”



However,therewassignificantdelaycompanies’submissionofthewaivers,withwaiversonlyreceivedfrom“lessthan50outof134”materialcompanies(2015EITIReport,p.104).

Materialgovernmententities:Thegovernmententitiescollectingextractivesrevenuesandmaterialtothe2015EITIReportarelisted,indiagramform,inthe2015EITIReport(2015EITIReport,p.80).However,the2015EITIReportdoesnotspecifythenumberandnamesofLGUsselectedforreporting.

Governmentreporting:The2015EITIReportdoesnotexplicitlystatewhetherallmaterialgovernmententitiesreportedallrevenues,althoughitdoeshighlightincompletereportingbylocalgovernments,withoutspecifyingthenumberornamesofnon-reportingLGUs(2015EITIReport,p.98).ItisstatedthatnotallLGUscollectingrevenuesfromthemining,oilandgasindustrieswereincludedinthescopeofreportingandthatreportingfromparticipatingLGUswas“incompleteandcamewithsignificantdelays”(2015EITIReport,p.98).

Discrepancies:ThereportreferstotheMSG’slackofmaterialitythresholdforinvestigatingdiscrepancies,althoughthisisnotarequirementoftheEITIStandard,andnotesthattheIAinvestigateddiscrepanciesbilaterallywithindividualcompaniesorgovernmentagencies(2015EITIReport,p.86).Thevalueofaggregateunreconcileddiscrepanciesisprovided,disaggregatedbetweentheminingandoilandgassectors(2015EITIReport,p.88),andthematerialityofdiscrepanciescanbeassessedbasedonthedataprovided.89Thereportpresentstheresultsofreconciliationofoilandgasrevenues(2015EITIReport,p.89)andminingrevenues(2015EITIReport,p.91),wherediscrepanciesareidentifiedbyrevenuestream.Theresultsofreconciliationdisaggregatedbycompanyprovidedinappendix,bothforoilandgas(2015EITIReport,pp.108-110)andmining(2015EITIReport,pp.111-129),providediscrepanciesdisaggregatedbycompanyandrevenuestream.Thereportalsoprovidesanoverviewofthemaincausesofdiscrepancies(2015EITIReport,pp.90-91).Akeycauseofdiscrepanciesinoilandgasroyaltieswasduetothewayinwhichroyaltiesonexportsarelevied(2015EITIReport,pp.90,92).

Fullgovernmentdisclosure:Thereportprovidesthegovernment’sfullunilateraldisclosureoftotal2015revenues,disaggregatedbystream,inninematerialoilandgasrevenuestreams90(2015EITIReport,p.32)andsevenminingrevenueflows91(2015EITIReport,p.53).Whilethereportdescribesthetaxconfidentialitywaiversincludedinthereportingtemplatesandprovisionofwaiversfrom“lessthan50ofthe134”materialcompanies(2015EITIReport,p.104),itdoesnotclarifywhetherthelackofconfidentialitywaiversfromover84materialcompaniesaffectedthegovernment’sabilitytoprovidefullunilateraldisclosure.

Thereportalsoprovidesanoverviewandreconciliationofpaymentstogovernmentfromthehydro-

89FinalunreconcileddiscrepancieswereLek1.081minoilandgasrevenues(or0.00976%ofoilandgasrevenuesreportedbygovernment)andLek3.898minminingrevenues(or0.124%ofminingrevenuesreportedbygovernment).90Royalty,taxonprofit,VAT,paymentsforsocialandhealthinsuranceandpersonalincometax,personalincometax,taxondividends,taxpenalties,thestate’sshareofoilproduction,andsignatureandtrainingbonuses.91Royalty,taxonprofit,VAT,paymentsforsocialandhealthinsuranceandpersonalincometax,personalincometax,taxondividend,andtaxpenalties.



powersector(2015EITIReport,pp.72-74).

The2013-14EITIReportincludessimilarmaterialitythresholds(pp.74-78)anddescriptionsofmaterialrevenuestreams(2013-14EITIReport,pp.12,74-77).Thenumberofmaterialcompaniesislower,at81miningcompanies(accountingfor85%ofproduction)in2013and99miningcompanies(87%ofproduction)in2014.Participationwasalsolowerthanin2015,with94of108materialcompaniesreportingin2013and103of115in2014(2013-14EITIReport,p.83).ItappearsbasedonanalysisofMSGmeetingminutesthattheMSGdecidedtoremoveallcompaniesthatfailedtoreportfromthelistofmaterialcompaniesforthe2013-2014EITIReports92,althoughitisunclearhowtheremovalofmaterialcompaniesretroactivelyonthebasisofdatacollectionwasjustifiedonmethodologicalgrounds.

Stakeholderviews

Materiality:MSGmembersfromallconstituencieshighlightedthechallengesposedbytheinabilitytodisaggregateextractivescomponentsofcommontaxesinthecurrentgovernmentsystems,butconfirmedthattheMSGre-examineditsmaterialitydecisionsannually.SecretariatstaffandgovernmentofficialsexplainedthattheinabilitytoprovidetotalgovernmentextractivesrevenueshadconstrainedtheMSG’sabilitytosetquantitativematerialitythresholds.AllMSGmembersconsultedconfirmedthattheMSGhaddecidedtoincludeallsector-specificrevenueflowsandexcludecommontaxesfromthescopeofreconciliation,althoughtheyconcededthatcertainsector-specificrevenueflows(licenseandentryfees)hadbeenexcludedgiventheirverylowcontributiontogovernmentrevenues.TheIAexplainedthatgivenconstraintsonthegranularityofgovernmentdata,theIAhadadoptedanalternativeapproachofselectingcompaniesandpaymentsbasedonthestructureofcontractually-requiredandstatutorypayments.

Toensurethatthe2015EITIReportincludedall“significant”sector-specificpaymentstogovernmentandidentifyany“neworpreviouslyuncovered”paymentstreams,theIAexplainedthattheMSGaskedallmaterialcompaniestoreportallotherpayments(bothsector-specificandcommontaxes)abovethresholdsofLek5mfornationalpaymentsandLek0.5mforsubnationalpayments.WhiletheIAnotedthatthecoverageofthereconciliationcouldnotbeestimatedasashareoftotalgovernmentextractivesrevenues,theIAestimatedthatthecoverage“shouldberelativelyhigh”giventhatallmajorrevenuestreamswerecovered.WithregardstothemorethanLek2bninaggregate“otherpayments”reportedbymaterialcompaniesinthe2015EITIReport,theIAexplainedthatthesepaymentswerereportedbyoilandgascompaniesand“afew”miningcompaniesandconsistedofexcisetaxandcarbontaxonfuelimportsforuseinoilproduction,twotaxesintroducedfollowingataxlawchangein2014.Indeed,theIAexplainedthatoilandgascompaniesoftenusedrefinedoilproductsasdiluentinoilextractionandthatsomeminingcompaniesusedgasoilintheirsmeltingfacilities.Wheresuchpaymentswerereportedbycompanies,theIAnotedthatitcomparedthisdatawithinformationfromtheCustomsDepartment(forcarbontaxonfuelimports)andfromtheTaxDepartment(forexcisetaxondomestically-purchasedfuel).WhiletheIAdidnotconsiderthesetworevenuestreamstoberelatedtoextractivesactivities,ithadproposedincludingthesepaymentsinreconciliationgiventheiraggregatevalueinordertobuildamorecomprehensivepictureoftotalextractivesrevenues.AnindustryMSGmemberconsideredthattheMSG’sextensivedeliberationsoverthematerialitythresholdswerenotadequatelydescribedinthe2015

92http://www.albeiti.org/multi-stakeholder-group/msg-meetings/year-2015/



EITIReport,inparticulartherationaleforadoptingaparticularapproachtomateriality.

Companyreporting:SeveralMSGmembersnotedthattheMSG’smainfocusinmaterialitydiscussionswasonminingratherthanoilandgas,sincealloilandgaslicense-holderswereincluded,althoughseveralmembersnotedthiscouldhavebeenbetterdescribedintheEITIReport.Forthe2015EITIReport,theIAaskedtheCustomsandTaxDepartmentstoprovideacomprehensivelistofalllicense-holdersoperatingintheminingsectorandoftheirsingleTaxIDnumbers,aswellasdisclosureofallrevenuesreceivedfromthesecompanies.Aseniorgovernmentofficialexplainedthattheselectionofmaterialminingcompaniesonthebasisofproductionratherthanpaymentstogovernmentwasanacceptableapproach,sinceminingroyaltieswerecalculatedonthebasisofproductionvolumes.ACSOMSGmemberexplainedthatwhilecivilsocietyhadoriginallywantedallminingcompaniestoparticipateinEITIreporting,inlinewithprovisionsoftheMiningLaw,theyhadunderstoodthatminingcompanieswithlowturnoverswereunlikelytomakesignificantpaymentstogovernment.However,anindustryrepresentativewashighlycriticaloftheexclusionofsmallerminingcompaniesfromthescopeofEITIreporting,consideringthatsmallercompanieswerethemostlikelytostrayfromtheirstatutoryduties.AseniorgovernmentofficialnotedthatthematerialitythresholdforselectingminingcompanieshadbeenloweredsincethefirstEITIReports,providingasufficientlyhighreconciliationcoverage.Whileseveralindustryrepresentativesnotedthatcompanyparticipationhadconsistentlyimprovedannually,industryandgovernmentrepresentativesconsideredthatthe2010MiningLaw’sintroductionofmandatoryEITIreportingrequirementshadmadecompaniesmorecautiousaboutreporting,astheyconsideredthatEITIreportingcouldleadtomoreleviesfromgovernment.

Withregardstothereasonsfor6ofthe115materialmining,oilandgascompanies(excludinghydropower)refusingtoparticipateinthe2015EITIReport,theIAnotedthatithadnotreceivedanyofficialresponsesfromthesecompanies,althoughsomecompanieshadsimplyunofficiallyrefusedtocooperateandotherssimplyhadnotrespondedtorepeatedfollow-up.Anecdotally,theIAexplainedthatsomeofthecompaniesmayhavebeenfrustratedatthegovernmentgiventhelackofrenewaloftheirlicenses,whileotherswereeithernotsufficientlyorganised,didn’thavetheadequateaccountingsystemsorweresimply“toosmall".TheIAnotedthattheAlbEITISecretariatandMEIrepresentativeshadbeen“verysupportive”intheprocessoffollowingupwithnon-reportingcompanies,sendingofficialreminderstoallnon-reportingcompanies.Severalindustryrepresentativesnotedthattheydidnotconsideritpartofcompanies’responsibilitiestofollow-upwithnon-reportingcompaniestoencouragethemtoreport.OneCSOMSGmemberexpressedsignificantcriticismatthefactthatthegovernmentdidnotwithdrawthelicensesofminingcompaniesthatfailedtoreport,consideringthatthisreflectedinsufficientgovernmentcommitmenttotheEITI.TheIAexplainedthatithadonlyassessedthecombinedmaterialityofpaymentsfromnon-reportingcompanies(as0.2%ofminingrevenues)asitdidnotseethevalueindisaggregatingthissmallfigurefurther.

Governmentreporting:Themajorityofgovernmentstakeholdersandsecretariatstaffconsultedhighlightedthelaboriousprocessofdatacollectionwithingovernmentsystems.Severalgovernmentrepresentativesexplainedthatlineagencies,ratherthantheTreasury,hadbeenselectedtoreportinEITI.WhiletheTreasurywastheentityactuallyreceivingthepaymentsfromcompanies,itdidnotdisaggregaterevenuespertaxpayerandthuscouldnotprovidesufficientdisaggregationforEITIreportingpurposes.WhilelineagenciesliketheTaxandCustomsDepartmentsweretheliquidatorsofpaymentsandthusdidnotreceiverevenuesthemselves,theyhadappropriatesystemstodisaggregaterevenuespertaxIDnumber.AgovernmentofficialexplainedthatlineagenciesandtheTreasuryreconciled



invoicesandrevenuesonamonthlybasis.

WhileanindustryMSGrepresentativehighlightedthefullparticipationofgovernmententitiesinEITIreporting,severalCSOMSGmembersexpressedconcernovertheconsistentdelaysinreportingbycertaingovernmententities,suchastheCustomsandTaxDepartments.TheseCSOsconsideredthatcivilsocietypressureontheMSGhadbeencrucialinensuringfullgovernmentreportinginthe2015EITIReport.ASecretariatstaffexplainedthattherewasaculturallegacyofconsideringinformationtoberestrictedinAlbania,whichcouldexplaintheslowresponseofsomegovernmententities.TheIAconfirmedthatallnationalgovernmententitieshadfullyreportedextractivesrevenuesinthe2015EITIReportandthat,whileanumberofLGUshadnotreported,theIAconsideredthatthemainLGUsreceivingthelion’sshareofextractivesrevenueshadparticipatedinreporting.

Discrepancies:Aseniorgovernmentofficialhighlightedthelowlevelofdiscrepanciesinthe2015EITIReportandconsideredthatthelowlevelofvariancesininitialreportingreflectedthereliabilityofdatabeingreportedbothbycompaniesandgovernmententities(seeRequirement4.9).SeveralindustryMSGmembersemphasisedthedecliningtrendofdiscrepanciesacrossAlbania’ssevenyearsofEITIreporting.

InitialassessmentThe2015EITIReportincludestheMSG’sdefinitionofthematerialitythresholdsforpaymentsandcompaniestobeincludedinreconciliationbasedonproductionvolumes,includingajustificationforwhythethresholdsweresetinthiswayandatthislevel.However,thesettingofaqualitativeratherthanquantitativethresholdforselectingmaterialrevenuestreams(asashareofgovernmentrevenuesforinstance)isaconcern.However,whiletwooftherevenueflowslistedinRequirement4.1.bhaveonlybeenexcludedfromreconciliationbasedongeneralreferencetotheirlackofmateriality,thereisnoevidencetosuggestthattheirvaluewassignificant.Thecompaniesthatdidnotreportarenamedandthevalueoftheirpaymentstogovernmentisprovidedrelativetogovernment-reportedrevenues.Theshareofnon-reportingcompaniesappearstobeinsignificant.The2015EITIReportdoesnotexplicitlystatewhetherallmaterialgovernmententitiesreportedallrevenues,althoughstakeholderconsultationsconfirmedthatallnationalgovernmententitieshadfullyreportedandthatomissionsfromlocalgovernmentswerenotconsideredmaterial.WhilethecommentaryfromtheIAonthecomprehensivenessoftheEITIReportislimitedtoastatementonthelackofassurances,itispossibletocalculatethematerialityofomissions.Giventhattheseappearimmaterial,inlightofthelowmaterialitythresholdadoptedforselectingmaterialcompaniesandinlightoftheEITIBoard’sdecisioninothercomparablecaseslikeMongolia,theInternationalSecretariat’sinitialassessmentisthatAlbaniahasmadesatisfactoryprogressinmeetingthisrequirement.

Tostrengthenimplementation,theMSGisencouragedtoconsiderrevisitingitsmaterialitythresholdforselectingminingcompaniestostrikeabalancebetweenthecomprehensivenessofdisclosuresandthequalityofreporting.TheMSGmaywishtoconsiderasamplingapproach,whichwouldallowthesepaymentstobeinvestigatedwithoutcreatinganunreasonablereportingburden.TheMSGisalsoencouragedtoensurethattheIndependentAdministratorprovidesitsopiniononthecomprehensivenessoftheEITIReport.



In-kindrevenues(#4.2)


Materiality:The2015EITIReportconfirmsthatcompanieswererequiredtoreportin-kindpaymentstogovernmentandSOEsandthatrevenueintheformofthestate’sshareofoilproductionwasthesecondlargestextractivesrevenuein2015(2015EITIReport,p.90).InlinewithMEIandMFInstructionno.1of26May2015,thereportexplainsthatcompaniescantransfertheshareofproductionallocatedtoAlbpetroleitherincashorin-kind(2015EITIReport,p.34).AlbpetrolsellsboththeshareofoilcollectedunderthePSAsanditsownoilproductionthroughannualpublicauctions(2015EITIReport,p.34).

Volumescollected:ThereportprovidestwodifferentfiguresforthevolumeofoilcollectedasAlbpetrol’sshareofoilproduction,withcompaniesreportinghavingtransferred50,791tonstoAlbpetrol(2015EITIReport,pp.14,95)andAlbpetrolreportinghavingreceived50,540tons(2015EITIReport,p.34).Thesecondfigureisconfirmedastheresultofpre-existingproductionof91,039tonsandproductionissuedcontractor’sinvestmentof11,985tons(2015EITIReport,p.34),whilethefirstfigureisquotedtwiceinthereport(includingreferencetothehigherfigureastheactualpaymentswithoutsourcing)withoutaclearexplanationthatthediscrepancywastheresultofreconciliationofthein-kindflows,norinvestigationofthereasonsforthediscrepancy.

Volumessold:ThereportstatesthatAlbpetrolreportedsalesof84,623tonsofcrudeoilin2015,toasinglebuyer,TradingPetrol&Drilling(TPD)(2015EITIReport,pp.34,137).TPDoperatestheFierrefineryinanagreementwithARMO,withouthavingtakenonARMO’sdebt(2015EITIReport,pp.21,34)(seeRequirement2.6).Appendix4presentsthedetailsofpublicauctionsofAlbpetrol’scrudeoil(2015EITIReport,p.137).However,thereasonsforsignificantlyhighersalesvolumesthanthosecollectedbyAlbpetrolforthesaleofthestate’sshareofoilproductionarenotexplained.Whilenotexplicitlystated,thiswouldimplythatthevolumesprovidedforcrudeoilsoldbyAlbpetrolincludebothAlbpetrol’sownproductionaswellasthestate’sshareofoilproductionunderPSAs.

Salesproceeds:ThereportprovidesthevalueofproceedsfromthesaleofAlbpetrol’s84,623tonsofcrudeoilin2015asUSD15.4m(2015EITIReport,p.34,137).Appendix4presentsthedetailsofpublicauctionsofAlbpetrol’scrudeoil,disaggregatedbymonthandbuyer,albeittoasinglebuyer(2015EITIReport,p.137).

However,thereportalsoprovidestheestimatedvalueofoilpaymentscollectedbyAlbpetrol,Lek1,615,639,000,“estimatedusingtheaverageexportpriceappliedin2013ofUSD254/ton.amountinUSD…convertedinLekwiththeaveragerateoftheBankofAlbaniafortheyear2013at1USDequalto125.96Lek.”AtotalofLek8,024,000wasleftasunreconcileddiscrepanciesinthereconciliationofin-kindshareofoilpayments,whichcanbecalculatedas0.5%ofrevenuesundertheshareofoilpaymentsreportedbygovernment(2015EITIReport,p.95).UsingUSD1:Lek125.96astheexchangerate,thevalueofcrudeoilfromPSAscollectedbyAlbpetrolin2015canbecalculatedasUSD148.74m,roughlytentimeshigherthantheUSD15.4mincrudeoilsalesproceedsreportedearlierinthereport(2015EITIReport,p.34).

Discrepancies:AtotalofLek8,024,000wasleftasunreconcileddiscrepanciesinthereconciliationofin-kindshareofoilpayments,whichcanbecalculatedas0.5%ofrevenuesundertheshareofoilpayments



reportedbygovernment(2015EITIReport,p.95).

Disaggregation:ThedatainTable55ofAppendix4ispresenteddisaggregatedby(thesingle)buyerandmonth(2015EITIReport,p.137).

Additionalinformation:Theinformationoncrudeoilsalesisnotreconciledwithbuyers.ThereportdescribestheprocessforsellingAlbpetrol’scrudeoil93(2015EITIReport,pp.136-137)andtheformulaforcalculatingthestate’sshareofoilproduction94(2015EITIReport,p.34).

The2013-14EITIReportprovidedthevolumesanddeemedvalueofin-kindrevenue,thestate’sshareofoilproduction(distinctfromAlbpetrol’sequityoil)95(2013-14EITIReport,pp.12,100).ThereportdisclosesthevolumescollectedbyAlbPetrolonbehalfofthegovernment,thevolumessoldandtheproceedsofcrudeoilsales.Dataoncrudeoilsaleswasalsodisaggregatedbybuyer(2013-14EITIReport,p.169).

Stakeholderviews

TheJanuary2017EurosupportreportnotedthatRequirement4.2wasnotapplicableintheAlbanianminingsector,giventhatArticle40ofLaw10304requiredminingroyaltiestobepaidincash(Eurosupport,2017).

TheIAexplainedthatthedecisiononwhethercompaniesshouldtransfertheshareofoilproductionincashorin-kindwaslefttoAlbpetrolandtheoilcompanies,inlinewithajointorderfromtheMinisterofEnergyandtheMinisterofFinanceinMay2015.TheIAconfirmedthatallsuchtransferswerein-kindin2015.AgovernmentofficialexpressedconcernatthefactthattwodifferentfigureswereprovidedfortheshareofoilcollectedunderPSAs,consideringthatthishighlightedtheneedforgovernmententitiestocheckdraftEITIReportstoensuresuchdiscrepancieswerenotpublished.

AgovernmentrepresentativeconfirmedthatthefigureforvolumessoldbyAlbpetrolin2015(84,623tons)representedboththeshareofoilfromPSAsandAlbpetrol’sownproduction.TheIAexplainedthatwhileAlbpetrolhaddisaggregatedthetwoinitsreportingforthe2013-14EITIReport,ithadnotdonesoforthe2015EITIReportandcategorisedAlbpetrolas“uncooperative”inthisrespect.ACSOMSGmemberconsideredthatAlbpetrol’sownproductionwasmarginalandrepresentedlessthan1%ofAlbania’soilproduction,therebyconsideringthatevenaggregatedvolumessoldbyAlbpetrolwereroughlyequivalenttotheshareofoilproductioncollectedunderPSAs.However,agovernmentofficialconfirmedthatAlbpetrolcollectedroughly50ktonsayearinoilunderPSAsandproducedaround34k

93AlbpetrolsellsoilthroughopenpublicauctionsinlinewithOrdern.83of10October2012.ThequantitiesofoilsoldarebasedonannualforecastsofoilproductionandshareofoilderivedfromPSAs.Thescheduleofoildeliveriesissetfortheyear.Thecompositionofthecommissionadministeringoilauctionsisdescribed.Thepricingformulafor2015crudeoilsalesisprovided(Brent*72.52%-USD5.55/barrel+K(whereKisUSD0.1perbarrel))andtheprocessforsettingoilsalespricesisdescribedingeneralterms.AlinktotheAlbpetrolwebpagedescribingtheproceduresforthesaleofAlbpetrol’scrudeoilin2015isprovided.94TheshareofoilproductioncollectedbyAlbpetroliscalculated“basedondeemedproduction(pre-existingproductionwhenthewellwastransferred-PEP)andincrementalproduction(productionissuedfromcontractor’sinvestment-ASP),whichvariesbasedonthelevelofproductionandcostrecoverystageasmeasuredbyRfactor(FactorRiscalculatedbydividingoilrevenueaccumulatedsincethecommencementofthePSAoperationstotheoilcostsaccumulatedforthesameperiod.Royaltyaccruedduringtheperiodisdeductedfromrevenue.”(2015EITIReport,p.34)95At75,825tonsin2013and94,304tonsin2014.



tonsofitsownoiloutput.

TheIAconfirmedthattherewasnolegalrequirementforAlbpetroltotransfertheproceedsfromthesaleofoilproductionfromPSAstotheTreasurygiventhatthewordingofPSAsidentifiedthisas“Albpetrol’sshareofproduction”,notthestate’sshare,giventhatthePSAshadbeenconcludedpriortothecorporatisationofAlbpetrol.AgovernmentofficialconsideredthatAlbpetrolneededtoretainmostoftheproceedsfromthesaleofshareofoilfromPSAsinordertofinanceitsoperations,whichexplainedthelowlevelofAlbpetrol'sdividendstoTreasuryinrecentyears.However,anothergovernmentrepresentativeandseveraldonorsexpressedsignificantconcernsatthefactAlbpetrolretainedmuchoftheproceedsandhighlightedtheneedtoamendtheprocessforoperatorstotransfertheshareofoilincashdirectlytotheTreasury.

TheIAconfirmedthattheoptionofincludingbuyersofAlbpetrol’scrudeoilsalesinthescopeofreportingwasnotdiscussedbytheMSGinpreparingthe2015EITIReport.TheIAnotedthatthereshouldbenobarrierstopresentingdataonAlbpetrol’scrudeoilsalesdisaggregatedbycargo,whererelevant(giventhatsuppliestothedomesticrefineryoperatedbyTPDin2015werethroughpipeline).TheIAexplainedthatitreceivedinformationoncrudeoilexportsdisaggregatedbyindividualcargofromtheCustomsDepartmentinpreparingtheannualEITIReports,butthatitwasnotpossibletopublishthisdisaggregateddata“unlessagreedbytheconcernedparties”.

SeveralgovernmentstakeholdersexpressedinterestintheEITI’stargetedeffortontransparencyinthesaleofthestate’sin-kindrevenue.OnegovernmentofficialexpresseduncertaintyoverwhetheritwouldbepossibletopublishthecrudeoilsalescontractsconcludedbyAlbpetrol,notingthatitwouldbenecessarytoconfirmwhetherthesecontractsincludedanyconfidentialityclausesinthesamewayasPSAs.TheofficialnotedthatitcouldbepossibletoundertakeadoublereconciliationofAlbpetrol’scrudeoilsalesbetweenwithreportingfromoilbuyersaswellasfromtheCustomsDepartment,whichsince2012alsohadresponsibilityforleviesofexcisetaxonkeydomesticproductssuchascrudeoil.SeveralgovernmentstakeholdershighlightedthecriticismsfromAlbpetrolwhenthepriceofAlbpetrol’scrudeoilsaleswasoriginallydisclosed(alongwiththeformula)inthe2013-14EITIReport,giventhatitwassignificantlylowerthanthepriceatwhichprivateoperatorslikeBankersPetroleumsoldtheirownoilproductiontointernationalbuyers(withaspreadofroughly30%and18%discountsonBrentrespectively).AgovernmentofficialexplainedthatthisdifferenceinpricescouldbeattributabletoseveralreasonsincludingthelowervolumessoldbyAlbpetrol,theprivateoperators’abilitytohedgeinternationaloilpricemovementsanddifferencesincrudeoilblendqualities.

Initialassessment

The2015EITIReportreconcilescrudeoilvolumescollectedunderPSAs,disclosescrudeoilvolumessoldandthevalueofproceedsfromcrudeoilsales,disaggregatedbybuyer.Thereportprovidesvolumescollected,volumessoldandsalesproceedsforboththeshareofoilproductionunderPSAsaswellasAlbpetrol’sequityoil,albeitwithoutdisaggregationbetweenthetwo.WhilethereisacaseforconsideringthatAlbaniahasgonebeyondtheminimumrequirementbydisclosinginformationonthesalesofAlbpetrol’sequityoil,theInternationalSecretariat’sinitialassessmentisthatAlbaniahasmadesatisfactoryprogressinmeetingthisrequirementgiventhelackofdisaggregationbetweenthestate’sin-kindrevenuesandAlbpetrol’sequityoil.



Tostrengthenimplementation,theMSGisencouragedtoensurethatfutureEITIReportsclearlydisaggregatethestate’sin-kindrevenuesfromAlbpetrol’sequityoil,asithasdoneinpreviousEITIReports.TheMSGcouldconsiderjoiningtheEITI’stargetedeffortoncommoditytradingtoprovideaframeworkforensuringthatdisclosuresofthestate’ssalesofitsin-kindrevenuesareinlinewithinternationalbestpractice.

Barterandinfrastructuretransactions(#4.3)


The2015EITIReportdoesnotaddresstheexistenceofinfrastructureprovisionsorbarteragreements.DuringtheIA’spresentationofthe2015inceptionreporttotheMSGatits29July2016meeting,theIAexplainedthatitdidnothavesufficientinformationtoassesstheexistenceofanyinfrastructureprovisionstominingoroilandgascontractsandnotedthatmaterialcompanieswouldbeaskedtoreportdetailsofsuchprovisionsaspartofthereportingtemplates(Alb-EITI,2016).

The2013-14EITIReportstatesthattherewerenoinfrastructurebarteragreementsinforceinthemining,oilandgassectorsin2013-14(2013-14EITIReport,p.275).

StakeholderviewsNoneofthestakeholdersconsultedwereawareofanybartersorinfrastructureprovisionsofcontractsinthemining,oilandgassector.OneCSOMSGmemberdidnotrecalltheMSGdiscussingthisissueinpreparingthe2015EITIReportandconsideredthattheMSGshouldhavehadaccesstothefulltextofallmining,oilandgascontractstoconfirmwhetheranysuchclausesexisted.TheIAnotedthattwoMEIrepresentativeshadconfirmedthattherewerenosuchagreementsinanyofthemining,oilandgascontractssignedtodate.TheIAnotedthatwhileithadnothadaccesstothefulltextofcontractstoconfirmthatsuchagreementsdidnotexist,itexplainedthatitreliedoninformationprovidedbytheseMEIrepresentativesandconsideredthatanysucharrangementswouldhaveappearedinthemedia.TheJanuary2017EurosupportreportconsideredRequirement4.3tobenotapplicabletoAlbania,giventhatlegalprovisionsandtermsofconcessionagreementsdonotprovideforbartersorinfrastructureagreements(Eurosupport,2017).

InitialassessmentTheInternationalSecretariat’sinitialassessmentisthatthisrequirementisnotapplicabletoAlbaniaintheyearunderreview(2015).However,the2015EITIReport’slackofcommentontheMSG’sconsiderationofRequirement4.3isaconcern.

Tostrengthenimplementation,theMSGshouldensurethatfutureEITIReportsclearlyaddressRequirement4.3andconfirmtheMSG’sassessmentofitsnon-applicability.TheMSGmaywishtoconsidertheextenttowhichareviewoftheactualtermsofmining,oilandgascontractswouldbenecessarytoensureacomprehensiveassessmentoftheapplicabilityofRequirement4.3.



Transportrevenues(#4.4)

DocumentationofprogressThe2015EITIReportimpliesthatthegovernmentandSOEsdonotreceiverevenuesfromthetransportationofminerals,crudeoilornaturalgas,althoughitdoesnotexplicitlystateso.ThereportdescribestheinfrastructureforexportingcrudeoilandstatesthatnoSOEprovidesport-sideoildepots(2015EITIReport,p.22).ItexplainsthatexportedoilistruckedfromtheoilfieldstotheoilterminalofthePortofVlora,whichisconcessionedtoaprivatecompany,LaPetroliferaItalo-AlbaneseSh.a,andprovideslinkstotwowebsites96withthetermsoftheportconcession(2015EITIReport,p.22).Itisalsostatedthattwopipelinesof188kmfromthetworefineriestothePortofVloraarenotoperational(2015EITIReport,p.22).

Thereportalsoprovidesanoverviewofgasinfrastructuredevelopmentplans,includingthegovernment’sLawonNaturalGasSectorn.102/2015ofMarch2015,thedevelopmentofthe215kmTrans-AdriaticPipelineandtheestablishmentoftheAlbanianGasTransmissionOperator(AlbgazSh.a.)in2016(2015EITIReport,pp.13,37-38).

The2013-14EITIReportprovidedasimilardescriptionofthetruck-basedtransportationarrangementsforoil,gasandmineralsandthelackofoperationalpipelines(2013-14EITIReport,p.275).

StakeholderviewsTheJanuary2017EurosupportreportconfirmedthatthegovernmentorSOEsdonotreceiverevenuesfromthetransportationofminerals,giventhatthecostoftransportationisbornebyprivateminingcompanies.Whilethesecompaniespaynormaltaxesandfees,theydonotpayanylevyassociatedwiththeirtransportationofminerals(Eurosupport,2017).ACSOMSGmembernotedthattheMSGdidnotdiscusstheissueoftransportationrevenuesinrelationtothetermsofthePortofVloraconcessioninpreparingthe2015EITIReport.WhilecivilsocietyhadraisedtheissueofTAPontheMSG,theMSGmembernotedthatthepipelinewasnotoperationalin2015.Allstakeholdersconsultedeitherdidnotexpressanopinionontheissueorstatedthatthegovernmentdidnotreceiveanyrevenuesfromthetransportationofmineralsorcrudeoil.

TheIAconfirmedthattheconcessionaireofthePortofVlora,LaPetroliferaItalo-AlbaneseSh.a.,didnotmakeanypaymentstogovernmentin2015,giventhattheIAhadconfirmedthattheconcessionwasstructuredasaBuild-Operate-Transfer(BOT)basedonitsreadingoftheConcessionLaw.However,theIAconfirmedthattheMSGhadnotconsideredthisissueinpreparingthe2015EITIReportandthatithadclarifiedtheissueduringValidationstakeholderconsultations.TheIAstateditsintentiontoraisethisissuewiththeMSGinpreparingthenextEITIReport,covering2016.

TheIAalsoconfirmedthatthetruckingcompaniestransportingoilfromtheoilfieldstothePortofVlorawereprivatelyownedandthatoilandgascompanieswerefreetoselecttheserviceprovideroftheirchoice,whichmeantthatthegovernmentreceivednorevenuesfromthetransportationofoilbytruck.

96http://www.gruppopir.com/en/la-petroliera-italo-albaneseandhttp://fiaalbania.al/members-list/la-petrolifera-italo-albanese-sh-a/



WithregardstopotentialfuturerevenuefromthetransportationofnaturalgasthroughtheTAP,theIAconfirmedthatAlbaniaisnotentitledtocollectanytransitfeesontheTAPgascorridor.WhiletheAlbanianGasTransmissionOperatorwasestablishedtomanagegastransportfromtheTAPstationstothegasdistributionpipelinenetworkinAlbania,theIAstatedthattheimplementingregulationshadyettobefinalizedatthetimeofValidationstakeholderconsultations.

Initialassessment

TheInternationalSecretariat’sinitialassessmentisthatthisrequirementisnotapplicabletoAlbaniaintheyearunderreview(2015).The2015EITIReportdescribesinfrastructuralarrangementsforthetransportationofcrudeoil,butnotofnaturalgasorminerals.However,theInternationalSecretariatunderstandsthatthegovernmentandSOEsdonotreceiveanyrevenuesfromthetransportationofminerals,crudeoilornaturalgas.

Tostrengthenimplementation,theMSGshouldconsiderensuringthatfutureEITIReportsexplicitlystatethatthegovernmentandSOEsdonotreceiveanyrevenuesfromthetransportationofminerals,crudeoilornaturalgasintheyear(s)underreview.

TransactionsbetweenSOEsandgovernment(#4.5)


IntermsoftransactionsbetweenSOEsandotheroil,gasandminingcompanies,the2015EITIReportconfirmsstateparticipationintheoilandgassectorthroughAlbpetrol(2015EITIReport,pp.10,27).ItisapparentfromthediagramofoilandgasrevenueflowsinSection8.1thatAlbpetrolcollectsshareofoilproductionandbonusesfromcompaniesoperatingunderPSA(2015EITIReport,p.79).

ThereportstatesthatAlbpetrolcollected22.6%ofoilandgasrevenuesgeneratedfromPSAsin2015(2015EITIReport,p.35).Table24inthereportprovidestheresultsofreconciliationoftherevenuescollectedbyAlbpetrol(tworevenuestreams:shareofoilpaymentsandBonuses-Albpetrol)(2015EITIReport,p.95).TheresultsofthereconciliationofshareofoilproductionandsignaturebonusesarepresentedinAppendix1,disaggregatedbycompany(2015EITIReport,pp.108-109).

IntermsoftransactionsbetweengovernmentandSOEs,the2015EITIReportdescribesrevenuesassociatedwithstateparticipationintheoilandgassector,wherebyAlbpetroltransfersdividendstothetreasury,alongsideregulartaxesappliedtoallcommercialoilandgascompaniesincludingprofittax,royalty,VATetc.(2015EITIReport,p.34).ItisapparentfromthediagramofoilandgasrevenueflowsfromSOEstogovernmentinSection8.1thatAlbpetrolpaysdividendstoMEDTTE,royaltiesonexportstoAlbanianCustomsAdministrate,seventaxesandlevies97totheGeneralDirectorateofTaxesandlocal

97Royaltiesoninternalsales;profittaxes;VAT;socialandhealthinsurance;personalincometax;taxpenalties;taxondividend.



taxestolocalgovernments(2015EITIReport,p.80).

ThereportstatesthatAlbpetrolcontributedUSD9.7minoilandgasrevenuestothenationalbudgetin2015throughthepaymentofcorporateincometax,royaltytax,VATetc.(2015EITIReport,p.35).Table23providestheresultsofthereconciliationofcashpaymentsbyAlbpetroltothegovernmentin2015underthesevenrevenuestreams,98disaggregatedbyrevenuestream(2015EITIReport,p.95).However,itappearsthatAlbpetrol’sdividendtogovernmentin2015wasonlyunilaterallydisclosedthroughAlbpetrol’s2012,2013,2014and2015auditedfinancialstatementsinAppendix4(2015EITIReport,p.138),butnotreconciled.

The2015EITIReportdoesnotdiscloseanyotheradhoctransfersfromextractivesSOEstoorfromgovernment.

The2013-14EITIReportprovidesasimilarreconciliationofpaymentsfromoilandgascompaniestoAlbpetrolandfromAlbpetroltothegovernment(2013-14EITIReport,p.100-101),butonlythesameunilateraldisclosureofAlbpetrol’sdividendstogovernment.

StakeholderviewsTheJanuary2017EurosupportreportconfirmedthattherewerenoSOEsoperatingintheminingsectorinAlbania(Eurosupport,2017).WhileCSOMSGmembersaswellasseveralmediaanddevelopmentpartnerrepresentativesexpressedsignificantconcernoverthefinancialmanagementofAlbpetrol,noneofthestakeholdersconsultedmadeanyparticularcommentsonthecoverageofSOEtransactionsinthe2015EITIReport.TheIAandagovernmentrepresentativenotedthatAlbpetrolwasalsoentitledtopenaltypaymentsincaseswherePSAoperatorsbreachedtheobligationsoftheirworkprogrammes,theyconfirmedthattherewerenosuchpaymentsfromoilandgascompaniestoAlbpetrolin2015.TheIAexplainedthatthereportingtemplateshadaskedmaterialcompaniestoreportanyothermaterialpaymentstoSOEsbutthatnosuchpaymentswerereportedfor2015.TheIAalsoconfirmedthatitwasnotawareofanyothertransferfromAlbpetroltoanyothergovernmententitythanthosecoveredinthe2015EITIReport.

TheIMF’sJanuary2016fiscaltransparencyevaluationofAlbaniafoundthatthegovernmentdidnotpublishareportonthefinancesofpubliccorporations,althoughtheirfinancialstatementsareavailablefromtheNationalRegistrationCentrelikeallotherjoint-stockcompaniesandtransfersbetweenthegovernmentandSOEsarepublishedinthenationalbudget(IMF,2016).

Initialassessment

Whilethe2015EITIReportincludesareconciliationofoilandgascompanypaymentstoextractivesSOEs(Albpetrol)andofsomeofAlbpetrol’spaymentstogovernment,itonlyprovidesAlbpetrol’sunilateraldisclosureofitsdividendstogovernment,whicharenotreconciledwithMEDTTEreceipts.While

98Royalty–internalsales;VAT;profittax;paymentsforSIandHI;taxondividend;taxpenalties;otherpaymentstolocalgovernments.



Albpetrol’sdividendstoMEDTTEarematerial,theyaccountforonly0.57%ofgovernment’soilandgasrevenuesand0.39%ofrevenuesfromthemining,oilandgassectors.99However,theInternationalSecretariatunderstandsthatMEDTTE’sreceiptofAlbpetroldividendsaredisclosedintheannualbudgetexecutionreport,giventhatMEDTTE’srevenuesarerecordedinthenationalbudget(seeRequirement5.1).Inaddition,thefactthatAlbpetrol’sannualfinancialstatementsareaudited(seeRequirement4.9)providesahighdegreeofqualityassuranceforAlbpetrol’sunilateraldisclosureofitsdividendstogovernment.ItcanthusbearguedthatthebroaderobjectivesoftherequirementhavebeenmetdespitethelackofreconciliationofAlbpetrol’sdividendstogovernment.Therefore,theInternationalSecretariat’sinitialassessmentisthatAlbaniahasmadesatisfactoryprogressinmeetingthisrequirement.

Tostrengthenimplementation,theMSGisstronglyencouragedtoensurethatfutureEITIReportsincludeAlbpetrol’sdividendstogovernmentinthescopeofreconciliation.

Subnationaldirectpayments(#4.6)

DocumentationofprogressThe2015EITIReportdoesnotprovideadefinitionofmaterialityfordirectsubnationalpaymentsnordetailthedifferenttypesofdirectsubnationalpayments,anditisunclearwhetherLGUswereincludedinthescopeofreporting.ItisapparentfromthediagramofoilandgasrevenueflowsinSection8.1thatLGUscollectlocaltaxesdirectlyfromoilandgascompanies(2015EITIReport,p.79),butthediagramofminingrevenueflowsinSection8.2doesnotrefertoanyminingcompanypaymentstoLGUs(2015EITIReport,p.80).ThereportstatesthattheMSGrequiredmining,oilandgascompaniestoreportanydirectsubnationalpaymentofoverUSD5ktoLGUs(2015EITIReport,p.80).ThisthresholdforreportinglocaltaxeswasagreedattheMSG’s29July2016meeting.100TheMSGhadoriginallydecidedatits16October2015meetingtoincludefivemunicipalitiesinthescopeofreportingofdirectsubnationalpaymentsforthe2013-2014EITIReports.101Yetthe2015EITIReportalsostatesthat“whenlocaltaxesreportedwereabove50,000USD,thesewereselectedforreconciliationasmaterialpayments”(2015EITIReport,p.80).Thus,theselectionofpaymentstobereconciledappearstohavebeenbasedonreportingfrommaterialcompanies.

The2015EITIReportprovidescompanyreportingofdirectsubnationalpaymentsinoilandgas,butnotinmining.Thereportprovidesoilandgascompanies’reportingof“otherpaymentstolocalgovernments”ofLek158,688,000bothinaggregate(2015EITIReport,p.89)andtheresultsofreconciliationdisaggregatedforthethreereportingcompanies(2015EITIReport,p.110).Inaddition,Table23showsthatAlbpetrolpaidLek17.88min“otherpayments”tolocalgovernments(2015EITIReport,p.95).However,thereportdoesnotprovidetheresultsofminingcompanies’reportingof“otherpaymentstolocalgovernments”anddoesnotexplainwhetherthiswasduetoomissionsincompanyreportingortothelackofsuchpayments.Section11.2.2highlightsincompletereportingbyLGUs,notingthattheMSGonlyselected“afew”LGUsforreportingbasedon2015productiondatabyLGUprovidedbyAKBNand

99AccordingtoTable56ofthe2015EITIReport,AlbpetrolpaidLek49mtoMEDTTEindividendsin2015(2015EITIReport,p.138).AccordingtoTable1,totalgovernmentrevenuesfromoilandgaswereLek8590mandfrommining,oilandgaswereLek12,520m(2015EITIReport,p.14).100http://www.albeiti.org/multi-stakeholder-group/msg-meetings/year-2016/101http://www.albeiti.org/multi-stakeholder-group/msg-meetings/year-2015/



thatthereportingprocessdidnotincludeallLGUscollectingextractivesrevenues.ThereportnotesthatdespitecooperationbetweenAlbEITIandsomeLGUs,“theirreportingwasincompleteandcamewithsignificantdelays”(2015EITIReport,p.98).

StakeholderviewsTheIAhighlightedtheconstraintsontheMSG’sscopingworkinpreparingannualEITIreporting,giventheinabilitytoreceivefullunilateraldisclosurefromLGUsaheadofkeymaterialitydecisions.TheIAexplainedthatthedifferenttypesoflocaltaxesweresetintheLawonLocalTaxes(includingtaxonproperty,taxonimpactinfrastructure,taxonpublicspaceoccupationetc.),butthatnoneofthesewerespecifictocompaniesoperatinginthemining,oilandgassectors.TheIAexplainedthatcompanies“tendedtoaccount”fortheirpaymentsoflocaltaxestoLGUsonanaggregatedbasis.TheIAexplainedthatinformationonlocaltaxescollectedbyLGUswasnotpublicly-accessibleandwasnotsubjecttoannualfinancialaudits.TheIAnotedthatitwouldbepossibletorequestcompaniesandLGUstoreportlocaltaxesdisaggregatedbypaymentstream,butthatthishadnotbeendoneinthepast.TheIAconfirmedthatcasesforreconciliation,i.e.wheretheLGUwasrequestedtoreportlocaltaxrevenues,wereselectedbasedonpaymentsinitiallyreportedbycompanies,i.e.duringthedatacollectionstageratherthaninceptionphase.TheIAwasnotabletoconfirmthenumberofLGUstowhomreportingtemplatesweresentforthe2015EITIReport.ACSOMSGmembernotedthattheissueofreconciliationoflocaltaxeshadbeenraisedontheMSGbutthattheIAhadrespondedthatincludingLGUsinthescopeofreportingwouldhavecreatedworkinexcessofthescopeofworkintheIA’sToRs,onwhichtheIA’scontracthadbeensigned.ThisCSOrepresentativehighlightedtheimportanceoflocaltaxesforLGUs,whichweresignificantforlocalcommunitieseveniftheydidnotappearsignificantcomparedtootherrevenuescollectedbythenationalgovernment.

InitialassessmentTheInternationalSecretariat’sinitialassessmentisthatAlbaniahasmademeaningfulprogresstowardsmeetingthisrequirement.ItispossiblethatfurtherworkonthisissuewoulddemonstratethatthisrequirementisnotapplicableinAlbania,asitseemslikelythatsubnationalpaymentstoLGUsarenotmaterial.However,theMSGclearlyagreedtoincludesubnationalpaymentstoLGUswithinthescopeofthereportingprocess,notingthesignificanceofthesepaymentstolocalcommunities.Intheabsenceofcomprehensivegovernmentdata,theapproachadoptedbasedonselectingLGUsforreconciliationbasedoncompanydataappearsreasonable.However,thereappeartobesignificantgapsinthereportingfromcompaniesandintheparticipationofLGUs.

Inaccordancewithrequirement4.6,theMSGshouldundertakeappropriatescopingofdirectsubnationalpaymentsbyextractivescompaniestoLGUs,establishingacomprehensivebasisfortheMSG’smaterialitydiscussionsregardingdirectpaymentstoLGUs.TheMSGmaywishtoconsiderasamplingapproach,whichwouldallowthesepaymentstobeinvestigatedwithoutcreatinganunreasonablereportingburden.

Levelofdisaggregation(#4.7)


The2015EITIReportpresentsreconciledpaymentandrevenueinformationdisaggregatedbycompany



andrevenuestream(andbyextensionbyreceivinggovernmententity)foroilandgas(2015EITIReport,pp.108-110)andmining(2015EITIReport,pp.111-129).ThereportdetailsconstraintstoEITIreportingonaper-projectbasis,notingthattaxesandleviesarecalculatedataconsolidatedcompanylevel(forcompaniesholdingseverallicenses)andthatrevenue-collectingagenciesincludingtheTaxDepartment,CustomDepartment,LocalTaxDirectorates,LGUs,Ministriesandotherpublicentitiesonlyholdrecordsforeachcompany’sUniqueTaxIdentificationNumber(NUIS)(2015EITIReport,p.82).

Stakeholderviews

OneCSOMSGmemberstatedthattheMSGhadnotdiscussedtheissueofproject-leveldisaggregationforEITIreconcileddata.WhenaskedwhethertheMSGhadconsideredproject-levelreporting,theIAstatedthattheexercisewasnotpossiblegiventhatCompanyandTaxLawsdidnotrequirethecalculationoftaxliabilitiesonaper-projectbasis.TheIAnotedthatwhileroyalties“mightbetoacertainextent”calculatedonaprojectlevelintheoilandgassector,itcouldnotsaythesamefortheminingsector.TheIAstatedthatitwouldnotbefeasibleforthegovernmenttoreportonaper-projectbasisintheshortterm,giventhatthiswouldrequireamendmentstotheTreasury’sMISandfiscalreportingstructuregiventhatitcurrentlyonlyreceivedpaymentsidentifiedbycompanies’singletaxIDnumbersandbypaymentstream.TheIAconfirmedthatProfitTaxandothertaxeswereleviedonaconsolidatedcorporatebasis,whileonlyAKBNandAlbpetrolrequiredproductiondataandbonusestobereportedbyoilandgascompaniesdisaggregatedperlicense.However,theIAexpresseduncertaintyoverwhetherAKBNcalculatedminingcompanies'liabilitiesonaper-licensebasis.TheIAalsonotedthatsomecompaniesmightnotbepreparedtoreportonaper-licensebasis,giventhatsmallerandmid-sizedcompaniestendedtohavelessdevelopedmanagementandcostaccountingframeworks.TheIAconsideredthatitwouldtakeatleast“acoupleofyears”forAlbaniatotransitiontoproject-levelreporting,giventheneedforfeasibilityandimpactstudies,legalduediligence,potentiallegislativeandcontractualchangesandsufficienttimetoreformaccountinginformationsystemsandtheactualpracticesoffiscalagentsandcompanies.

Thefactthat626mininglicenseswereheldby527companieswouldseemtoimplythatatleastashareofminingcompaniesoperatedonlyasinglemine,whichisreflectedintheregisterofmininglicensesontheMEIandAlbEITIwebsites,whichincludesomecompanies’singletaxIDnumbers.

InitialassessmentTheInternationalSecretariat’sinitialassessmentisthatAlbaniahasmadesatisfactoryprogressinmeetingthisrequirement.The2015EITIReportpresentsreconciledinformationdisaggregatedbycompany,revenuestreamandgovernmententity.

Tostrengthenimplementation,theMSGmaywishtoconsidertheextenttowhichitcanmakeprogressinimplementingproject-levelEITIreportingofsector-specificleviesandtaxesaheadofthedeadlineforallEITIReportscoveringfiscalperiodsendingonorafter31December2018,agreedbytheEITIBoardatits36thmeetinginBogotá.



Datatimeliness(#4.8)


Albaniapublishedits2012EITIReportinNovember2014,its2013-2014EITIReportinDecember2015andits2015EITIReportinFebruary2017102,evenifthedraftpublishedontheAlbEITIwebsitestatesDecember2016.103The2015EITIReportconfirmsthereportingperiodtobethefiscalyearending31December2015(2015EITIReport,p.6).

Stakeholderviews

AllMSGmembersexpressedsatisfactionatthefactthatAlbaniahadensuredtimelierreportingthanduringtheperiodcoveredbyAlbania’sfirstValidation,undertheEITIRules.However,severalCSOsandjournalistsconsideredthatthedatawouldbemoreusefulifEITIReportswerepublishedwithinayearoftheendofthefiscalperiodunderreview.SeveralgovernmentrepresentativesechoedtheseconcernsoverthetimelinessofEITIreporting,consideringthattimelierEITIdatawouldbemoreeffectiveinsupportinginformedpolicy-makingandeffectivecommunicationstotheinvestorcommunity.OnegovernmentofficialaskedaboutthepossibilityofAlbEITIproducingquarterlyinterimreportsaheadoftheannualEITIReport.SeveralgovernmentandindustryrepresentativesnotedthatbothcompanyandgovernmentfinancialstatementswererequiredtobesubmittedbeforeJuneofthesucceedingyear,whichimpliedthatdatacollectioncouldbeginwithinsixmonthsoftheendofthefiscalperiodcovered.SeveralindustryrepresentativesbothonandofftheMSGcalledfortheintegrationofEITIreportingwithcompanies’mandatoryreportingrequirementstogovernment.SecretariatstaffhighlightedprovisionsofthedraftLawonAccountingandFinancialReporting,whichifenactedwouldintegratecompanies’EITIreportingintotheirstatutoryreportingrequirements(includingauditedfinancialstatements,whereapplicable)(seeRequirement4.9).

DuringthecourseoftheInternationalSecretariat’sstakeholderconsultationsforthisinitialassessment,itbecameclearthattheversionofthe2015EITIReportontheAlbEITIwebsite(inJune2017)wasdifferenttothatapprovedbytheMSGinFebruary2017andtotheversionpublishedontheAlbEITIwebsiteasofthecommencementofAlbania’sValidation,on1April2017.Followingexaminationofthetwoversions,theInternationalSecretariatfoundthattheupdatedversion(currentlyontheAlbEITIwebsite104)hadalteredtheresultsofreconciliation,mostnotablyinthefactthatunreconcileddiscrepanciesincreasedfromaroundLek1mintheoriginalversiontoLek14mintherevisedversion.SecretariatstaffandtheIAexplainedthattherevisionswereduetothelatearrivalofreportingtemplatesfromsomecompanies,whichhadalteredtheresultsofreconciliation.TheIAhadamendedthe2015EITIReportasitwaslayingoutthepublicationforprinting,buthadnothighlightedthechangestotheAlbEITISecretariat,accordingtosecretariatstaff.StaffexplainedthattheyhadonlyrealisedthediscrepancyduringthecourseoftheInternationalSecretariat’sValidationstakeholderconsultationsandthattheMSGwasnotyetawareofthediscrepancies.Thus,pagenumbersreferencedinthisinitialassessmentarenotinlinewiththe

102http://www.albeiti.org/year-2017/103http://www.albeiti.org/wp-content/uploads/2017/04/EITI-REPORT-2015_FINAL_ENG_FINAL.pdf104http://www.albeiti.org/wp-content/uploads/2017/04/EITI-REPORT-2015_FINAL_ENG_FINAL.pdf



versionofthe2015EITIReportontheAlbEITIwebsite,butareconsistentwiththeversionofthe2015EITIReportontheAlbaniapageoftheglobalEITIwebsite.105

InitialassessmentTheInternationalSecretariat’sinitialassessmentisthatAlbaniahasmadesatisfactoryprogresstowardsmeetingthisrequirement.AllofAlbania’sEITIReportsundertheEITIStandardhavebeenpublishedwithintwoyearsofthecloseofthefiscalyear(s)underreview.However,thefactthatthetimestamponthe2015EITIReportismarkedastwomonthspriortotheactualpublicationofthereport,andthefactthatasignificantlyrevisedversionofthe2015EITIReportwaspublishedwithoutMSGapproval(orknowledge)isaconcern.Inthefuture,anyupdatestotheEITIReportshouldbebroughttotheattentionoftheMSG.ThisisfurtherdetailedintheassessmentofMSGoversightabove(seeRequirement1.4).

Tostrengthenimplementation,theMSGmaywishtoliaisewithkeyrevenuecollectingagenciesandsectorregulatorstoexploremeansofembeddingdisclosuresofEITI-requiredinformationinroutinegovernmentsystemstoensuretimelierEITIreporting.

Dataquality(#4.9)


TermsofReferencefortheIndependentAdministrator:TheMSGapprovedtheToRsfortheIAofthe2015EITIReportviacircularon1March2016,havingreceivedthedraftToRsforcommenttwoweeksprior.106TheMSGhadapprovedtheIA’sToRsforthe2011-2012EITIReportson13February2014107andtheToRsforthe2013-2014EITIReportson14June2015.108TheToRsforthe2015EITIReportisgenerallyconsistentwiththeStandardToRsagreedbytheEITIBoard(asofMarch2016).109TheMSGfilledouttheannexesoftheToRsforthereconciliationoutliningitsinitialscopingdecisionsonmaterialityandqualityassuranceandtheToRsconfirmtheneedfortheMSGandIAtoagreematerialitythresholdsforselectingcompaniesandrevenuestreamsduringtheinceptionphase.

AppointmentoftheIndependentAdministrator(IA):FundedbyWorldBankgrantsthroughtheMulti-DonorTrustFund(MDTF),procurementoftheIAfollowedWorldBankprocurementguidelinesthroughcompetitivebidding,withtheAlbEITISecretariatactingastheprocuremententityforallcontracts.TheIA’sToRs,evaluationofbidsandselectionofthewinningbidwereallsubmittedtotheWorldBankfor“no-objection”foreachofthethreeprocurementprocessesforIAs(forEITIReportscovering2011-12,2013-14and2015-16).DeloitteAuditAlbaniawasthewinningbidderforallthreeprocurementprocessesforIAsundertheEITIStandard,coveringsixfiscalyears.Thefirstandthirdprocurementrounds(covering2011-12and2015-16)werebasedontheconsultant’squalification,whilethesecondround(2013-14)wasbasedonsingle-sourcerepeatprocurement.ThereisnoevidenceofMSGinvolvementintheevaluationandselectionofbiddersforthe2015EITIReportanditappearsthatthebidevaluation

105https://eiti.org/sites/default/files/documents/2015_albania_eiti_report.pdf106http://www.albeiti.org/multi-stakeholder-group/msg-meetings/year-2016/107http://www.albeiti.org/multi-stakeholder-group/msg-meetings/year-2014/108http://www.albeiti.org/multi-stakeholder-group/msg-meetings/year-2015/109SeecomparisonofToRsforthe2015EITIReportandtheBoard-approvedtemplateonthefollowingPDFcomparisonwebsite:https://draftable.com/compare/rrAWnAeZjPxY



committeeforthe2015-16EITIReportswascomposedexclusivelyofAlbEITIsecretariatstaff.BoththeWorldBankandtheMEIundertookpost-awardinternalauditsofgrantadministration,includingofprocurementoftheIA.Thedatesofkeystepsintheprocurementprocessareprovidedbelow,sourcedfromtheAlbEITISecretariat:

Description Method

MSG’sIAToRapproval

WorldBankNo-Objection

EOIAdvertisement

EvaluationReport

Bank'sNoObjection

ContractSigning

Companyname

ContractCompletion

IAfor2011-2012EITIReports CS-CQ

15-Mar-14

6-Mar-14 10-Mar-14 2-Apr-14

30-Apr-14

2-May-14

DeloitteAlbania

31-Oct-14

IAfor2013-2014EITIReports CS-SSS

2-Jun-15 - - - 3-Jul-15

14-Jul-15

DeloitteAuditAlbania

30-Nov-15

IAfor2015-2016EITIReports

CS-CQ6-May-16

14-May-16 19-May-16

18-Jun-16

13-Jul-16

18-Jul-16

DeloitteAuditAlbania

31-Dec-17

Source:AlbEITISecretariat.Reportingtemplates:ThereportingtemplateswereagreedbytheMSGinAugust2016(2015EITIReport,p.84).ThereportraisesconcernsoverthestructureofEITIreportingtemplates,whichwasagreedinMarch2011viaCMD233anddoesnotreflectthechangesintheEITIStandard,andrecommendstheirrevisioninlightofchangesintheEITIStandardandinthestructureoftheindustry(2015EITIReport,pp.104-105).TheIAranaworkshopforreportingentities,providingguidanceonfillingoutEITIreportingtemplates,on6September2016(2015EITIReport,p.85).

Reviewofauditpractices:The2015EITIReportprovidesasummaryoftheIA’sreviewofstatutoryauditproceduresforprivatecompaniesincludingthresholds110forstatutoryexternalaudits,thestatutoryauditrequirementforlimited-liabilitycompanies“electingtoreportunderIFRS”(althoughitisunclearwhetherLLCshavescopenottoreportunderIFRS),thestatutoryauditrequirementsforalljoint-stockcompaniesregardlessofsize,andtheexemptionfromstatutoryauditsforforeigncompanybranchesthatdonotreportunderIFRS(2015EITIReport,p.77).Thereportalsostatesthatindependentauditofoilandgasconcessionsandpublic-privatepartnershipperformanceisnotrequiredaspartofthestatutoryannualaudit(2015EITIReport,p.77).Thereportconfirmsthatstatutoryauditsofprivatecompaniesarebasedonlaws,regulationsandstandardsthatare“generallyacceptedinAlbania,includingInternationalStandardsonAuditing”(2015EITIReport,p.77).Intermsofactualauditpracticeformaterialcompaniesinthe2015EITIReport,thereportstatesthat“manylicensees”werenotrequiredtoundergoastatutory

110inlinewiththeLawonAuditno.10091of5March2009,namelythatalllimitedliabilitycompanies(Ltd.orSh.p.k)aresubjecttostatutoryaudits,asidefromsmallcompanies(definedasthosewithtotalassetsoflessthanLek40m,averageoflessthan30employeesandannualrevenuesoflessthanLek30m).



auditgiventheirformofincorporation,asbranchesofforeigncompanies,orsmallsize(2015EITIReport,p.97)butdoesnotprovideacomprehensivelistofreportingpracticesforeachofthematerialcompanies.Thereportdoesnotclearlycategorizethematerialcompaniesthatarelimitedliabilitycompanies,joint-stockcompaniesandbranchesofforeigncompanies.Thereportrecommends“followupandstrictapplication”offinancialreportingandauditingoffinancialstatementsofextractivescompanies(2015EITIReport,p.97).ThereportindicatesthatfinancialstatementsaresubmittedtotheNationalRegistrationCentre111by31Julyofthesubsequentcalendaryear(2015EITIReport,p.77)butdoesnotexplicitlystatewhetherallfinancialstatementsofmaterialcompaniesareavailablefromtheNRCwhererelevant.

Intermsofstatutoryauditproceduresforgovernmententities,the2015EITIReportprovidesasummaryoftheIA’sreviewincludingacursorydescriptionoftheSupremeStateAuditor(2015EITIReport,pp.77-78).ThereportprovidesalinktotheOfficeoftheSupremeStateAuditor112,whereinformationonauditstandardsandguidelinesisavailable,andconfirmsthatAlbanianauditingstandardsareinlinewithINTOSAIstandards(2015EITIReport,p.78).ThereportdoesnotstatewhethertheSupremeStateAuditor’sreportfor2015wasprovidedtotheIAinpreparationofthe2015EITIReport,althoughitappearsthatallgovernmentprovidedcopiesoftheirauditedfinancialstatementstotheIAasidefromAKBN(2015EITIReport,p.86).

Assurancemethodology:Whilethe2015EITIReportstatesthat“nospecialauditrequirementswereimposedwithregardtothenumbersreportedunderEITI”(2015EITIReport,p.77),itappearsbasedontheresultsofdatacollectionthatgovernmententitiessuchasAlbpetrol,KESHandAKBNwereaskedtoprovidetheIAwithcopiesoftheir2015auditedfinancialstatements(2015EITIReport,p.86).Materialcompanieswereaskedtosubmitcertificationlettersfromtheirexternalauditorsattestingthatthecompany’sEITIreportingwas“comprehensiveandconsistentwiththeirauditedfinancialstatements”(2015EITIReport,p.86).Reportingtemplatesfromallreportingentities,includingbothcompaniesandgovernment,wererequiredtobesignedbyahigh-levelofficial,“attestingthatthatthecompletedreportingformisacompleteandaccurate”(2015EITIReport,pp.86,92).ItappearsbasedontheresultsofdatacollectionthattheIAattempted,unsuccessfully,tocomparegovernmentEITIreportingtemplateswithpublishedannualaccounts,whichwasnotpossibleduetothelackofdisaggregationbyrevenuestreamsofpublisheddatafromtheGeneralDirectorateofTaxesandtheAlbaniaCustomDirectorate(2015EITIReport,p.86).

Cashvsaccrual:The2015EITIReportdoesnotclearlystatewhetherEITIreportingwasundertakenonacashoraccrualaccountingbasis.Oneofthemaincausesfordiscrepanciesinthereconciliationofoilandgasrevenuesishighlightedas“partiesreportedaccrualsversuscashflows”,implyingthatEITIreportingwasonacashbasis(p.90).Yetthebasisforreportingremainsunclearinthe2015EITIReport.Forinstance,thereportingofsubnationaltransfersof2015royaltiesinTable15includestransfersrelatingto2015royaltiesthatwereexecutedin2016,i.e.onanaccrualbasis(2015EITIReport,p.76).

Confidentiality:The2015EITIReportdoesnotrefertoanymechanismestablishedbetweentheMSGandtheIAtoensuretheconfidentialtreatmentofEITIreportingpre-reconciliation.However,thereportdescribeschallengescausedbyconfidentialityprovisionsofthetaxandcustomscodes,whichprevent

111www.qkr.gov.al112http://www.klsh.org.al/



disclosureofcompanypaymentinformationwithoutwrittencompanyconsent(2015EITIReport,p.104).WhilethereportdescribesthetaxconfidentialitywaiverdevelopedforthepurposesofEITIreporting,itstatesthat“lessthan50”ofthe134materialcompaniesprovidedthesignedofficialwaivers(2015EITIReport,p.104).Thereportdoesnotprovideacomprehensivelistofcompaniesthatprovidedthesignedtaxconfidentialitywaivers,nordescribetheimplicationsofthelackofwaiversfromthemorethan84materialcompaniesforthegovernment’sabilitytodiscloserevenueinformationdisaggregatedbycompanyandrevenueflow.

Inaddition,theIA’srecommendationfortheMSGtoaskreportingentitiestoagreewithregionaltaxofficestheamountoftaxespaidfortheyearunderreviewpriortosubmittingtheirEITIreportingtemplatesisaconcern(2015EITIReport,p.97),asthiswouldseemtounderminetheindependenceofthereconciliationprocess.

Reconciliationcoverage:Whilethe2015EITIReportdoesnotprovidethetotalcoverageofreconciliation,itstatesthattheselectionofmaterialminingcompaniesprovidedareconciliationcoverageof89%of“estimatedminingproductionvaluein2015”(2015EITIReport,p.81),notasashareoftotalgovernmentrevenues.GiventhatalloilandgascompaniesoperatinginAlbaniawereincludedinthescopeofreporting,itcanbeinferredthatthereconciliationcoverageofsector-specificoilandgasrevenueswas100%.

Assuranceomissions:The2015EITIReportstatesthateightoutofninereportingoilandgascompanies(2015EITIReport,p.90)andfourofthe104reportingminingcompanies(2015EITIReport,p.92)submitted“officiallysigneddeclarationsandauthorizationsforpublicationofdata,besidetheelectronicdeclarationssubmittedearlierviaemail”(2015EITIReport,pp.90,92).However,thereportstatesthatnoneofthe122reportingcompanies(outof134materialcompanies)providedtherequestedletterfromtheirexternalauditorsandthatonly15companiesprovidedsign-offfromaseniorofficial(2015EITIReport,p.86).ThereportfurtherexplainsthattheIA“understands”thattherequestforexternalauditorcertificationcomeswithadditionalcostsandrecommendsthattheMSGincludecertificationofEITIreportingincompanies’usualauditsandthatallcompaniesbesubjecttoauditregardlessoftheirlegalform(2015EITIReport,pp.86,97).

ThereportalsostatesthatAKBNdidnotprovidetheirauditedfinancialstatementsandthatitwasnotpossibletoreconcilegovernmentEITIreportingwithfinancialstatementsforAlbpetrol,AKBN,theGeneralDirectorateofTaxesandtheAlbaniaCustomDirectorateduetothelackofdisaggregationintheirannualaccounts(2015EITIReport,p.86).Thereportdoesnotclarifywhetheranyofthereportingtemplatesfromgovernmententitieswereaccompaniedwithcertificationlettersfromhigh-levelofficials.

Thereportdoesnotidentifythe15companiesthatprovidedmanagementcertificationlettersanddoesnotassessthematerialityofomissions,includingfromAKBN.

Datareliabilityassessment:The2015EITIReportprovidesacursoryoverviewoftheworkperformedbytheIAincludingdatacollection,reconciliation,compilationofcontextualinformation,draftingofrecommendations(2015EITIReport,pp.9,83-87).ThereportalsoincludestheIA’sclearrenunciationofassuranceonthecomprehensivenessoraccuracyofthereport:



“Thisprocess[EITIreporting]doesnotconfirmthattherewerenootherpaymentsmadetothegovernmentotherthanthosethatwerereported,assuchamountsmayhavebeenomittedinthereportingfromlicenseesandgovernmentalagenciesatthesametime.Thecurrentregulationsdonotrequireustoperformdetailedtestinginordertouncoversuchomissions;andtouncovertheseomissionswouldbedifficulteventhroughdetailedtestingofalllicensees.”(2015EITIReport,p.87)

Sourcingofinformation:Allcontextualinformationappearsclearlysourcedinthe2015EITIReport.ThereportdoesnotappeartoincludecommentsfromstakeholdersasidefromtheIA.ThereportalsoprovidesalistofsourcedocumentsonwhichtheIA’spreliminarycollectionofcontextualinformationwasbased(2015EITIReport,p.84).

Summarydata:TheIAappearstohavepreparedsummarytablesofEITIdatainlinewithprovision5.3oftheToRsforthe2015EITIReport,availableontheAlbaniaEITInationalwebsite113andontheAlbaniapageoftheglobalEITIwebsite.114

Recommendations:Thereportdoesnotreviewfollow-uponrecommendationsfrompreviousEITIReportsorValidation.

Chapter11presents14recommendationsfromthe2015EITIReport,includingamajorityofrecommendationslinkedtobroaderreformsinthemining,oilandgassectorsaswellasinpublicfinancialmanagement(2015EITIReport,pp.96-105).

The2013-14EITIReportprovidesanoverviewofstatutoryauditproceduresforgovernmentandcompanies(2013-14EITIReport,p.72),butnotofactualpracticefortheperiodunderreviewnoranyreformsplannedorunderway.Asinthesubsequent(2015)EITIReport,only15reportingcompaniesprovidedsign-offfromaseniorofficialandnoneprovidedlettersfromtheirexternalauditors(2013-14EITIReport,p.83).Likewise,AKBNdidnotprovidecopiesoftheirauditedfinancialstatements(2013-14EITIReport,p.18).TheIAdidnotassessthematerialityofpaymentsfromnon-complyingentities,norprovideanyassuranceregardingthereliabilityofdatareported.

Stakeholderviews

IAprocurement:AllMSGmembersconfirmedthatwhiletheAlbEITISecretariatpreparedafirstdraftoftheIA’sToRs,MSGmembersprovidedinputtothedraftToRsandapprovedthemannually.SeveralCSOMSGmemberswerehighlycriticaloftheIAprocurementprocess,notingthatneithercivilsocietynorindustryrepresentativehadbeenrepresentedonthebidevaluationcommitteesinceprocurementofthe2010EITIReport.Notingthattherehadbeensignificantinterestfrombiddersforthatreport,witharoundtenbids,oneoftheCSOsvoicedallegationsofpotentialcollusionbetweenthesuccessfulbidderforsubsequentreports(Deloitte)andseniorgovernmentofficials,albeitwithoutprovidingspecificevidence.AseniorgovernmentofficialconsideredthatCSOconcernsoverprocurementoftheIAhadbeenaddressedandnotedthatsuchdemandsmayhavebeenlinkedtoCSOs’desiretoreceivepaidcontractsforEITIactivities.SecretariatstaffconfirmedthattheMSGwasnotbriefedonprogressinprocuringtheIA

113http://www.albeiti.org/en/114https://eiti.org/albania#revenue-collection



betweenthetimetheyapprovedtheIA’sToRsandthesigningoftheIAcontract.SecretariatstaffhighlightedthattheWorldBank’sgrantagreementwiththegovernmentexplicitlystatedthattheAlbEITISecretariatwastheprocuremententityandthatitwasthusitssoleresponsibilitytoevaluatebids,notingthattheinclusionofMSGmembersonthebidevaluationcommitteeforthe2009and2010EITIReportswaspurelyhonorific.InresponsetoCSOs’allegationsoffinancialmismanagement,SecretariatstaffhighlightedthattheIAprocurementprocesswascontrolledbyfourauditsandthattheAlbEITIwebpageprovidedallnecessaryinformationonAlbEITIfinances,includingauditreports.TheIAstatedthatitwasnotawareofanystakeholdercommentsontheIAprocurementprocessandwassatisfiedwiththeprocess.Despiteconcernscitedabove,allMSGmembersconsulted,includingfromcivilsociety,expressedconfidenceintheprofessionalismofDeloitteAlbaniaastheIA.

Reportingtemplates:WhileaCSOMSGmemberstatedthatthereportingtemplateswereoriginallyagreedin2011andneverre-examinedinpreparationofsubsequentEITIReports,severalgovernmentandindustryMSGmembersconfirmedthatthedraftreportingtemplateswereapprovedaspartoftheMSG’sreviewoftheinceptionreporteveryyear.TheIAexplainedthatwhiletheDecisionoftheCouncilofMinisters(DCM)233ofMarch2011hadapprovedthecontentofEITIreportingtemplates,ithadnotbarredtheMSGfromincludingadditionalelementsinsubsequentreportingtemplates,astheMSGhaddoneforinstancebyincludingbeneficialownershipinformation.Rather,DCM233wasforenforcementpurposesfollowingtheinclusionofmandatoryreportingrequirementsintheMiningandHydrocarbonsLaws,sinceitapproveddatapointsthatmining,oilandgascompanieswererequiredtoreporttoEITI.TheMSG’sadditionstothereportingtemplatesapprovedbyDCM233werethusnotenforceablebylaw,accordingtotheIA.TheIAhighlightedthatthedraftLawonTransparencyinPublicAdministrationswouldallowAlbEITItoaddmandatoryreportingrequirementstoreportingtemplatesthroughsecondaryimplementingregulations.

Auditpractices:Intermsofcompanies’auditpractices,theIAconfirmedthatwhile“themajority”ofmining,oilandgascompaniesweresubjecttostatutoryaudits,withfinancialstatementspreparedonanaccrualaccountingbasis,smallercompaniestypicallydidnothaveauditedfinancialstatements.TheIAexplainedthatwhileithadundertakenareviewofstatutoryauditproceduresforextractivescompaniesduringtheinceptionphaseofthe2015EITIReport,ithadnotreviewedindetaileachmaterialcompany’sactualauditpracticesfor2015priortodatacollection.Rather,ithadrequestedcopiesofmaterialcompanies’auditedfinancialstatementsaspartofthedatacollectionandhadreceivedthesestatementsfromsome,butnotall,reportingcompanies.TheIAemphasisedtherecommendationinthe2015EITIReporttostrengthenenforcementofstatutoryauditrequirements.Therewasconsiderableconfusionoverwhethercompanies’auditedfinancialstatementswerefreelyavailabletothepublic,withseveralgovernmentrepresentativesandSecretariatstaffconfirmingthattheauditedfinancialstatementswereaccessiblefreeofchargeontheNRCwebsite,whileseveralmediaandcivilsocietyrepresentativesconsideringthatthesewereonlyavailableuponrequestfromtheTaxDepartment,whichnormallydidnotreleasethemtothepublic.Uponinvestigation,theInternationalSecretariatconfirmedthatcompanies’auditedfinancialstatementswereavailableontheNRCwebsite115(forcompaniesthatarerequiredtoundertakesuchstatutoryaudits),althoughtheprocessforaccessingthemconsistedof

115http://www.qkr.gov.al/



severalstepsthatwerenotclearlyexplainedonthewebsite.116NeitherSecretariatstaffnortheIAhadconsideredprovidingguidancetothepublicontheprocessforaccessingauditedfinancialstatementsbutconsideredthiscouldbeavalue-addedprovidedbyAlbEITIinfuture.

Withregardstogovernmentauditpractices,theIAnotedthatgovernmententitiesdidnotpublishfinancialstatementsshowingrevenuesdisaggregatedbyindustryorrevenuestreamanddidnotundergoannualfinancialaudits.Ratherthanfinancialaudits,theIAandgovernmentrepresentativesconfirmedthattheOfficeofSupremeStateAuditorundertookonlyperformanceandcomplianceauditsofgovernmententitiesinlinewithINTOSAI’sISSAI400117onFundamentalPrinciplesofComplianceAuditingforcomplianceandISSAI300118onFundamentalPrinciplesofPerformanceAuditingforperformancerespectively.

TheIAnotedthatitwasnotpossibleforittorevieweachgovernmententity’sactualauditpracticesfortheyearunderreviewduringtheinceptionphaseforthe2015EITIReport,giventhelackoffinancialaudits.RepresentativesfromtheOfficeoftheSupremeStateAuditorconfirmedthattheyhadneverinteractedwithAlbEITIpriortotheInternationalSecretariat’sValidationstakeholderconsultations.GovernmentrepresentativesexplainedthatsummariesofSupremeStateAuditorreportswereavailableontheinstitution’swebsite,includingannualreports119,quarterlyreports120andtheSupremeStateAuditor’sproceduresmanual121,althoughthelatestsummaryreportsavailableintheEnglishlanguagedatefrom2011.122Bylaw,thefinalaccountsaretobesubmittedtotheSupremeStateAuditorbyMay30thoftheyearfollowingthereportingperiod,withtheauditorreportingtoParliamentinSeptemberandpresentingitsannualauditreporttoParliamentinMarchofthesubsequentyear(WorldBank,2012).ThegovernmentrepresentativesconfirmedthattheSupremeStateAuditoralsoundertookperformanceauditsofAKBNand,since2015,Albpetrol.Severalrepresentativesfromgovernment,media,civilsocietyanddevelopmentpartnershighlightsensationalfindingsofpastSupremeStateAuditreports,whichincludedallegationsoffinancialmismanagement.However,severaldevelopmentpartnersandgovernmentrepresentativesexpressedconcernatthepoliticisednatureofsuchaudits.SeveralrepresentativesfromgovernmentanddevelopmentpartnershighlightedsupportforreformsoftheSupremeStateAuditorfromtheOECDandEUundertheSIGMAprogramme123,underthesixthpillarofAlbania’sPFMreformsrequiredaspartofitsEUaccessionprocess.WhileAlbania’s2017Publicexpenditureandfinancialaccountability(PEFA)assessmentwasbeingpreparedatthetimeofValidationstakeholderconsultations,Albania’slatestPEFAassessment(from2011)notedthatwhiletheSupremeStateAuditorauditedthegovernment’srevenues,expenditures,financialassetsandliabilities,itdidnotyetexpressanoverallopiniononasetofconsolidatedfinancialstatements(WorldBank,2012).The2011PEFAassessmentalsonotedreformsininternalaudits,withthecreationofasmallinspectionunitwithintheMOFtotakeovertheinvestigationofareassuspectedofcorruptorfraudulentactivities(WorldBank,

116Inordertoaccessacompany’sauditedfinancialstatements,itisnecessarytofirstsearchforthenameofthecompanyontheNRCwebsite,clickon“downloadhistoricalextracts”inordertodownloadaPDFwithhyperlinkstoallhistoricaldocuments(intheAlbanian-language)andnavigatetotherequiredauditedfinancialstatement(“BilanciKontabël”)inordertodownloadanotherPDFwiththedesiredauditedfinancialstatements.117http://www.intosai.org/issai-executive-summaries/view/article/issai-400-fundamental-principles-of-compliance-auditing.html118http://www.intosai.org/issai-executive-summaries/view/article/issai-300-fundamental-principles-of-performance-auditing.html119http://www.klsh.org.al/web/Raporte_Auditimi_Rregullshmerie_1770_1.php120http://www.klsh.org.al/web/Buletini_i_Auditimeve_80_1.php121http://www.klsh.org.al/web/Standarde_dhe_Manuale_1328_1.php122http://www.klsh.org.al/web/raporti_buxh_2011_ang_328.pdf123http://www.sigmaweb.org/countries/albania-sigma.htm



2012).Theassessmenthighlighteddonor-supportedreformsincludingrevisionstotheStateSupremeAuditInstitutionauditlawtocomplywithinternationalstandards,preparationofanauditopiniononthegovernment’ssummaryfinancialstatementsandharmonisationofexternalauditswiththenewPublicInternalFinancialControl(PIFC)controlsystem,withtheaimofincreasingtheshareoffinancialauditsto50%oftotalannualauditsperformedoverthemediumterm(WorldBank,2012).

Severalgovernmentrepresentativesexplainedthatthegovernment’saccountingsystemswereforthemostpartcash-based,althoughthereweresomecasesofaccrual-basedaccounting.TheseofficialsexplainedthatAlbania’sgoalwastotransitiontoafullyaccrual-basedaccountingsystem,althoughnofixedtimeframehadyetbeensetforthisreform.TheIAconfirmedthatEITIreportingwasalwayscash-based.

EITIqualityassurance:Withregardstoqualityassuranceforcompanyreporting,theIAnotedthatcompanyadherencetoEITI-specificqualityassuranceprocedureshadbeenaweaknessoftheprocesshistoricallyandhighlighteditsrepeatedrecommendationforcompaniestoincludecertificationoftheirEITIreportingtemplatesaspartoftheirroutineannualaudittoreduceadditionalcosts.StakeholdersfromallconstituenciesrecognisedthatthishadalreadyprovedakeychallengeinAlbania’sfirstValidation,undertheEITIRules.Severalindustryandgovernmentrepresentatives,aswellasSecretariatstaffandtheIA,highlightedconsistentcomplaintsfromreportingcompaniesovertheperceptionthatcompanieswerealreadybeingover-burdenedbystatutoryreportingandcompliancerequirements.Aseniorgovernmentofficialreferredtoindependentstudiesthatfoundthatcompaniesspentanaverageof774hoursayeartocomplywithgovernmentregulations.Severalstakeholdersfromgovernmentandindustryalsoconsideredtherequirementforcertificationofcompanyreportingtemplatesfromahigh-levelcompanyofficialasaformofover-burdening,consideringthatthereconciliationprocessitselfprovidedsufficientqualityassuranceforEITIreporting.SeveralindustryrepresentativescalledfortheintegrationofEITIreportingincompanies’statutoryreportingrequirementstogovernment,acallthatgovernmentrepresentativesandSecretariatstaffsaidhadbeenaconsistentdemandfromcompaniesinpastEITIReports.SecretariatstaffandseveralgovernmentrepresentativeshighlightedprovisionsofthedraftLawonAccountingandFinancialReporting,whichwouldintegrateauditorcertificationofcompanies’EITIreportingtemplatesaspartoftheirroutineaudits.

Anindependentauditorestimatedthatthecostofsecuringaletterfromtheexternalauditorwasroughlyafifth(20%)ofthecostoftheirstatutoryannualaudits(evenifpreparedaspartofthecompany’sroutineannualaudit),whichrangedfromEUR1ktoEUR70kdependingonthecompany’ssize.Therewassomeconfusionoverwhetheranyofthereportingcompaniesinthe2015EITIReporthadactuallyprovidedaletterfromtheirexternalauditors,withSecretariatstaffconsideringthatthelargercompanieshadprovidedthiscertification,althoughallstakeholdersconfirmedthatthe2015EITIReportclearlystatedthatnoneofthereportingcompanieshadprovidedsuchlettersatthetimeofpublicationofthe2015EITIReport.Noneofthestakeholdersconsulted,includingMSGmembers,couldexplainwhytheMSGhadagreedthesamequalityassuranceproceduresforreportingcompaniesineverysuccessiveEITIReport(i.e.acertificationletterfromtheexternalauditor),whennoneofthereportingcompanieshadevercomplied.TheIAconfirmedthatitwasnotpossibletoreconcilecash-basedEITIreportingwithcompanies’accrual-basedauditedfinancialstatements.

Withregardstoqualityassuranceforgovernmentreporting,severalgovernmentrepresentatives



consideredthatthegovernment’sdisclosureswerereliablegiventhatreportingentitieshadprovidedastatementthattheEITI-reporteddatawasofficialgovernmentdata.However,theIAnotedthattherewasnoqualityassuranceforgovernment’sEITIreportinggiventhelackoffinancialauditsofgovernment’sextractivesrevenue.RepresentativesfromtheOfficeoftheSupremeStateAuditorconfirmedthattheywerenotinvolvedinthecertificationofgovernment’sEITIreporting.

Despitethelackoffinancialauditofgovernmentextractivesrevenues,theIAexplainedthatallextractivesrevenuesasidefrombonusesandshareofoilunderPSAswerefiscalpaymentscollectedbythemainfiscalagents,i.e.theTaxandCustomsDepartments.TheIAnotedthatallfiscalpaymentswererecordedintheTaxandCustomssystemswhenpaidandthatindividualtaxpayerscouldundertakeareconciliationbetweentheirpaymentsandthefiscalagents’receiptsonareal-timebasisthroughthededicatedtaxportal.Inaddition,crudeoilandmineralscouldnotbeexporteduntilcompanies’royaltypaidtoCustomswaspaidandreconciled.Thus,theIAconsideredthattheriskofanytaxpaymentbeingmadebyacompanybutnotrecordedinthefiscalagents’systemswas“verylow”,aswasthelikelihoodofacompanyreportingpaymentsinexcesstothosereceivedbythefiscalagents.

Confidentialitywaivers:TheIAandSecretariatstaffexplainedthatinordertocircumventtheconfidentialityprovisionsofAlbania’sTaxCode,AlbEITI(asagovernmententityitself)hadsignedanMoUwithgovernmententitieswaivingtaxconfidentialityprovisionsforgovernmentreportingtoAlbEITI.Thus,theinitialdatacollectionfromgovernmententitieswasundertakenviaemailsfromeachgovernmententitytotheAlbEITISecretariat,withacopytotheIAwhothenfollowedup.Whilethecompanyreporting,templatesincludedataxconfidentialitywaivertoallowforpublicationofindividualtaxpayerdata,theIAandSecretariatstaffexplainedthatoverhalfofthereportingcompanieshadnotprovidedasignedwaiver.TheIAnotedthatitcontinuedtoreceivesuchwaiversfromreportingcompaniesafterthe2015EITIReportwaspublished,with“lessthan”60companiesprovidingthissignedwaiveratthetimeofValidationstakeholderconsultations,upfromthe“lessthan50”mentionedinthe2015EITIReportitself.TheIAandSecretariatstaffhighlightedprovisionsofthedraftLawonTransparencyinPublicAdministrationswouldwaivetaxconfidentialityprovisionsforEITIreportingpurposesandremovetheneedforcompaniestosigntaxconfidentialitywaivers.

Datareliability:TheIAandseveralgovernmentrepresentativesexplainedthatthedetailednatureoftheannualEITIreconciliation,whichwasperformedonaper-transactionbasis,providedassurancefortheaccuracyandexistenceofreconciledpaymentsbuthighlightedthatthereconciliationprocedurecouldnotensurethecompletenessofreconciledinformationifbothpartiestothetransactiondidnotreportcertainpayments.TheIAalsoconfirmedthatithadrequestedcopiesofreceiptsfromreportingentitiesincasesofdiscrepancies.TheIAandseveralgovernmentrepresentativesconsideredthattheauditenvironmentinAlbaniawas“better-known”andmorestrictlyfollowedthaninotherEITI-implementingcountries,notingthatthislessenedtheneedforarobustqualityassuranceproceduresforEITIreporting.However,theIAdefendeditsexplicitdisavowalofanassessmentofthecomprehensivenessandreliabilityofdatainthe2015EITIReportonthegroundsthattherewasnoqualityassuranceforgovernment’sfinancialstatementsortheprocessforcompilingfinancialaccounts.TheIAsaidthatitwasnotpossibletoprovideanestimateofthereconciliationcoveragegiventhelackofcomprehensivefiguresontotalgovernmentextractivesrevenues(seeRequirement4.1),butconsideredthatthecoveragewas“likelyquitehigh”giventhatmostofthelargecompanieshadreported.



However,allstakeholdersconsulted(fromallconstituencies)consideredthatthedatainAlbania’sEITIReportswasreliableandthattheissueofqualityassuranceforEITIdatawasnotasignificantissuefortheMSG,orforAlbaniaasawhole.SeveralgovernmentrepresentativesconsideredthatthequalityofdatainEITIReportshadimprovedovertimegiventhatthevalueofaggregatediscrepancieshadconsistentlydeclined.

Recommendations:SecretariatstaffconsideredthattheMSGdidnothavehigh-qualitydiscussionsofdraftrecommendationsaheadofpublicationoftheEITIReports.However,aseniorgovernmentofficialnotedthatEITIrecommendationswerealwaysdiscussedbytheMSGfollowingpublicationoftheEITIReportandSecretariatstaffexplainedthattheMSGestablishedspecificadhocworkinggroupstofollowuponspecificEITIrecommendations.SeveralgovernmentrepresentativesandtheIAnotedfollow-uponpastEITIrecommendationsrelatedtothequalityofofficialproductionfiguresandthefactthattheIAhadbeenprovidedwithcompanies’singletaxIDnumbersinpreparingthe2015EITIReportforthefirsttime(seeRequirement7.3).TheIAnotedthatmostoftheEITIrecommendationswerethesameeveryyearandwereonlyupdatedasnecessary.TheIAwelcomedtheInternationalSecretariat’squestionsconcerningfollow-uponpastEITIrecommendationsandstatedthatitintended,inthe2016EITIReport,todisclosetheyearwheneachpastEITIrecommendationhadoriginallybeenmade,theMSG’sactionplanrelatedtoeachrecommendationandanysubsequentupdates.

Initialassessment

TheInternationalSecretariat’sinitialassessmentisthatAlbaniahasmademeaningfulprogresstowardsmeetingthisrequirement.TheMSGappearstohaveapprovedtheselectionoftheIAforthe2015EITIReport,includingaToRsconsistentwiththeBoard-approvedtemplate,aswellasthereportingtemplates.WhiletheIAappearstohavereviewedmaterialentities’statutoryauditprocedurespriortoagreeingqualityassuranceproceduresforensuringthereliabilityofreconcileddatainthe2015EITIReport,thereisnoevidencethattheIAreviewedreportingentities’actualauditpractices.ItisunclearwhytheindustryMSGmembersapprovedqualityassuranceproceduresthatnocompanyfollowedinpractice.The2015EITIReportdoesnotassessthesignificanceofreportingfromentitiesthatdidnotcomplywiththeagreedqualityassuranceprocedures.ThelackofanyassurancefromtheIAonthecomprehensivenessandreliabilityofreconcileddataisaconcernandrepresentsadeviationfromtheIA’sToRsforthe2015EITIReport.TheIAhaspreparedsummarytablesofdataintheAlbania’sEITIReports.

InaccordancewithRequirement4.9.a,theEITIrequiresanassessmentofwhetherthepaymentsandrevenuesaresubjecttocredible,independentaudit,applyinginternationalauditingstandards.Inaccordancewithrequirement4.9.b.iiiandthestandardTermsofReferencefortheIndependentAdministratoragreedbytheEITIBoard,theMSGandIndependentAdministratorshould:

a. examinetheauditandassuranceproceduresincompaniesandgovernmententitiesparticipatingintheEITIreportingprocess,andbasedonthisexamination,agreewhatinformationparticipatingcompaniesandgovernmententitiesarerequiredtoprovidetotheIndependentAdministratorinordertoassurethecredibilityofthedatainaccordancewithRequirement4.9.TheIndependentAdministratorshouldexercisejudgementandapplyappropriateinternationalprofessionalstandardsindevelopingaprocedurethatprovideasufficientbasisforacomprehensiveandreliableEITIReport.TheIndependentAdministratorshouldemployhis/herprofessionaljudgementtodeterminetheextentto



whichreliancecanbeplacedontheexistingcontrolsandauditframeworksofthecompaniesandgovernments.TheIndependentAdministrator’sinceptionreportshoulddocumenttheoptionsconsideredandtherationalefortheassurancestobeprovided.





Table4-Summaryinitialassessmenttable:Revenuecollection



Comprehensiveness(#4.1)

The2015EITIReportincludestheMSG’sdefinitionofthematerialitythresholdsforpaymentsandcompaniestobeincludedinreconciliationbasedonproductionvolumes,includingajustificationforwhythethresholdsweresetinthiswayandatthislevel.However,thesettingofaqualitativeratherthanquantitativethresholdforselectingmaterialrevenuestreams(asashareofgovernmentrevenuesforinstance)isaconcern.Thecompaniesthatdidnotreportarenamedandthevalueoftheirpaymentstogovernmentisprovidedrelativetogovernment-reportedrevenues.Theshareofnon-reportingcompaniesappearstobeinsignificant.The2015EITIReportdoesnotexplicitlystatewhetherallmaterialgovernmententitiesreportedallrevenues,althoughstakeholderconsultationsconfirmedthatallnationalgovernmententitieshadfullyreportedandthatomissionsfromlocalgovernmentswerenotconsideredmaterial.WhilethecommentaryfromtheIAonthecomprehensivenessoftheEITIReportislimitedtoastatementonthelackofassurances,itispossibletocalculatethematerialityofomissions.


In-kindrevenues(#4.2)

The2015EITIReportreconcilescrudeoilvolumescollectedunderPSAs,disclosescrudeoilvolumessoldandthevalueofproceedsfromcrudeoilsales,disaggregatedbybuyer.Thereportprovidesvolumescollected,volumessoldandsalesproceedsforboththeshareofoilproductionunderPSAsaswellasAlbpetrol’sequityoil,albeitwithoutdisaggregationbetweenthetwo.WhilethereisacaseforconsideringthatAlbaniahasgonebeyondtheminimumrequirementbydisclosinginformationonthesalesofAlbpetrol’sequityoil,theInternationalSecretariat’sinitialassessmentis




thatAlbaniahasmadesatisfactoryprogressinmeetingthisrequirementgiventhelackofdisaggregationbetweenthestate’sin-kindrevenuesandAlbpetrol’sequityoil.

Barterandinfrastructuretransactions(#4.3)

TheInternationalSecretariat’sinitialassessmentisthatthisrequirementisnotapplicabletoAlbaniaintheyearunderreview(2015).However,the2015EITIReport’slackofcommentontheMSG’sconsiderationofRequirement4.3isaconcern.

Transportrevenues(#4.4)

TheInternationalSecretariat’sinitialassessmentisthatthisrequirementisnotapplicabletoAlbaniaintheyearunderreview(2015).The2015EITIReportdescribesinfrastructuralarrangementsforthetransportationofcrudeoil,butnotofnaturalgasorminerals.However,theInternationalSecretariatunderstandsthatthegovernmentandSOEsdonotreceiveanyrevenuesfromthetransportationofminerals,crudeoilornaturalgas.

TransactionsbetweenSOEsandgovernment(#4.5)

Whilethe2015EITIReportincludesareconciliationofoilandgascompanypaymentstoextractivesSOEs(Albpetrol)andofsomeofAlbpetrol’spaymentstogovernment,itonlyprovidesAlbpetrol’sunilateraldisclosureofitsdividendstogovernment,whicharenotreconciledwithMEDTTEreceipts.WhileAlbpetrol’sdividendstoMEDTTEarematerial,theyaccountforonly0.39%ofgovernmentrevenuesfromthemining,oilandgassectors.However,theInternationalSecretariatunderstandsthatMEDTTE’sreceiptofAlbpetroldividendsaredisclosedintheannualbudgetexecutionreport,giventhatMEDTTE’srevenuesarerecordedinthenationalbudget(seeRequirement5.1).Inaddition,thefactthatAlbpetrol’sannualfinancialstatementsareaudited(seeRequirement4.9)providesahighdegreeofqualityassuranceforAlbpetrol’sunilateraldisclosureofitsdividendstogovernment.


Subnationaldirectpayments(#4.6)

ItispossiblethatfurtherworkonthisissuewoulddemonstratethatthisrequirementisnotapplicableinAlbania,asitseemslikelythatsubnationalpaymentstoLGUsarenotmaterial.However,theMSGclearlyagreedtoincludesubnationalpaymentstoLGUswithinthescopeofthereportingprocess,notingthesignificanceofthesepaymentstolocalcommunities.Intheabsenceof

Meaningfulprogress



comprehensivegovernmentdata,theapproachadoptedbasedonselectingLGUsforreconciliationbasedoncompanydataappearsreasonable.However,thereappeartobesignificantgapsinthereportingfromcompaniesandintheparticipationofLGUs.

Levelofdisaggregation(#4.7)

The2015EITIReportpresentsreconciledinformationdisaggregatedbycompany,revenuestreamandgovernmententity.


Datatimeliness(#4.8)

AllofAlbania’sEITIReportsundertheEITIStandardhavebeenpublishedwithintwoyearsofthecloseofthefiscalyear(s)underreview.However,thefactthatthetimestamponthe2015EITIReportismarkedastwomonthspriortotheactualpublicationofthereport,andthefactthatasignificantlyrevisedversionofthe2015EITIReportwaspublishedwithoutMSGapproval(orknowledge)isaconcern.ThisisfurtherdetailedintheassessmentofMSGoversightabove(seeRequirement1.4).


Dataquality(#4.9)

TheMSGappearstohaveapprovedtheselectionoftheIAforthe2015EITIReport,includingaToRsconsistentwiththeBoard-approvedtemplate,aswellasthereportingtemplates.WhiletheIAappearstohavereviewedmaterialentities’statutoryauditprocedurespriortoagreeingqualityassuranceproceduresforensuringthereliabilityofreconcileddatainthe2015EITIReport,thereisnoevidencethattheIAreviewedreportingentities’actualauditpractices.ItisunclearwhytheindustryMSGmembersapprovedqualityassuranceproceduresthatnocompanyfollowedinpractice.The2015EITIReportdoesnotassessthematerialityofpaymentsfromentitiesthatdidnotcomplywiththeagreedqualityassuranceprocedures.ThelackofanyassurancefromtheIAonthecomprehensivenessandreliabilityofreconcileddataisaconcernandrepresentsadeviationfromtheIA’sToRsforthe2015EITIReport.TheIAhaspreparedsummarytablesofdataintheAlbania’sEITIReports.

Meaningfulprogress




1. Tostrengthenimplementation,theMSGisencouragedtoconsiderrevisitingitsmaterialitythresholdforselectingminingcompaniestostrikeabalancebetweenthecomprehensivenessofdisclosuresandthequalityofreporting.TheMSGmaywishtoconsiderasamplingapproach,whichwouldallowthesepaymentstobeinvestigatedwithoutcreatinganunreasonablereportingburden.TheMSGisalsoencouragedtoensurethattheIndependentAdministratorprovidesitsopiniononthecomprehensivenessoftheEITIReport.

2. Inaccordancewithrequirement4.2,theMSGshouldensurethatitclearlydisaggregatethestate’sin-kindrevenuesfromAlbpetrol’sin-kindrevenuesinfutureEITIReports.TheMSGcouldconsiderjoiningtheEITI’stargetedeffortoncommoditytradingtoprovideaframeworkforensuringthatdisclosuresofthestate’ssalesofitsin-kindrevenuesareinlinewithinternationalbestpractice.

3. Tostrengthenimplementation,theMSGshouldensurethatfutureEITIReportsclearlyaddressRequirement4.3andconfirmtheMSG’sassessmentofitsnon-applicability.TheMSGmaywishtoconsidertheextenttowhichareviewoftheactualtermsofmining,oilandgascontractswouldbenecessarytoensureacomprehensiveassessmentoftheapplicabilityofRequirement4.3.

4. Tostrengthenimplementation,theMSGshouldconsiderensuringthatfutureEITIReportsexplicitlystatethatthegovernmentandSOEsdonotreceiveanyrevenuesfromthetransportationofminerals,crudeoilornaturalgasintheyear(s)underreview.

5. Tostrengthenimplementation,theMSGisstronglyencouragedtoensurethatfutureEITIReportsincludeAlbpetrol’sdividendstogovernmentinthescopeofreconciliation,inlinewithrequirement4.5.

6. Inaccordancewithrequirement4.6,TheMSGshouldundertakeappropriatescopingofdirectsubnationalpaymentsbyextractivescompaniestoLGUs,establishingacomprehensivebasisfortheMSG’smaterialitydiscussionsregardingdirectpaymentstoLGUs.TheMSGmaywishtoconsiderasamplingapproach,whichwouldallowthesepaymentstobeinvestigatedwithoutcreatinganunreasonablereportingburden.

7. Tostrengthenimplementation,theMSGmaywishtoconsidertheextenttowhichitcanmakeprogressinimplementingproject-levelEITIreportingofsector-specificleviesandtaxesaheadofthedeadlineforallEITIReportscoveringfiscalperiodsendingonorafter31December2018,agreedbytheEITIBoardatits36thmeetinginBogotá.

8. Tostrengthenimplementation,theMSGmaywishtoliaisewithkeyrevenuecollectingagenciesandsectorregulatorstoexploremeansofembeddingdisclosuresofEITI-requiredinformationinroutinegovernmentsystemstoensuretimelierEITIreporting.

9. InaccordancewithRequirement4.9.a,theEITIrequiresanassessmentofwhetherthepaymentsandrevenuesaresubjecttocredible,independentaudit,applyinginternationalauditingstandards.Inaccordancewithrequirement4.9.b.iiiandthestandardTermsofReferencefortheIndependentAdministratoragreedbytheEITIBoard,theMSGand



IndependentAdministratorshould:

a. examinetheauditandassuranceproceduresincompaniesandgovernmententitiesparticipatingintheEITIreportingprocess,andbasedonthisexamination,agreewhatinformationparticipatingcompaniesandgovernmententitiesarerequiredtoprovidetotheIndependentAdministratorinordertoassurethecredibilityofthedatainaccordancewithRequirement4.9.TheIndependentAdministratorshouldexercisejudgementandapplyappropriateinternationalprofessionalstandardsindevelopingaprocedurethatprovideasufficientbasisforacomprehensiveandreliableEITIReport.TheIndependentAdministratorshouldemployhis/herprofessionaljudgementtodeterminetheextenttowhichreliancecanbeplacedontheexistingcontrolsandauditframeworksofthecompaniesandgovernments.TheIndependentAdministrator’sinceptionreportshoulddocumenttheoptionsconsideredandtherationalefortheassurancestobeprovided.





5. Revenuemanagementanddistribution

5.1Overview

ThissectionprovidesdetailsontheimplementationoftheEITIrequirementsrelatedtorevenuemanagementanddistribution.

5.2Assessment

Distributionofrevenues(#5.1)

DocumentationofprogressThe2015EITIReportstatesthatrevenuescollectedbyAKBNandAlbpetrolarenotrecordedinthenationalbudget(2015EITIReport,p.35).Thereportstatesthatonly76.7%ofoilandgasrevenuesfromprivatecompanieswasrecordedinthenationalbudgetin2015(2015EITIReport,p.35).

Chart16inthe2015EITIReportshowsthatAKBNretainsallrevenuesitreceivesfromoilandgascompaniesandthereportclarifiesthatAKBNonlyreceivedbonusesand“guaranteesexecuted”(whichrepresentspenaltiesfromoilandgascompaniesthatdonotmeettheirworkprogrammeobligations),butnoshareofoilgiventhatthePSAstowhichitispartydidnotproduceanycrudeoilin2015(2015IETIReport,p.35).WhiletheIArequestedcopiesofAKBN’sauditedfinancialstatements,thereportstatesthatAKBNdidnotprovidethese(2013-14EITIReport,p.18).Thus,whilethereporthighlightsrevenuescollectedbyAKBNasbeingoff-budget,itdoesnotprovideanexplanationoftheallocationoftheseresources.

Chart16alsoshowsthatAlbpetrolcollected22.6%ofoilandgasrevenuesin2015andthatthesewerenotrecordedinthenationalbudget(2015IETIReport,p.35).WhileAlbpetrolcollects(signatureandtraining)bonusesandtheshareofoilunderPSAstowhichitissignatory,itretainstheseearningsandonlypaysdividendstotheTreasury,asidefromregulartaxesandfeesleviedonallcompaniesoperatingintheoilandgassector.Appendix4presentsinformationfromAlbpetrol’s2012,2013,2014and2015annualauditedfinancialstatements(2015EITIReport,p.138),whichprovideanexplanationoftheallocationoftheseoff-budgetfunds.

The2015EITIReportdoesnotrefertoanynationalrevenueclassificationsystem.

The2013-14EITIReportprovidesasimilarcoverageofextractivesrevenuesnotrecordedinthenationalbudget,withAKBNnotdisclosingitsauditedfinancialstatements(2013-14EITIReport,p.49).

StakeholderviewsSeveralgovernmentofficialsandtheIAconfirmedthattheonlytwoentitiescollectingrevenuesfromthemining,oilandgassectorthatwerenotrecordedinthenationalbudgetwereAKBNandAlbpetrol.ThesestakeholdersconfirmedthatAlbpetrolretainedrevenuesitcollectedandonlypaiddividendstogovernmentandregulartaxesandfees(seeRequirement4.5).TheIAconfirmedthatAKBNwasanon-budgetaryentityandthatitmadenotransferstothecentralgovernment,retainingitsrevenuestofund



itsownbudget.DespiterepeatedrequestsforAKBN’sfinancialstatements,theIAexplainedthatAKBNhadnotbeencooperativeinthisregard.SeveralgovernmentrepresentativesconfirmedthatAKBNpreparedannualfinancialstatementsandthatitwassubjecttoperformance(butnotfinancial)auditsfromtheOfficeoftheSupremeStateAuditor.However,onegovernmentrepresentativeexpressedconcernthatAKBN’sannualfinancialstatementswerepreparedonthebasisofprivate-sectorauditingstandardsratherthanpublic-sectorstandards.Severalgovernmentanddevelopmentpartnerrepresentativesreferredtorepeatedcalls,includingfromtheSupremeStateAuditor,foracentralisationofallextractivesrevenueflowstotheTreasury,incash.However,agovernmentrepresentativenotedthatthisrecommendationhadnotbeenfollowedupon.ACSOMSGmemberdidnotrecalltheMSGeverconsideringtheissueofAKBN-collectedrevenuesasbeingoff-budgetinthesenseofRequirement5.1.

Withregardstorevenueclassificationsystems,severalgovernmentanddevelopmentpartnerrepresentativesnotedthatthegovernmentfollowedtheGFS-2001classifications,whichwasconfirmedinAlbania’s2011PEFAassessment(WorldBank,2012).WhilethePEFAassessmentnotedthatthegovernmentpreparedGFS-basedfinancialstatementsthatwerenotfullycompliantwithIPSASstandardsforcash-basedreportingsystems,itforecastthatfullcompliancewouldbeachievedwithinsixyears(i.e.by2018)(WorldBank,2012).TheIAconfirmedthatAlbanianrevenueclassificationsweregenerallyinlinewithinternationalstandards,buthighlightedthecash-basedratherthanaccrual-basednatureofaccountingsystems.

SeveralgovernmentrepresentativesandSecretariatstaffhighlightedongoingworktoestablishtheAlbanianGovernmentFinancialInformationSystem(AGFIS)linkingMoFsystemstoimproveinterconnectionsbetweenvariousdatabasesincludingTreasury,Customs,Taxetc.

InitialassessmentTheInternationalSecretariat’sinitialassessmentisthatAlbaniahasmademeaningfulprogressinmeetingthisrequirement.Whilethe2015EITIReporthighlightsextractivesrevenuescollectedbyAKBNandAlbpetrolasbeingoff-budget(i.e.notrecordedinthenationalbudget),itonlyprovidesanexplanationoftheallocationoffundscollectedbyAlbpetrol,notAKBN.Whilethereportdoesnotrefertonationalorinternationalrevenueclassificationsystems,theInternationalSecretariatunderstandsthatnationalrevenueclassificationsystemsarebasedonGFS-2001classifications.

Inaccordancewithrequirement5.1.a,theMSGshouldensurethattheallocationofextractivesrevenuesnotrecordedinthenationalareexplained,withlinksprovidedtorelevantfinancialreportsasapplicable.TheMSGmaywishtoexploretheextenttowhichitcoulduseextractives-specificGFSclassificationsfromitsEITIsummarydatatablesasameansofdisaggregatingtheextractivescomponentsofcommontaxesinexistingMoFsystems.



Sub-nationaltransfers(#5.2)

DocumentationofprogressThe2015EITIReportdescribesstatutorysubnationaltransfers124andtheirreductionfrom25%to5%ofroyalties,effectivefrom2015(2015EITIReport,p.75).ThereportdescribesInstructionn.26of4September2008,whichrequireseachLGUtoagreeroyaltypaymentsmadebylicenseesoperatingintheLGUdistrictwiththeregionaldirectorateoftaxesandcustomsattheendofthemonth.TheregionaldirectoratesoftaxesandcustomsthensubmitsalistofroyaltyrevenuescollectedfromeachLGUtotheDirectorateofBudgetatMinistryofFinance,whichinitiatesmonthlytransfersofroyaltytoLGUs(2015EITIReport,p.75).Foroilcompanies,whichoperatesimultaneouslyinseveralLGUs,theinstructionsetstheshareofroyaltyallocatedtoeachLGUbasedontheoutputgeneratedbyeachoilfield(2015EITIReport,p.75).

Thereportprovidesthe2015royaltiescollectedandallocatedfortransfer(5%ofroyaltiescollected),aggregatedforallLGUsbutdisaggregatedbetweenminingroyaltiesandoilandgasroyalties(2015EITIReport,p.76).TheformulaforcalculatingsubnationaltransferstoindividualLGUsin2015isnotprovided,asidefromageneralreferencetoallocationstohostLGUsbasedonproductionlevels.Whilethereportprovidesthevalueofminingandoilroyaltiesthatshouldhavebeentransferredaccordingtotheformula,aswellastheactually-transferredamounts,thisinformationisonlyprovidedinaggregateforallLGUs,notdisaggregatedperindividualLGU.Inaddition,thereportdoesnotclearlystatehowmanyLGUsweremeanttoreceivesubnationaltransfersin2015,northenumberofLGUsthatactuallyreceivedtransfers.Finally,theinformationonexecutedsubnationaltransfersisprovidedfortransfersexecutedbothin2015andin2016(asstatedinthefootnoteonp.76),whichmeansthatreportingofexecutedsubnationaltransferswasonanaccrual-accountingbasisratherthanonacash-accountingbasis.

ThereportnotesthattheMoFexplainedthatLGUswereresponsibleforinitiatingsubnationaltransfersthroughthereconciliationprocessandthatlowerdisbursementsinthefirstyearofimplementationofthenewsubnationaltransfersystemin2015werebeinginvestigatedandarrearscleared.ItalsonotesthattheMoFplannedtointroduceamendmentstothestatutoryprocedurestopreventunder-andover-claimingbyLGUsinfuture(2015EITIReport,p.76).

Thereportalsoincludescommentaryontheefficiencyofsubnationaltransfersoverthe2011-2015period,withachartshowingtherisingtrendinsubnationalroyaltytransfersinthe2011-2015period.Itnotesthatonlyoil-producingLGUsreceivedsubnationaltransfersupto2014,withnoclearcorrelationbetweenroyaltiescollectedandsubnationaltransfers,butthatsince2015newroyaltytransferproceduresledtohighertransferlevels.Thereportstatesthatthesetransferswillbeevenhigherwhentheroyaltyfor2015isfullyallocatedtotheproducingLGUs”(2015EITIReport,p.76).

Thereporthighlightssignificantdeviationsinthelevelofexecutedsubnationaltransfersin2015,withsubnationalroyaltytransferssignificantlylowerthanthetransferableportionassetinlaw,basedonreportingbytheMinistryofFinance(2015EITIReport,p.103).Subnationalroyaltytransferswerenot

124TheLawonNationaltaxesno.9975,dated28July2008,amended,requiresaportionofroyaltytaxtobeallocatedtoeachlocalgovernmentunitinproportionwiththeircontributiontothedomesticoutputofoil,gasandmining.FollowingparliamentarychangestotheLawonNationaltaxesinNovember2014,theroyaltyearmarkswerereducedfrom25%to5%ofroyalties,startingfrom2015(2015EITIReport,p.75).



reconciledinthe2015EITIReportandtheIArecommendsthattheMSGincludesuchtransfersinthescopeofreconciliationinfutureEITIReports(2015EITIReport,p.103).

The2013-14EITIReportprovidesasimilarlevelofdetailinitsdescriptionofsubnationalroyaltytransfers,includingthegeneralrevenuesharingformula,theaggregateamountbudgetedandtransferred(2013-14EITIReport,p.49),butnotthespecificrevenuesharingformulaforcalculatingtransferstospecificLGUsnorexecutedsubnationaltransfersdisaggregatedbyLGU.

Stakeholderviews

TheIAconfirmedthattherewerenoothersubnationaltransferslinkedtoextractivesrevenuesin2015asidefromthesubnationaltransfersofroyaltiesdescribedinthe2015EITIReport.Therewassignificantinterestamongstallstakeholdersconsultedabouttheissueofsubnationalroyaltytransfers.Representativesfromallconstituenciesconsultedhighlightedthesignificantchallengesposedbysuchsubnationaltransfersinthepast.Severalseniorgovernmentofficialsexplainedthatwhiletheshareofroyaltiestobetransferredhadbeencutfrom25%to5%,thetransferswerenowactuallybeingexecuted.Inthepast,thetransferof25%ofroyaltiestoLGUswascontingentonLGUsachieving120%oftheirbudgetedinternally-generatedrevenues(localtaxes),whichwasimpossibletoachieveonaconsistentbasis.Inaddition,thesefundscouldonlybeusedonenergyinfrastructure,tooffsettheimpactofextractivesactivitiesordirectlytobenefitcommunitieshostingextractivesactivities.Adevelopmentpartnerhighlightedthatthegovernmenthadbeentransparentaboutthereasonsforhinderingtheexecutionofsubnationaltransfersinthepast,astheyhadnotedthatif25%ofroyaltiesweretransferredtoLGUshostingsignificantextractivesactivities,aLGUlikeBulqizëwouldhavealargerbudgetthanthenationalcapitalTirana.GovernmentrepresentativesexpressedprideatthefactthatthisissuehadbeenidentifiedthankstoEITIreporting,withthelower5%ofroyaltiesnowtransferredautomaticallywithoutconditionalityotherthanthefundsbeingusedtofundLGUs’capital(ratherthanrecurrent)expenditures.

SeveralCSOMSGmemberscalledforthepublicationofsubnationaltransfersdisaggregatedbyLGUsinordertoallowstakeholderstotracktheimplementationofthenewsystemforsubnationaltransfers,althoughthesemembersappearednottorealisethatsuchdisaggregationwasanintegralpartofRequirement5.2.SeveralgovernmentrepresentativesaswellastheIAandSecretariatstaffexplainedthatdataonexecutedsubnationaltransfersdisaggregatedbyLGUwasavailableandthattherewasnobarriertopublishingsuchdata.Notingtheoversight,theIAandSecretariatstaffsecuredthedataonexecuted2015subnationaltransfersdisaggregatedbyLGUandpublishedthisasanaddendumtothe2015EITIReportontheAlbEITIwebsite125on13June2017,afterthecommencementofValidation.Uponconsultations,theIAappearedtorecognisetheinconsistencyinaccountingbasisbetweenaccrual-basedreportingofsubnationaltransfersandcash-basedaccountingusedfortherestofinformationincludedinthe2015EITIReport.Thus,theaddendumtothe2015EITIReportclearlydisaggregated2015subnationaltransfersthatwereexecutedin2015fromthoseexecutedin2016,disaggregatedbyLGU.BoththeIAandSecretariatstaffconsideredthatthishadbeenanoversightinpreparingthe2015EITIReportandnotedthatnoneoftheMSGmembershadhighlightedthisissuebefore.

Severalgovernmentrepresentatives,theIAandSecretariatstaffhighlightedbarrierstodisclosingthe

125http://www.albeiti.org/wp-content/uploads/2014/03/EITI-Report-2015-Subnational-Royalty.pdf



amountsthateachLGUshouldhavereceivedbasedontheformula’scalculations.TheyexplainedthatwhiletheCustomsDepartmenttrackedthelocationofacompany’soperationinitscollectionofroyalties,andthuscoulddisaggregateroyaltiesonexportsperLGU,theTaxDepartmentdidnottrackthelocationofcompaniespayingroyaltiesondomestically-consumedmineralsandthuscouldnotprovideinformationonbudgetedroyaltytransfersdisaggregatedbyLGU.StakeholderscouldnotexplainhowtheMoFcouldbudgetwhateachLGUshouldreceivewithoutsuchrecordsfromtheTaxDepartment.SeveralgovernmentstakeholdersexplainedthatitwastheresponsibilityoftheLGUtoinitiatethereconciliationofroyaltyreceiptsinordertorequestsubnationaltransfersfromtheMoF.TheyexplainedthatLGUsdidnotalwaysknowofthisresponsibility,whichexplainedthelowlevelofexecuted2015subnationaltransfersandconsideredthatsignificantcapacitybuildingwasneededatthelevelofindividualLGUs.SecretariatstaffexplainedthatAlbEITIhadundertakentrainingworkshopsontheissueofsubnationaltransfersin2015forLGUshostingextractiveactivities.AnindustryrepresentativehighlightedtheneedfortransparencyinsubnationaltransferstoLGUs,giventhatlocalcommunitiessometimesblamedcompaniesfornotprovidingsufficientsupportforlocaldevelopment,whentheydidnotseeanyshareoftheroyaltiescompaniespaid.ALGUrepresentativehighlightedthevalueofdatabeingdisaggregatedbyreceivingLGU,giventhatLGUscurrentlydidnothavethecapacitytotrackhowthevalueofroyaltytransferstheyshouldhavereceived.

SeveralstakeholdersfromallthreeconstituencieshighlightedthechallengesposedbytherestructuringofLGUseffectivein2016,whichreducedthenumberofLGUsfromatotalof305to61municipalitiesand12districts.Severalgovernmentofficialsexplainedthatthishadledtodouble-claimsbyseveralLGUsregardingtheir2015royaltytransfers,butconsideredthatthisrepresentedonly“teethingproblems”forthenewsystem.TheIAexplainedthatithadnomandatetoinspecttheprocessfortransferringroyaltiesforthe2015EITIReportbutthatitintendedtoproposethatsubnationaltransfersbereconciledinthenextEITIReportcovering2016andthatithadalreadyreceivedpositivefeedbackonthisrecommendationfromMSGmembers.StakeholderconsultationsrevealedthattheMSGhadnotyetreachedouttoassociationsofLGUssuchastheAlbanianAssociationofMunicipalities.126

Initialassessment

TheInternationalSecretariat’sinitialassessmentisthatAlbaniahasmademeaningfulprogresstowardsmeetingthisrequirement.The2015EITIReportdescribesstatutorysubnationaltransfersofroyalties,providesthegeneralformula,budgetedandactualtransfersfor2015inaggregateterms,albeitreportedonanaccrualratherthancashbasis.However,thereportdoesnotprovidethespecificformulaforcalculatingsubnationaltransferstoindividualLGUs,northelevelofbudgetedandexecutedsubnationaltransfersdisaggregatedbyLGU,evenifithighlightsdiscrepanciesbetweenbudgetedamountsandactualtransfers.WhileAlbEITIpublishedexecuted2015subnationaltransfersdisaggregatedbyLGUonacash-accountingbasisafterthestartofValidation,thelevelofbudgeted2015subnationaltransfersdisaggregatedbyLGUisnotpubliclyavailable.

Inaccordancewithrequirement5.2.a,theMSGshouldassessthematerialityofsubnationaltransferspriortodatacollectionandensurethatthespecificformulaforcalculatingtransferstoindividuallocalgovernmentsbedisclosed,tosupportanassessmentofdiscrepanciesbetweenbudgetedandexecuted

126http://aam.org.al/en/



subnationaltransfers.Giventhehighlevelofpublicinterestinthisissue,theMSGmaywishtoconsiderincludingLGUsinthereportingprocessforsubnationaltransfersinordertoreconcilethesetransactions.

Additionalinformationonrevenuemanagementandexpenditures(#5.3)


The2015EITIReportdoesnotrefertoanyearmarkedextractivesrevenues,nordescribethebudget-makingprocess.ThereportprovidesabriefreviewoftheSupremeStateAuditor’sauditofgovernmententities,includingalinktomoreinformation(2015EITIReport,pp.77-78),butdoesnotprovideadditionalinformationonproductionprojectionsorrevenueforecasts.

The2013-14EITIReportstatesthattheMinistryofFinanceandothergovernmententitiesdidnotreportearmarkedrevenues(2013-14EITIReport,p.71),andprovidesachartofoilrevenueallocations(2013-14EITIReport,p.38).

StakeholderviewsTheIAconfirmedthatitwasnotawareofanyearmarkedextractivesrevenuesandthatithadbeentoldbyMoFrepresentativesthatnoneoftheextractivesrevenuesrecordedinthenationalbudgetwereearmarkedforaspecificproject,asidefromthesubnationaltransfersof5%ofroyaltiestoLGUs(seeRequirement5.2).TheIAalsostatedthatitwasnotawareofanyearmarkedrevenuescollectedbyAKBNandAlbpetrol.Noneoftheotherstakeholdersconsultedwereawareofanyearmarkedextractivesrevenues.

Albania’s2011PEFAassessmentnotedthatsubstantialfiscalinformationwasavailablefromtheMoFwebsite,includingthemedium-termbudgetingplan,economicandfiscalprogrammes,theannualbudgetlawandin-yearbudgetexecutionreportsintheformoffiscaltablesinexcelspreadsheetformat,albeitwithafocusonnumbersratherthanexplanatorynarratives(WorldBank,2012).ThiswasconfirmedwiththeIA.

InitialassessmentItisencouragingthattheMSGhasmadesomeattempttoincludinginformationontheauditingprocessinthe2015EITIReport,althoughtheInternationalSecretariat’sviewisthatAlbEITIhasmadeonlymodesteffortstoincludeadditionalinformationonthebudget-makingprocess.

TheMSGmaywishtoconsiderincludingadditionalinformationonthebudget-makingandauditingprocessesforgovernmentaccountsinfutureEITIReports.



Table5-Summaryinitialassessmenttable:Revenuemanagementanddistribution



Distributionofrevenues(#5.1)

Whilethe2015EITIReporthighlightsextractivesrevenuescollectedbyAKBNandAlbpetrolasbeingoff-budget(i.e.notrecordedinthenationalbudget),itonlyprovidesanexplanationoftheallocationoffundscollectedbyAlbpetrol,notAKBN.Whilethereportdoesnotrefertonationalorinternationalrevenueclassificationsystems,theInternationalSecretariatunderstandsthatnationalrevenueclassificationsystemsarebasedonGFS-2001classifications.

Meaningfulprogress

Sub-nationaltransfers(#5.2)

The2015EITIReportdescribesstatutorysubnationaltransfersofroyalties,providesthegeneralformula,budgetedandactualtransfersfor2015inaggregateterms,albeitreportedonanaccrualratherthancashbasis.However,thereportdoesnotprovidethespecificformulaforcalculatingsubnationaltransferstoindividualLGUs,northelevelofbudgetedandexecutedsubnationaltransfersdisaggregatedbyLGU,evenifithighlightsdiscrepanciesbetweenbudgetedamountsandactualtransfers.WhileAlbEITIpublishedexecuted2015subnationaltransfersdisaggregatedbyLGUonacash-accountingbasisafterthestartofValidation,thelevelofbudgeted2015subnationaltransfersdisaggregatedbyLGUisnotpubliclyavailable.

Meaningfulprogress

Informationonrevenuemanagementandexpenditures(#5.3)

ItisencouragingthattheMSGhasmadesomeattempttoincludinginformationontheauditingprocessinthe2015EITIReport,althoughtheInternationalSecretariat’sviewisthatAlbEITIhasmadeonlymodesteffortstoincludeadditionalinformationonthebudget-makingprocess.

Initialconclusionsandrecommendations:

1. Inaccordancewithrequirement5.1.a,theMSGshouldensurethattheallocationofextractivesrevenuesnotrecordedinthenationalareexplained,withlinksprovidedtorelevantfinancialreportsasapplicable.TheMSGmaywishtoexploretheextenttowhichitcoulduseextractives-



specificGFSclassificationsfromitsEITIsummarydatatablesasameansofdisaggregatingtheextractivescomponentsofcommontaxesinexistingMoFsystems.

2. Inaccordancewithrequirement5.2.a,theMSGshouldassessthematerialityofsubnationaltransferspriortodatacollectionandensurethatthespecificformulaforcalculatingtransferstoindividuallocalgovernmentsbedisclosed,tosupportanassessmentofdiscrepanciesbetweenbudgetedandexecutedsubnationaltransfers.Giventhehighlevelofpublicinterestinthisissue,theMSGmaywishtoconsiderincludingLGUsinthereportingprocessforsubnationaltransfersinordertoreconcilethesetransactions.

3. TheMSGmaywishtoconsiderincludingadditionalinformationonthebudget-makingandauditingprocessesforgovernmentaccountsinfutureEITIReports.



6. Socialandeconomicspending

6.1Overview

ThissectionprovidesdetailsontheimplementationoftheEITIrequirementsrelatedtosocialandeconomicspending(SOEquasi-fiscalexpenditures,socialexpendituresandcontributionoftheextractivesectortotheeconomy).

6.2Assessment

Socialexpenditures(#6.1)

DocumentationofprogressThe2015EITIReportdoesnotstatewhethermining,oilandgascompaniesarerequiredtoundertakemandatorysocialexpendituresinlinewithanyprovisionsoftheMiningorHydrocarbonsLaws,oroftheiroperatingcontracts.Thereportdoesnotstatewhetherallsocialexpenditurescoveredinthereportaremandatory,asitonlyreferstosocialexpendituresingeneraltermswithoutdistinguishingbetweenmandatoryandvoluntaryexpenditures.ThereportstatesthatcompanieswererequiredtounilaterallyreportsocialexpendituresofoverLek5m,butthatthesewerenotreconciledwithreportingfrombeneficiaries(2015EITIReport,p.80).OnthebasisofthelistofrevenueflowsselectedforreportinginAnnex1oftheIA’sToRsforthe2015EITIReport,itappearsthatgovernmententitieswererequiredtoreportvoluntarydonationstogovernmentfrommining,oilandgascompanies,whilecompanieswererequiredtoreportsocialexpendituresdisaggregatedbetweenmandatoryandvoluntary(IA’sToRsfor2015EITIReport,pp.20-21).TheMSGagreedaUSD5,000materialitythresholdforthereportingofmandatorysocialexpendituressuchas“publicworksandinfrastructureundercontractualobligations”atits29July2016meeting.127

However,asidefromthereport’scursorystatementthatBankersPetroleumreportedsocialexpendituresworthLek194m“madeforthebenefitofthecommunityintheareasurroundingthebusiness”(2015EITIReport,p.90),thereisnoevidenceinthe2015EITIReportoftheresultsofcompanies’unilateralreportingofsocialexpenditures.Theonlydetailsofsocialexpendituresreported,thatofBankersPetroleum(inaggregate),doesnotdistinguishbetweencashandin-kindcontributionsanddidnothighlighttheidentityofanynon-governmentbeneficiaries.

The2013-14EITIReportsimilarlydoesnotclarifywhethermining,oilandgascompanieswererequiredtoundertakemandatorysocialexpendituresin2013-14andonlyprovidedAlbpetrolandBankersPetroleum’sunilateraldisclosureoftheirsocialexpenditures,withoutclarifyingwhethertheyweremandatoryorvoluntary(2013-14EITIReport,pp.91,101).

Stakeholderviews

Therewassignificantdisagreementbetweenstakeholdersoverwhethertherewereanymandatorysocial

127http://www.albeiti.org/multi-stakeholder-group/msg-meetings/year-2016/



expenditurestobeundertakenbycompaniesoperatingintheminingoroilandgassectors.TheIAandseveralgovernmentofficialsconfirmedthatneithertheMiningnorHydrocarbonsLawsrequiredcompaniestomakeanymandatorysocialexpenditures.However,allCSOMSGmembersstatedthattherewerecontractualclausesrequiringsomecompaniestoundertakemandatorysocialexpenditures.TheIAandgovernmentrepresentativesnotedthatsomeoperatingcontractsmayrequirecompaniestoundertakesocialexpendituresbutthattheydidnotsetaspecificlevelfortheseexpenditures.TheIAnotedthatsomeofthePSAsithadreviewedincludedsomeprovisionscoveringsocialexpenditures,althoughthesewerenotrequiredtobeannual,whichwereentirelycostrecoverableonceagreedaspartoftheworkprogrammewiththePSAcounterpart(eitherAKBNorAlbpetrol).TheIAdescribedassurancesfromtwogovernmentMSGmembersthatno“material”socialexpenditureswereforeseenintheagreementscurrentlyinforce,butnotedthattheyhadnotprovidedanysupportingdocumentation.AnindustryrepresentativeexplainedthatBankersPetroleumwasrequiredtoundertakemandatorysocialexpendituresaspartofitsoilandgasexplorationlicense,butnotunderitsoilandgasproductionlicense.Severalindustryandcivilsocietyrepresentativesconsideredthattherewereonlymandatorysocialexpendituresintheoilandgassector,notintheminingsector.SeveralgovernmentofficialsalsoexplainedthatcertainoilandgascompaniesmadecashpaymentstotheMEIforstafftrainingpurposes,underthetermsoftheirPSAs.SeveraldevelopmentpartnersandSecretariatstaffemphasisedthehighstandardsoftheTAPproject,whichincludedacleardollarfigureformandatorysocialexpendituresinthecontractbetweenTAPandtheGovernmentofAlbania.AllCSOMSGmembersconsultedhighlightedtheneedfordisclosureofallmining,oilandgascontractstoallowtheMSGandIAtoundertakeacomprehensivereviewofmandatorysocialexpenditureclauses.

TheIAstatedthatithadnotreviewedalloperatingcontractsheldbymaterialcompaniestoassesstheexistenceofmandatorysocialexpendituresbuthadinsteadaskedreportingcompaniesto“voluntarily”discloseamountspaidinsocialexpenditures,albeitnotclearlydisaggregatedbetweenmandatoryandvoluntary.TheIAnotedthatcompanieshadreportedsocialexpendituresinpreviousyears,suchasforthe2013-14EITIReport,butthatreportingcompanieshadnevermadeadistinctionbetweenmandatoryandvoluntarysocialexpendituresintheirEITIreporting.TheIAalsonotedthat“most”ofthesocialexpendituresreportedinthe2013-14EITIReportwereprovidedincash,notinkind.Upondiscussion,theIAnotedthatthereferencetoBankersPetroleum’ssocialexpendituresinthe2015EITIReportwaserroneousandhadbeentakenoutoftherevisedversionofthe2015EITIReportpublishedinmid-April2017ontheAlbEITIwebsite,giventhatitwasaleftoverfrompreviousEITIReports.TheIAconfirmedthatnoreportingcompanyhaddisclosedanysocialexpendituresinthe2015EITIReport.Thus,theIAexpressedconcernsoverthepotentiallackofcomprehensivenessinreportingofmandatorysocialexpendituresinthe2015EITIReport.Secretariatstaffexpressedsurpriseatthefactthatmaterialcompaniesreportedextensivesocialexpenditureprogrammesincorporatereportsontheirwebsitesbuthadnotreportedanysocialexpendituresinthe2015EITIReport.Forinstance,theexampleofBankersPetroleumreportingacumulativeUSD7.5mincommunityrelationsprojectsinAlbaniainthe2009-2015periodontheircorporatewebsite128wascited.OneindustryMSGmemberexpressedsurpriseatthelackofinformationonsocialexpendituresinthe2015EITIReport,incontrasttothe2013-14EITIReport,giventhatsuchinformationinEITIReportswasparticularlyusefulforcompanies’relationswithhostcommunities.

128http://www.bankerspetroleum.com/albania/bankers-albania



Severalindustryrepresentativesconfirmedthatmanymining,oilandgascompanies,particularlylargerones,undertookextensivevoluntarysocialexpendituresaspartoftheirCSR.However,severalcivilsocietyanddevelopmentpartnerrepresentativesconsultedexpressedconcernoverthetendencyforcertaincompaniestore-categoriseinfrastructurethattheybuiltfortheirownoperationsasaformofvoluntarysocialexpenditures.TheIAnotedthatcompanieswereeagertoreportallformsofsocialexpenditureswithoutdistinguishingbetweenmandatoryandvoluntaryexpenditures,asaformofpublicrelations.Secretariatstaffhighlightedthehighlevelofpublicinterestinsocialexpendituresfrommining,oilandgascompanies,giventhattheytendedtoseetheuseofthesefundsforthemselvesincontrasttosubnationaltransfers.

TheIAconfirmedthattheMSGhadnotdiscussedthematerialityofmandatorysocialexpendituresaheadofdatacollectionforthe2015EITIReportandthatcompaniesweresimplyinvitedtoreportsuchexpendituresinanattempttotracesuchpayments.TheIAexplainedthatthegovernmententityinapositiontoprovideaccurateinformationonsocialexpendituresagreedaspartofcompanies’workplans(andthuscostrecoverable)wasAKBN,butthatthisentityhadnotprovedcooperativeinthisregard.TheIAconfirmedthatrecipientsofsocialexpenditureswereeitherLGUsorlocalcommunities,whichmeantthatsomeoftherecipientswerenon-governmentalentities.AllMSGmembersconfirmedthatenvironmentalrehabilitationpaymentsweregoingtobeincludedinthescopeofthenextEITIReport,covering2016.

InitialassessmentTheInternationalSecretariat’sinitialassessmentisthatAlbaniahasmadeinadequateprogresstowardsmeetingthisrequirement.TheMSGdoesnotseemtohaveassessedwhethermandatorysocialexpendituresexistundercontractualtermsaheadofdatacollectionandthereiswidespreadconfusionoverwhetheranysuchmandatorysocialexpendituresexist.The2015EITIReportprovidesunilateralreportingofsocialexpendituresbyoneoilandgascompany(althoughthismayhavebeenerroneouslyincluded),butdoesnotclarifywhethertheseweremandatoryanddoesnotincludetheIA’sconcernsoverthecomprehensivenessofreportingofmandatorysocialexpendituresinthe2015EITIReport.TheMSGappearstohavemadenoattempttodistinguishbetweenmandatoryandvoluntarysocialexpenditures,cashandin-kindexpendituresnortoclarifytheidentityofanynon-governmentrecipientofmandatorysocialexpenditures.

Inaccordancewithrequirement6.1.a,theMSGshouldagreeacleardistinctionbetweenmandatoryandvoluntarysocialexpenditurespriortodatacollectionandensurethatmaterialmandatorysocialexpendituresarecomprehensivelydisclosedinfutureEITIReports.Wherebeneficiariesofmandatorysocialexpendituresareathirdparty,i.e.notagovernmentagency,theMSGshouldensurethatthenameandfunctionofthebeneficiarybedisclosed.TheMSGmaywishtoconsidertheextenttowhichdisclosureofactualmining,oilandgascontracts(orreviewofkeyterms)wouldbenecessarytoprovideacomprehensiveassessmentoftheexistenceofmandatorysocialexpenditures.TheMSGmayalsowishtoconsiderthefeasibilityofreconcilingmandatorysocialexpenditures.



SOEquasifiscalexpenditures(#6.2)


Neitherthe2015EITIReportnorthe2013-14EITIReportreferstoanyquasi-fiscalexpendituresundertakenbyextractivesSOEs(e.g.Albpetrol).

Stakeholderviews

TheIAstatedthattherewerenoquasi-fiscalexpenditurescodifiedinAlbanianlawandthatneitherAlbpetrolnorMEIhadreportedanyquasi-fiscalexpendituresinthedatacollectionforthe2015EITIReport.WhiletheIAnotedthatAlbpetrolwasprovidingaformofsocialservicesbymaintainingasubstantiallylargerworkforcethanwasnecessary,itexpresseduncertaintyoverwhethersuchapolicycouldbeconsideredasaformofquasi-fiscalexpenditures.SeveralgovernmentrepresentativesandtheIAalsohighlightedthesignificantpricedifferencebetweencrudeoilsoldoninternationalmarketsbyprivateoperatorslikeBankersPetroleumandcrudeoilsoldbyAlbpetrol.WhiletheIAnotedthattherecouldbedifferentreasonsforthis,includingpotentiallyasubsidyfromAlbpetroltobuyersofitscrudeoil(TPDin2015),itexpresseduncertaintyoverwhetherthiswasaquasi-fiscalexpendituregiventhelackofexplanation.However,agovernmentrepresentativestatedcategoricallythatAlbpetroldidnotprovidesubsidiesinitscrudeoilsalestoprivatecompaniesandtheIAreferredtoAlbpetrolmanagementrepresentationsthatitdidnotundertakeanyquasi-fiscalexpenditures.

Uponextensiveconsultations,severalgovernmentrepresentativesnotedthatAlbpetrolundertookcertaintypesofsponsorshipsofculturalevents,includingsponsorshipofthenationalfootballteam,butthatthiswasinlinewiththeLawonSponsorshipthatallowedcompaniestospenduptoasetleveloftheirprofitsonsponsorshipandsubsequentlyrecoverthecostthroughtaxdeductions.AdevelopmentpartnernotedallegationsthatAlbpetrolprovidedfundingtocertainpoliticalpartiesthroughitschoiceofpolitically-affiliatedsub-contractors.SeveralgovernmentrepresentativesandSecretariatstaffconfirmedthattheMSGhadneverdiscussedtheissueofquasi-fiscalexpendituresinpreparinganyofAlbania’sEITIReports.

Initialassessment

TheInternationalSecretariat’sinitialassessmentisthatAlbaniahasmadenoprogresstowardsmeetingthisrequirement.ThereisnoevidencethattheMSGhaseverconsideredtheissueofquasi-fiscalexpendituresinrelationtoAlbpetroloranyotherextractivesSOE.

Inaccordancewithrequirement6.2,theMSGshouldconsidertheexistenceandmaterialityofanyquasi-fiscalexpendituresundertakenbyextractivesSOEsandtheirsubsidiaries,ensuringthatallmaterialquasi-fiscalexpendituresaredisclosedinfutureEITIReports.

Contributionoftheextractivesectortotheeconomy(#6.3)


The2015EITIReportprovidestheextractiveindustries’(mining,oilandgas)contributiontoGDPinrelativeterms(3%)(2015EITIReport,p.10)butnotinabsoluteterms.However,thereportprovidesa



linktotheINSTATwebsite129,whereinformationon2015GDPinbothcurrentandconstantpricescanbeobtained(2015EITIReport,p.84).The2015EITIReportdidnotprovideanestimateofthesizeoftheinformalsector,suchasartisanalmining.

Intermsoftheextractives’shareofgovernmentrevenues,the2015EITIReportprovidestherelativeshareofthemining,oil,gasandhydro-electricsectors(“about4.1%)(2015EITIReport,p.5),aswellas,inrelativeandabsoluteterms,thedirectandindirectcontributiontototalrevenuesofrevenuesfromoilandgas(“above1.1%”and“approximately2%”,orUSD54.6m))(2015EITIReport,pp.11,35)andmining(“atminimum0.8%”and“about1.1%”,orUSD31.2m)(2015EITIReport,pp.12,53).However,giventheconstraintsongovernment’sabilitytodisaggregatetheextractivescomponentofcommonlawtaxes,thereportonlyprovidesgovernment-reportedrevenuesfrommaterialcompanies,ratherthantotalextractivesrevenues.Nonetheless,thereportistransparentaboutchallengesindisaggregatingtheextractivescomponentsofcommontaxes(seeRequirement4.1),providesafigurefortotalmining,oilandgasrevenuesbasedonEITIreportingandformulatesarecommendationtoaddressthegovernment’sinabilitytoprovideacomprehensivefigurefortotalextractivesrevenues.

The2015EITIReportprovidestheextractivessector’sshareofexportsinabsoluteandrelativeterms130(2015EITIReport,p.10),aswellasdisaggregatedbetweencrudeoil131andmineralexports132(2015EITIReport,pp.22,42).

Thereportalsoprovidestheextractives’shareofemploymentforthethreesectors(mining,oilandgas,hydro-electricity)inrelativeterms(“lessthan1%”oftotalemployment)(2015EITIReport,p.5),aswellasinabsoluteandrelativetermsforoilandgas133(2015EITIReport,pp.11,23)andformining134(2015EITIReport,pp.12,41).

Intermsofthelocationoftheextractiveindustries,the2015EITIReportprovidesmapsofkeydepositsofoilandgas(2015EITIReport,p.23)andminerals(2015EITIReport,pp.43-48).

The2013-14EITIReportprovidedasimilarlevelofmacro-economicdatabutdidnotprovidetheabsolutevalueofextractiveindustries’shareofGDPnortheextractives’shareoftotalemploymentin2013(2013-14EITIReport,pp.11,44).

Stakeholderviews

TheIAexplainedthatinformationonGDPcompositioninabsoluteandrelativetermswasavailablefromtheINSTATwebsiteandthatalinkwasprovidedtotheINSTATwebpageinthe2015EITIReport.AgovernmentrepresentativeexplainedthatINSTATpublishedpreliminaryGDPdatainNovemberofthesubsequentyearandfinalGDPdatainthefollowingMay.However,INSTATalsopublishedquarterlyGDPdataatconstantpriceswithin90daysoftheendofthequarter.TheIAexplainedthatithadonlyincluded

129http://www.instat.gov.al/al/home.aspx13024%oftotalexportsin2015,orLek57.9bn.131USD252m,or13%oftotalexportsin2015.132Lek26.3bn,orUSD208.5m,equivalentto11%oftotalexportsin2015.1333215employees,or0.3%oftotalemploymentin2015.1345000employees,or0.4%oftotalemploymentin2015.



GDPdatainrelativetermsinthe2015EITIReportforeaseofunderstandingandconsideredthatinterestedpartiescouldfreelyaccessadditionalinformationonGDPcompositiononline,throughtheINSTATportal.

Extensiveconsultationswithabroadrangeofstakeholdershighlightedthegovernment’sinabilitytoprovideacomprehensivefigurefortotalgovernmentextractivesrevenues,giventheconstraintsondisaggregatingextractivescomponentsofcommontaxes.Severalstakeholdershighlightedthatthiswasonlyanissueforminingcompanies,ratherthanforoilandgascompaniesthattendedtobesolelyoperatingintheoilandgassector(seeRequirement4.1).

AgovernmentrepresentativeexplainedthatINSTATestimatedthesizeoftheinformalsector,forinstanceartisanalmining,throughtheStructuralBusinessSurvey(SBS),wheretheyaskedcompaniestoestimatethesizeoftheirworkforce,andthencomparedthisinformationwithofficialdatasourcesonemployment.However,noneofthestakeholdersconsultedknewofanystudiesestimatingthevalueofinformalminingactivity.

Initialassessment

TheInternationalSecretariat’sinitialassessmentisthatAlbaniahasmadesatisfactoryprogresstowardsmeetingthisrequirement.Whilethe2015EITIReportprovides,inabsoluteandrelativeterms,estimatesoftheextractiveindustries’contributiongovernmentrevenues,exports,employmentandthelocationofmajoractivities,itonlyprovidesthemining,oilandgassector’scontributiontoGDPinrelative,notabsolute,terms.However,itispossibletoaccessthevalueofGDPin2015inbothcurrentandconstantpricesthroughtheINSTATwebsite,whichallowsreaderstocalculatethecontributionofextractiveindustriestoGDPinabsoluteterms.

Tostrengthenimplementation,theMSGisencouragedtoensurethatfutureEITIReportsincludethevalueofextractiveindustries’contributiontoGDPinabsolutetermsandprovidespecificfiguresforthemacro-economicinformationcoveredunderRequirement6.3.TheMSGisencouragedtostudytheextenttowhichitcouldprovideupdatedmacro-economicinformationonthecontributionoftheextractiveindustriesinatimeliermannerthroughtheAlbEITI(orotherrelevantgovernment)website.



Table6-Summaryinitialassessmenttable:Socialandeconomicspending



Socialexpenditures(#6.1) TheMSGdoesnotseemtohaveassessedwhethermandatorysocialexpendituresexistundercontractualtermsaheadofdatacollectionandthereiswidespreadconfusionoverwhetheranysuchmandatorysocialexpendituresexist.The2015EITIReportprovidesunilateralreportingofsocialexpendituresbyoneoilandgascompany(althoughthismayhavebeenerroneouslyincluded),butdoesnotclarifywhethertheseweremandatoryanddoesnotincludetheIA’sconcernsoverthecomprehensivenessofreportingofmandatorysocialexpendituresinthe2015EITIReport.TheMSGappearstohavemadenoattempttodistinguishbetweenmandatoryandvoluntarysocialexpenditures,cashandin-kindexpendituresnortoclarifytheidentityofanynon-governmentrecipientofmandatorysocialexpenditures.

Inadequateprogress

SOEquasifiscalexpenditures(#6.2)

ThereisnoevidencethattheMSGhaseverconsideredtheissueofquasi-fiscalexpendituresinrelationtoAlbpetroloranyotherextractivesSOE.

Noprogress

Contributionoftheextractivesectortotheeconomy(#6.3)

Whilethe2015EITIReportprovides,inabsoluteandrelativeterms,estimatesoftheextractiveindustries’contributiongovernmentrevenues,exports,employmentandthelocationofmajoractivities,itonlyprovidesthemining,oilandgassector’scontributiontoGDPinrelative,notabsolute,terms.However,itispossibletoaccessthevalueofGDPin2015inbothcurrentandconstantpricesthroughtheINSTATwebsite,whichallowsreaderstocalculatethecontributionofextractiveindustriesto




GDPinabsoluteterms.


1. Inaccordancewithrequirement6.1.a,theMSGshouldagreeacleardistinctionbetweenmandatoryandvoluntarysocialexpenditurespriortodatacollectionandensurethatmaterialmandatorysocialexpendituresarecomprehensivelydisclosedinfutureEITIReports.Wherebeneficiariesofmandatorysocialexpendituresareathirdparty,i.e.notagovernmentagency,theMSGshouldensurethatthenameandfunctionofthebeneficiarybedisclosed.TheMSGmaywishtoconsidertheextenttowhichdisclosureofactualmining,oilandgascontracts(orreviewofkeyterms)wouldbenecessarytoprovideacomprehensiveassessmentoftheexistenceofmandatorysocialexpenditures.TheMSGmayalsowishtoconsiderthefeasibilityofreconcilingmandatorysocialexpenditures.

2. Inaccordancewithrequirement6.2,theMSGshouldconsidertheexistenceandmaterialityofanyquasi-fiscalexpendituresundertakenbyextractivesSOEsandtheirsubsidiaries,ensuringthatallmaterialquasi-fiscalexpendituresaredisclosedinfutureEITIReports.




PartIII–OutcomesandImpact

7. OutcomesandImpact

7.1Overview

ThissectionassessesimplementationoftheEITIRequirementsrelatedtotheoutcomesandimpactoftheEITIprocess.

7.2Assessment

Publicdebate(#7.1)


Comprehensibility:TheAlbEITISecretariathasledallEITI-relatedcommunicationeffortssince2011,structuredthroughcommunicationstrategiesfor2011-2012,2014-2015and2016-2017.AllEITIReportscovering2009-2015,theirsummariesandSummaryDataFilesareaccessibleinAlbanianandinEnglishontheAlbEITIwebsite135,aswellashavingbeenpublishedinhardcopies.TheIAhaspreparedSummaryEITIReportsthatarealsoavailableinbothhardcopyandonline.136ThesecretariatfrequentlyupdatestheAlbEITIwebsite,coveringallEITIeventsandrecentnewsunderitsnewsandblogssection.137ThesecretariathasalsopreparedtwoEITInewsletters138andabrochure139in2012,althoughitappearstohavediscontinuedthispracticethereafter.TheAlbEITISecretariatproducedtwopromotionvideosontheEITIprocessinAlbania,oneinJanuary2017140andoneinMarch2015141topromotethe2013-2014EITIReport.Drivenbythesecretariat,AlbEITIhasalsofollowedcontentiousissuessuchassubnationaltransfersthatwerenotbeingtransferredtolocalgovernment142andpublishedasupplementtothe2015EITIReportcoveringsub-nationaltransfersinJune2017(Alb-EITI,2017).

Promotion:TheAlbEITISecretariathasactivelypromotedEITIinformationthroughpressbriefings143,disseminationactivitiesinTiranaandextractiveregions144,opinionpolls145,socialmediaandcapacity

135http://www.albeiti.org136Summary2015EITIReport,http://www.albeiti.org/wp-content/uploads/2016/02/Brochure-EITI2.pdf137http://www.albeiti.org/news-2/138http://www.albeiti.org/wp-content/uploads/2014/03/newsletter_3.pdf;http://www.albeiti.org/wp-content/uploads/2014/03/NewLetter_print-1.pdf139http://www.albeiti.org/wp-content/uploads/2014/03/Broshura_Albeiti_2012.pdf140https://www.youtube.com/watch?v=rrjfhNsTako&feature=youtu.be141https://www.youtube.com/watch?v=_g1wccmQbbw&feature=youtu.be142CollectinganddistributingroyaltiesinLGU,http://www.albeiti.org/collection-and-distribution-of-mining-rent-in-lgus/143http://www.albeiti.org/press-conference-eiti-report-2013-and-2014/144http://www.albeiti.org/wp-content/uploads/2014/03/EITI-Report-2015-Subnational-Royalty-1.pdf;http://www.albeiti.org/presentation-of-the-2015-eiti-report-in-bulqize/;http://www.albeiti.org/presentation-of-the-2015-eiti-report-in-fier-and-patos-2/145http://www.albeiti.org/wp-content/uploads/2014/03/2016-Impact-and-Outcomes-of-EITI-Implementation-in-Albania-4-ENG.pdf



buildingworkshopsfortheMSG146;civilsociety,media147andcompanies.148Thesecretariatconductedextensivedisseminationcampaignsthatincludedmeetingswithlocalgovernments,localpopulationsandcompaniesinregionshostingextractivesactivities(Tiranë,Korçë,Berat,Kuçovë,Fier,Marinzë,Patos,BulqizaandKukës).Inadditiontothis,theMSGheldtwomeetingsintheextractiveregions:ameetinginMarch2017inBorizanëwherecementextractioniscarriedout149andameetinginDecember2016inBulqizawherechromeisproduced.ThesecretariattogetherwithMSGmembersheldaroundtablewithextractivecompaniesandlocalgovernmentinKukes150inFebruary2016.ThereisnoevidencethatMSGmemberswereactivelyengagedinotherdisseminationandoutreachactivitiesinextractivesregions,includingfromcivilsociety,beyondthoseactivitiesdrivenbytheAlbEITISecretariat.Therecentpromotionvideobasedonthe2015EITIReportwasshowninninebiggestcities(Tiranë,Korçë,Berat,Kuçovë,Fier,Marinzë,Patos,BulqizaandKukës)inFebruary2017andthefeedbackonpeople’sperceptionandunderstandingofsimplifiedcomplexeconomictopicsisavailableinaseparatestudy151.AccordingtoanAlbEITIImpactsurveyin2016,70%ofrespondentsconsideredFacebookastheirprimarymeansofaccessinginformationabouttheextractiveindustriesinAlbania(Alb-EITI,2016).

Publicaccessibility:TheAlbEITISecretariathasbeenactiveinensuringthepublicaccessibilityofEITIinformationboththroughonlinechannels,inhardcopythroughdisseminationandoutreachevents.AnactivesocialmediapresenceismaintainedthroughFacebook.152SecretariatstaffhavesoughttoimprovetheaccessibilityofkeyEITIdatabydevelopingeasy-accessinfographics,forinstancemappingextractivesrevenuesinAlbaniageographically.153

Opendatapolicy:TheMSGagreedtheAlbEITIOpenDataPolicyinDecember2016whichreferstogovernment’spolicyonaccesstoinformationinaccordancewiththeDigitalAgendafor2015-2020forE-governanceandInformationSociety154asapartofthegovernment’sOGPcommitments(CouncilofMinisters,2015).TheMSGupdatedthepaperinMarch2017byaddingOpenDataPrinciplesandPrioritiesrelevanttothenationalagenda(AlbEITI,2017).Onaccessandrelease,thepolicystatesthatdatashallbecomplete,authentic,timely,accessible,machine-readable,non-discriminatory,non-proprietaryandpublishedunderopenlicense.Onreuse,itstatesthatdatashallbefreelyused,modified,andsharedbyanyoneforanypurpose.Intermsofthenaturalresourcegovernance,thegovernmentshouldmoretowardmainstreamingtheEITIandensuretimelyhigh-qualitydatathatcouldbeusedandreusedinmachinereadableformatandinacost-effectiveway(AlbEITI,2017,p.5).

Contributiontopublicdebate:PresscoverageofAlbEITIactivitieshasbeenextensive,bothatperiodsofpublicationofEITIReportsandduringroadshowsandworkshops,online155andinprintedmedia,newsvideos156andTVprograms.157The2016-2017EITIcommunicationstrategytargetskeystakeholdergroups

146http://www.albeiti.org/training-from-world-bank-mission-for-msg-members-eiti-albania/147http://www.albeiti.org/transparency-and-accountability-in-the-extractive-industry-in-albania/148http://www.albeiti.org/roundtable-with-the-extractive-industries-operators/149http://www.albeiti.org/msg-meeting-in-premises-of-antea-in-borizane-kruje/150http://www.albeiti.org/round-table-with-the-extractive-industries-operators-in-kukes/151http://www.albeiti.org/wp-content/uploads/2016/02/Eng-Report-Testimi-i-Spotit-te-Vjeter-.pdf152https://www.facebook.com/eitialbania/?fref=ts153http://www.albeiti.org/extractive-industries-map-2/154https://issuu.com/miap4/docs/booklet_m-inovacionit_preview155Droninewsoutlet,http://www.droni.al/2016/01/20/eiti-publikon-transparencen-e-minierave-dhe-naftes-per-dy-vite/156https://www.youtube.com/watch?v=53EzMlr5VDk157InterviewwithDorinaCinarionSCANTV,7January2016,https://www.youtube.com/watch?v=7JeWBLyJyjI



includinggovernmententities,localgovernmentsandcommunities,themedia,CSOs,extractivescompanies,academicsandstudents,researchersandexpertsaswellasthegeneralpublic(Alb-EITI,2016).WhileEITIReportshavebeenusedasdiagnostictoolsforAlbania’sextractivesgovernance,includingexpandingtothehydropowersectorasakeygovernmentpriorityin2015,communicationseffortshavefocusedonraisingtheEITIasaprocessratherthanthefindingsandfiguresofEITIReportsthemselves.Withthe2016annualprogressreporthighlightingtheEITIasamechanismtotacklecorruption,ensuretransparencyandtriggersectoralreforms(Alb-EITI,2017),itiscleartheAlbEITIhasactivelypromotedpublicdebateofsectorfactsandreformsintheircommunicationsandoutreach.

Accordingtothe2016Impactsurvey,78%ofrespondentshadneverheardoftheEITI,withurbanrespondentsaccountingforthehighershareofthosewhohadheardoftheEITIatleastonce.Thefactthat80%ofrespondentswerenotawareoftherevenuegeneratedbyextractivecompanieswasusedtodemonstratethelowlevelofinteractionbetweencompaniesandhostcommunities(Alb-EITI,2016).

Stakeholderviews

Comprehensibility:OneCSOMSGmemberexplainedthatcivilsocietyhadsuggestedmakingtheMSG’sownsimplifiedversionoftheEITIReport,inparalleltothenormalsummaryreportproducedbytheIA,butthatthishadnotbeensupportedbyotherMSGmembers.SeveraldevelopmentpartnersnotedtheuseofEITIReportsforfactsandstatisticaldata,buthighlightedthefactthatlargeAlbEITIReportswerenotveryuser-friendly.SeveralgovernmentofficialsconsideredthatEITIdatawashelpfulforcitizens.Severalstakeholdersfromdifferentconstituenciesconsideredthatthereconciliationpartwaseasytoreadandonlycertainpartsofthenarrativereportcouldhavebeensimplified.CertaingovernmentrepresentativesnotedthatcertainstakeholderscouldnotunderstandthecomplexdatainEITIReports.AnothergovernmentrepresentativesaidthattheEITIReportsweresufficientandconsideredamongthebestreportsonextractiveindustriesinthecountry.

Promotion:SeveralgovernmentrepresentativessaidtheywidelydisseminatedEITIReports,forinstancewhenvisitingregionstotalktolocalcommunities,atmeetingsoftheCouncilofMinistersandothergovernmententities,andformeetingswithcompaniesandinvestors.SomedevelopmentpartnersnotedthattheyhadnotreceivedEITIReportsbeforeandwouldhaveappreciatedreceivingnotificationwhenEITIReportswerepublished,criticisingthefactthattheywerenotinvitedtoEITI-relatedevents.OnejournalistconsideredthatthegovernmentusedtheEITIprocesstoimproveitsinternationalimage.

OneCSOMSGmembernotedthattheAlbEITIconductedalotofeventsinextractiveregionsandsometimesinvitedcivilsocietytojoin,althoughtheintervieweehadonlyparticipatedonceduetoone’slackoffreetime.AnotherCSOMSGmembersaidthatcivilsocietyalwaysmentionedtheEITIanditsbenefitswhentalkingtolocalgovernmentsandcommunities.SeveralCSOrepresentativesbothonandofftheMSGemphasisedfundingconstraintstoexplainthelackofcivilsocietyoutreachonEITIoutsideTirana,independentlyorinconjunctionwiththeAlbEITISecretariat’sefforts.However,civilsocietyrepresentativescomplainedthattheydidnothavefundingtoconductdisseminationandawarenessraisingevents.TheCSOsdeniedthattheyhadeverbeenaskedbytheAlbEITItojoindisseminationactivitiesinextractivesregions.NoneoftheCSOsconsultedprovidedevidenceoftheiruseofEITIdata,despitegeneralclaimsthatEITIdatawasusefulforCSOs’advocacyandlobbyingneeds.

Publicaccessibility:SeveralgovernmentrepresentativescommentedthatEITIReportswerepublicly



availableandwidelyconsultedontheAlbEITIwebsite.Secretariatstaffexplainedthatallrelevantdocumentationwascontinuouslyuploadedonthewebsite,includingEITIReports,theirsummariesandanalysesofthedata.Thesecretariatpublishedthe2015EITIReport,likeallothers,inAlbanianandthepopularsummaryEITIreportinbothAlbanianandEnglish.StakeholdersdidnotexpressanyparticularviewsontheusefulnessofEITIdataforcompaniesorcivilsociety,norprovideanyspecificexamplesoftheiruse.However,severalgovernmentandindustryrepresentativesnotedtheuseofEITIReportsforinvestorsseekingtoapplyforminingoroilandgaslicenses,andconsideredthatitwouldbehelpfultoextrapolatekeyEITIdata(andthebenefitsofEITIforindustry)intobrochuresandinfographics.

Contributiontopublicdebate:OneCSOMSGmembersaidthatpublicawarenessanddisseminationactivitieswereimportantforEITIimplementation.

SeveralindustryrepresentativessaidthatcompaniesusedtheEITItolobbytheirrightsandthatitservedasaplatformtocommunicatetheirchallenges.ItwasnotedthattheEITIreportinganduseofdatahadgrownoveryears.Thereportshavebecometimelier,thequalityofEITIdatahasimprovedandreportshavebecomemoreextensive.Itwasnotedthatcommunitiescouldseetheinformationoncompanies’paymentsandbetterunderstandthevalueofextractivespayments.Oneindustryrepresentativepraisedthefactthatthe2013-2014EITIReporthadincludedinformationonsocialpaymentsbutwasdispleasedbythefactthatthe2015EITIReportprovidednosuchdata.

Amayorofanextractiveregionsaidthatpublichearingsandcitizens’consultationswereconductedonaregularbasisandamongothertopicstheydiscussedtheEITIprocess.TheEITItriggereddiscussionsfromcitizensseekingbenefitsfromlivingonresource-richlands.ThelocalofficialnotedthatasidefromAlbEITI’sholdingofpunctualpublichearingsandmeetings,therewasnosustainedmechanismthroughwhichtovoiceconcernsoverlocalissuesatthenationallevel.Thelocalofficialcalledforthegovernmenttoconsultwithlocalgovernmentsandcitizenswhentakingimportantdecisionsuchsubnationalroyaltytransfers.

Initialassessment

TheInternationalSecretariat’sinitialassessmentisthatAlbaniahasmadesatisfactoryprogressinmeetingthisrequirement.TheEITIReportsarepublishedonaregularandtimelybasis,fullandsummaryreportsarepublishedinAlbanianandEnglishinhardcopiesandonline.TheAlbEITISecretariathasbeenthekeydriverofcommunicationsandoutreach,attimessacrificingmulti-stakeholderengagement,andwidelydisseminatedandpromotedEITIReportsintheregionsandonlinethroughvideos,newsitemsandsurveys.However,giventhattheAlb-EITISecretariatisexecutingworkplanactivities,itcouldbearguedthatthesecretariatoperateswithamandatefromtheMSG.ThereissomeevidenceofuseofEITIdatafromsomestakeholdersincludinggovernment,journalistsandtoalesserextentcivilsociety.TheMSGhasagreedapolicyonaccess,releaseandreuseofEITIdatathatisalignedwiththebroadergovernmentagenda.

Tostrengthenimplementation,theMSGshouldconsiderstrengtheningmulti-stakeholderengagementinitscommunications,disseminationandoutreachefforts,toensurebroaderdisseminationandpublicdebateonEITI-relatedissues.Naturalresourcegovernanceandanti-corruptionareheatedtopicsinAlbania,andtheMSGmaywishtoconsidertailoringEITIdiscussionstotangibledemandsfromstakeholders.



DataAccessibility(#7.2)

DocumentationofprogressTheAlbEITIOpenDataPolicyestablishestheclearpresumptionoftransparencyforallAlbEITIinformation(Alb-EITI,2016).SummarydatatableswereproducedforallAlbEITIReportscoveringsevenfiscalyears(2009-2015)inmachine-readableformatontheAlbEITIhomepage158andontheAlbaniapageoftheglobalEITIwebsite.159However,AlbEITIhasnotyetpublishedmachine-readablefilesofallreconcileddatainEITIReports.ThereislimitedevidenceofMSGdiscussionsrelatedtotherecommendationslinkedtoEITIRequirement5.1onrevenueclassificationsystemsortoproductionofsummaryreports.However,theMSGhaspublishedsummariesoftheAlbEITIReports,accessibleontheAlbEITIwebsiteanddisseminatedhardcopiesofreports.TheMSGincludedmovingtowarddisclosuresinopendataformatasoneofitsobjectivesforthe2016-2019EITIworkplan.Inaddition,theMSGhiredDMConsultingServicestoexploreopportunitiestointegratetheEITIintothegovernmentalsystemsin2015.Thefeasibilitystudy,whoseexecutivesummaryisavailableontheAlbEITIwebsite160,focusedonassessingexistingsystemsandthepotentialforintegratingEITIreportingandcreatinganonlineEITIreportingsystem(DMConsultingServices,2015).

StakeholderviewsSeveralsecretariatstaffandgovernmentrepresentativeshighlightedthatsummarydatatableshadbeenpreparedforallEITIReportsproducedbyAlbania,whichwereaccessibleontheAlbEITIhomepage.Severalsecretariatstaffanddevelopmentpartnersconsideredthatthe2015mainstreamingpre-feasibilitystudyhadbeeninitiatedtooearlyandhadfocusedonthetechnicalinterconnectionsbetweengovernmentITsystems,ratherthanbroaderissuesofintegratingreportingunderspecificEITIRequirementsinroutinegovernmentsystems.Secretariatstaffhighlightedtheimportanceofthegovernment’sopendatapolicyandwork,notingthattheEITIopendataeffortswerebeingintegratedintobroadergovernmentopendatapolicyinordertoavoidduplicationofdatacollectionandaggregationautomationsystems.Noneofthestakeholdersconsultedexpressedanyparticularviewsontheuseofmachine-readableEITIdata.

SeveralgovernmentstakeholdersandsecretariatstaffhighlightedAlbEITI’s2015mainstreamingpre-feasibilitystudybutnotedthatithadfocusedonintegratingexistinggovernmentdatabasesfromanITperspectiveratherthanscopingEITI-requiredinformationthatwasalreadyproducedbygovernmentsystems.Aconsultanthighlightedthelackofintegrationofgovernmentdatabases,notingthatagenciessuchasCustoms,Tax,AKBNandothersdidnotcommunicate.WhiletheNationalAgencyforITSystems(NAIS)wasseekingtointegrategovernmentdatabasesthroughtheGovNetcloud,thiswasstillatanembryonicstage.Theconsultantalsonotedthatcompanieswerenowrequiredtofiletheirtaxesonline,since2015.SeveralgovernmentofficialshoweverhighlightedongoingreformstoestablishtheAlbanianFinancialInformationSystem(AFMIS)in2018,aEUR40mprojectsupportedbytheAustrianDevelopmentAgency161,whichwouldintegratedatabasesoftheMinistryofFinance’sTreasury,Customs,Tax,Budget

158http://www.albeiti.org/en/159https://eiti.org/albania#revenue-collection160http://www.albeiti.org/wp-content/uploads/2015/04/Feasibility-study-for-the-implementation-of-EITI-data-integrated-system-in-Albania-4.pdf161http://www.entwicklung.at/fileadmin/user_upload/Dokumente/Publikationen/Landesstrategien/CS_Albania_2015-2020.pdf



andHumanResourcesDepartments.

InitialassessmentRequirement6.2encouragestheMSGstomakeEITIreportsaccessibletothepublicinopendataformats.SucheffortsareencouragedbutnotrequiredandshouldnotbeconsideredinassessingcompliancewiththeEITIStandard.TheAlbEITIdataisavailableinmachinereadableformatthroughthenationalAlbEITIwebsiteandtheAlbaniapageoftheEITIglobalwebsite,drawingonsummarydatatablescompletedbythenationalsecretariatandIA.TheAlbEITIsecretariathasalsopublishedsummariesofEITIReportspreparedbytheIA.

Lessonslearnedandfollow-uponrecommendations(#7.3)


The2016annualprogressreport,approvedbytheMSGon20March2017162,providesanoverviewoftheMSG’sresponseandprogressmadeinaddressingsomeoftherecommendationsfromthe2015EITIReport(pp.36-44).Theannualprogressreportlists14recommendationsfromthe2015EITIReport,allofwhichwererecurrentfrompreviousEITIReports.TherecommendationsrelatebothtoEITIRequirementsandtobroaderimprovementsingovernmentsystems,including:

• improvingreportingprocessanddatacollectionprocedures,

• requiringqualityassuranceofcompanyreportingbystatutoryaudit,

• reconciliationofsubnationaltransfersandtheinclusionofLGUsinreporting,

• transitioningtocentralisedextractivesrevenuesreportingbytheTreasurysystem,

• encouragingMEIandAKBNtoroutinelydisclosestatisticaldata(e.g.onproduction,export,investmentandemployment,etc.)ontheirwebsites,

• publishingdataonprovennaturalresourcereserves,

• maintaininganupdatedlicenseregisterorcadastresystemthatispubliclyaccessible,

• publishingonlinethefinancialandtechnicalcriteria,listofbiddersandtenderoutcomesforlicenseallocation,and

• amendingthelegalbasisforcomprehensiveEITIreporting(Alb-EITI,2017).

TheMSGhasdiscussedsomeoftherecommendationsonseveraloccasions,includingdelaysinEITIreporting,assurancepractices,improvementsinreportingsystems,reportingfromLGUs,routinelydisclosingproductiondata,maintaininganonlinelicenseregisterandpublishinglicenseallocationprocedures.However,thereisnoevidencethattheMSGinvestigatedunreconcileddiscrepanciesafter




thepublicationofEITIReports.GiventhattheIAprovidedthesamerecommendationsforthe2013-2014EITIReportasforthe2015EITIReport,progressinimplementingpastEITIrecommendationsappearstohavebeenlimitedtotheMSGdiscussionsonly.Inmostofthecases,theMSGagreedtotherecommendationsandtaskedtheAlbEITISecretariattoshareandfollowuponrecommendationwithrelevantindividualentities.

The2015EITIReportdoesnotassesstheprogressonimplementing14recommendationsfromthepreviousEITIReport,norcommentsonwhetheranyofthemwereaddressed.Theannualprogressreportnotesthatthelackoflegalenforcementkeepsthereportingentitiesfromtakingownershipandactinguponrecommendations(p.36).Forthisreason,theMSGandAlbEITIinitiatedalegalreviewthatsuggestedamendmentstothelegalframeworktostrengthenandempowertheimplementationofpastEITIrecommendations(Eurosupport,2017).Basedonthelegalreview,aconsultantdevelopedadraftLawonTransparencyoftheExtractiveIndustriesActivitiesinAlbania,supportedbythegovernmentandduetobeadoptedbyParliamentbeforeSeptember2017.

Recommendationsthatdonotappeartohavebeenfolloweduponbygovernmentbutappearhighlyrelevanttoimprovementsinthemanagementoftheextractiveindustriesinclude:

• reportingentitiestoreconciletaxpaymentswithregionaltaxofficespriortosubmittingEITIreportingtemplates;

• MoFtodiscloseaformulaoncalculatinga5%ofsubnationalroyaltyandreportonhowitwasdistributedtoLGUs;

• MEItorequestauditedfinancialstatementsfromtheextractivecompanies;

• disaggregatepaymentsbylicenses;

• mainstreamstatisticaldataonMEIandAKBNwebsitesformoretimelyreporting.

TheAlb-EITIpreparedaworkplantofollowuponrecommendationfromthe2015EITIReport.TheworkplanlistsallpastEITIrecommendations,objectives,actionsrequired,responsiblestakeholderandtimeline.Theworkplan163alsoplannedfortheestablishmentofworkinggroupsofMSGmembersandrelevantgovernmententitiestoaddresseachrecommendation,whichhelditsfirstjointmeetingon9May2017.164

StakeholderviewsTheIAnotedthataddressingrecommendationsrequiredcollaborationacrossgovernmentinstitutionstobuildinternalEITI-relatedprocessesandestablishthenecessaryqualitycontrols,forinstanceonproductiondata.TheIAnotedthattherewasinsufficientinstitutionalmemoryacrossthegovernmentduetofrequentchangesinministerialstaff,whichmeantthatproactivebilateralfollow-upwithindividualgovernmententitiesonpastEITIrecommendationswasrequired.TheIAnotedthatveryfewEITI

163TheworkplanonrecommendationsfromEITIreportsisavailableinAlbanian.164http://www.albeiti.org/working-group-on-implementing-the-independent-administrators-recommendations-on-the-2015-eiti-report/



recommendationshadbeenaddressedinpractice,withthenotableexceptionoftheprovisionofalistofallmaterialcompanies’singleTaxidentificationnumberstotheIAforthe2015EITIReportforthefirsttime.

Secretariatstaffconfirmedthattherewasnoinstitutionalisedstructureforfollow-upandimplementationofEITIrecommendationsandnotedthatfollow-upwasonabilateralbasisbetweenthesecretariatandrelevantgovernmentagencies.SecretariatstaffandcertainMSGmembersnotedthatinlate2016theyhadstartedaddressingrecommendationsrelatedtolegalamendments.However,theIAnotedthatlegalamendmentswouldrequiresignificanteffortsbythegovernmentbeyondtheMSGandhighlightedthatthesamerecommendationshadbeenrepeatedinthelastfiveEITIReports.AccordingtotheIA,whentheMSGdiscussedEITIReports’recommendations,itusuallydidnotobjecttoanyofthem,norcommentormakesuggestions.

AseniorgovernmentofficialsaidthatEITIrecommendationswereconsideredbythegovernmentandservedtoimprovemanagementoftheextractiveindustries.TheofficialstatedthatEITIdatawouldbemadeevenmorerelevanttodecision-makingthroughthegovernment’seffortstostandardisecompanyEITIreporting,integrateitintonormalcompanyreportingtogovernmentandensureitispublishedonatimelierbasis(e.g.quarterly).SecretariatstaffsaidthattheMEIandAlbEITIhadsentofficialletterstogovernmententitiestofollowuponindividualrecommendationsin2015-2016,althoughtheministrieswereslowinrespondingwithmanynotfollowingup.Itwasnotedthatcertaingovernmententitieswerenotwillingtotakeownershipinaddressingrecommendations.SecretariatstaffconfirmedthattheAlbEITISecretariatwasthedriverinfollowinguponrecommendationsfromEITIReports,withtheMSGhavingonlyinconsistentdiscussionsoncertainrecommendations.Thesecretariatpreparedalistofrecommendationsfromthe2015EITIReportandsuggestedthecreationofworkinggroupsthatwouldaddresseveryrecommendation.AcompanyrepresentativesaidthattherecommendationsintheEITIReportsshouldbepresentedanddiscussedbyeachconstituency,butthatthishadnothappenedinpracticeforpastEITIReports.

Initialassessment

TheInternationalSecretariat’sinitialassessmentisthatAlbaniahasmademeaningfulprogressinmeetingthisrequirement.ThereislimitedevidenceofMSGfollow-uptoactonlessonslearned,toidentify,investigateandaddressthecausesofdiscrepanciesandtoconsidertherecommendationsforimprovementsfromtheIAinpreviousEITIReports.MinutesofMSGmeetingsdonotrevealsubstantialdiscussionsonrecommendationsandlessonslearnedfromEITIReports.SuccessiveEITIReportscoveringfiveyearshaveincludedthesamerecommendations.Theannualprogressreportprovidessomeassessmentoffollow-uponpastEITIrecommendations,albeitonlytoalimitedextent.TheAlbEITISecretariathasbeenthedriveroffollow-uponrecommendations,bilaterallywithrelevantagenciesthroughadhocworkinggroups,althoughthelackofmulti-stakeholderengagementhaslimitedtheextenttowhichsecretariatfollow-uphashadanimpact.

Inaccordancewithrequirement7.3,theMSGshouldtakestepstoactuponlessonslearnt,toidentify,investigateandaddressthecausesofanydiscrepancies,andtoconsidertherecommendationsresultingfromEITIreporting.TheMSG,inconsultationwithgovernmentstakeholdersinparticular,maywishtoconsiderinstitutionalisingitsmechanismsforfollowinguponrecommendationsfromEITIReportsandValidationasameansofensuringstricterattentiontoimplementation.



Outcomesandimpactofimplementation(#7.4)


AlbEITIhasproducedfourannualactivityreportscovering2013-2016,publishedinbothAlbanianandEnglish,availableontheAlbEITIwebsite.165Asinthepastseveralyears,theMSGapprovedthe2016annualprogressreportandpublisheditontheAlbEITIwebsiteinMarch2017,aheadofthe1Julydeadline,toensurethereports’relevanceandtimelinessforstakeholders.

TheannualprogressreportunderlinesthatoneofthemainoutcomesofEITIimplementationinAlbaniawastheinclusionofthehydropowersectorinthescopeofreportingfrom2015.ThehydropowersectorisagovernmentpriorityinAlbaniaandextendingtheEITItothehydropowerwasaimedathighlightingchallengesinthesectorandensuringthattransparencyledtoreformsandimprovementsingovernance.Despitethelackoflegalrequirementsforhydropowercompaniestoreport,hydropowercompanieshavereportedvoluntarilyforthelastthreeyears(Alb-EITI,2017).Theannualprogressreportincludesasummaryofactivitiesundertakenin2016(Alb-EITI,2017,pp.3-11).Thereportnotesthatworkin2016focusedonpreparationofthe2015EITIReportandfollowuponlegalreformsfortheextractiveindustriesasaconsequenceofrecommendationsfromthe2013-14EITIReport(Alb-EITI,2017,p.3).ThereportalsoprovidesanassessmentofprogresswithmeetingEITIrequirements,statingthatthe2015EITIReportcovers100%ofrevenuesinoilandgas,95%inhydropowerand88%inmining.Itprovidesanassessmentofprogressandactionsthatweretakeninrelationtothe“encouraged”aspectsoftheEITIStandardsuchasrevenuemanagementandexpenditure,transportationpayments,discretionarysocialexpenditures,subnationaltransfers,contractsandbeneficialownership(Alb-EITI,2017,pp.23-34).WhiletheannualprogressreportdoesnotincludeanassessmentofprogresswithmeetingeachEITIRequirement,eachofthepastthreeAlbEITIReportshasprovidedacomprehensiveoverviewofprogressagainsteachrequirement,e.g.inAppendix10ofthe2015EITIReport(AlbaniaEITI,2016,p.161).TheannualprogressreportalsocommentsonaspectsoftheEITIStandardthatwereexceeded,forinstanceinthehydropowersector.

TheannualprogressreportprovidesalimitedoverviewoftheMSG’sresponsesandprogressmadeinaddressingtherecommendationsfromthe2015EITIReport(AlbaniaEITI,2016,pp.36-44).Theannualprogressreportlists14recommendationsfromthe2013-2014EITIReport166,althoughthesearealsoincludedintothe2015EITIReport.TheannualprogressreportprovidesclearevidencethattheMSGdidnotfullyconsidernordiscussindetailanyfollow-uponEITIrecommendations,giventhatmostrecommendationsreviewedintheannualprogressreportshownoMSGpositionoranyfollow-upaction(seeRequirement7.3).

Theannualprogressreportlists12objectivesfromthe2016EITIworkplan167,whichrelatetotechnical

165http://www.albeiti.org/publications/166Delaysanddiscrepancies,Assuranceprocess,Otherqualityaspectsofthepaymentsanalysis,Lackofcentralizedreportingatgovernmentlevel,ReportingfromLocalGovernmentUnits,LimitationsonreportsproducedbytheTaxauthorities’MIS,Publicationofstatisticsinthesector,Productiondataandvalues,Disclosureoftotalgovernmentrevenue,Reserves,Maintainingofanupdatedpublicregisteroflicenseesandconcessions,Transparencyoverlicenseallocation,ReconciliationofsubnationaltransfersandRegulatoryaspectsinthecontextofEITIreporting.1672016EITIWorkplan;2015AnnualActivityReport;MSG;Legalandregulatoryreview;2016-2017CommunicationStrategy;Communicationactivities;2015EITIReport;2016EITIValidation;Studyontheuseofroyaltyincometransparencyandextractiveindustriescompaniesdonationsinthelocalgovernment;SurveysonEITIimpact;Additionalprojects;andEITIcapacitybuilding.



EITIaspectsratherthannationalextractivespriorities,eventhoughthe2017workplanobjectivesaremoreinlinewithnationalprioritiesandtheEITIPrinciples.Theannualprogressreportassessesprogressagainstlistedworkplanobjectives,highlightingtheoutcomesofeachobjective’simplementationandcommentsontheimpactwherepossible(Alb-EITI,2017,pp.11-22).TheannualprogressreportincludesanarrativeaccountofstrengthsandweaknessesofAlbania’sEITIimplementation.ThereportcommentsthatthestrongestaspectsincludethewidescopeofreportingcompaniesandEITIawarenessamongststakeholders,whileoneoftheweaknessesincludedthelowknowledgeofEITIamongstcitizens.Thereportsuggestswaysofaddressingtheseweaknessesbyraisingmorefundsandbuildingcapacitiesforstakeholders,whilealsorecommendingthatEITIreportingbeintegratedintogovernmentalreportingsystemstoensurethesustainabilityoftheprocess,beyonditscurrentdependenceonforeigndonorfunding(Alb-EITI,2017,p.46).ThereportdoesnotcommentonothereffortstoexpandthescopeofEITIimplementationbeyondtheexpansionofreportingtothehydropowersector.Theannualprogressreportprovidesanoverviewoffundingandexpenditures,includingadetailedbudget(Alb-EITI,2017,pp.47-48),anddetailschangestotheMSGamongstthegovernmentandcivilsocietyconstituenciesandapprovaloftheMSG’snewToRs.TheannualprogressreportisalsoillustratedwithphotosfromMSGmeetingsandotherEITIeveningin2016(Alb-EITI,2017,pp.51-62).

AlbEITIundertookthreeopinionsurveystomeasuretheimpactoftheEITIoncommunities.ThefirstsurveywasconductedinOctober2014andlookedintoageneralawarenessofEITIimplementationandanimpactoftheextractiveindustriesoperationsoncitizensinBulqiza,Kukës,Librazhd,Patos,PerrenjasandTirana(AlbEITI,2014).Thesecondsurvey,undertakeninJanuary2016,showedthat90%ofits1,000respondentswereawareoftheextractiveoperationsintheregionsbutknewlittleaboutthepaymentsthatcompaniesmade,including5%ofsubnationalroyalties(AlbEITI,2016).ThethirdsurveyconductedinSeptember2016,coveredthirteencities(Bulqiza,Burrel,Fier,Korca,Kukes,Librazhd,Patos,Pogradec,Perrenjas,Rrëshen,Tirana,VauiDejesandVlora)(Alb-EITI,2016).

Stakeholderviews

Noneofthestakeholdersconsulted,includingMSGmembers,expressedanyparticularviewsontheuseoftheAlbEITIannualprogressreport.SecretariatstaffnotedthattheannualprogressreportwasdisseminatedatsomeregionalroadshowsandwasusefulinaccountingforAlbEITIactivitiesthroughouttheyear.SecretariatstaffalsohighlightedtheexistenceofseveralannualauditreportsonAlbEITI,accessibleundertheTransparencytaboftheAlbEITIwebsite,whichwereconsideredcomplimentarytotheAlbEITIannualprogressreport.Moststakeholderswhoexpressedanyviewsontheissueappearedtoconsidertheannualprogressreportasasimplecompliancedocument,inlinewithEITIRequirements,ratherthanameansofcommunicatingAlbEITIactivitiestobroaderconstituenciesandthegeneralpublic.AgovernmentMSGmemberconfirmedthatthedraftannualprogressreportwaspreparedbytheAlbEITIsecretariatandcirculatedamongstakeholdersforinput.Theannualprogressreportwasconsideredhelpfulintermsoftrackingprogress,identifyingresultsandassessinggaps.OneCSOMSGmembernotedthatcivilsocietyhadprovidedcommentsandinputtothe2016annualprogressreportduringMSGmeetings.

TherewerevaryingviewsregardingtheoutcomesandimpactsofEITIimplementation,bothacrossandbetweenstakeholdergroups.AgovernmentrepresentativecommentedthattheEITIprovidedcredibledataandhelpedinassessinggapsinreportingsystems.TheofficialnotedthatthegovernmentusedtheEITItoattractmoreresponsibleinvestmentandenactmoretransparentrulesforbusinessinAlbania.



SeveralgovernmentofficialsnotedthatEITIreportingwasconsideredneutralandservedasadiagnostictooltoprovidecredibledatatothegovernment,withEITIdataoftenusedbytheMembersofParliamentandgovernmentofficials,inparticulartoforecastrevenues.SeveralstakeholdersfromallconstituencieshighlightedthealignmentofEITIwithnationalprioritiesbynotingtheexpansionofEITIimplementationtothehydropowersector,consideringthatthisinitselfconstitutedanimpactofEITIimplementation.Ahigh-levelgovernmentofficialconsideredthatannualreportingwasnotsufficientandthattheEITIshouldcovermorethematictopicsofinteresttothepublic,notingthatthegovernmentsawvalueinexpandingtheEITIfurthertoforestryandfisheries.SeveralgovernmentofficialshighlightingthegeneralimportanceoftheEITIasaformofinternationally-recognisedgoodpractice.OneindustryMSGmembersaidthattheEITIwasusedtocommunicateconcernsaboutthegovernanceofnaturalresourcesandasameansofreassuringinvestorswhowantedassurancesthattheirinvestmentwouldbesafebyclarifyingambiguities.TheEITIthushelpedinclarifyingambiguities,accordingtotherepresentative.OnecivilsocietyrepresentativesaidthatEITIimplementationhadgraduallystrengthened,withCSOsfollowingeverystepsincethestartin2009,withtheMSGconstantlyaskingforimprovementsinEITIReports.AnotherCSOsrepresentativeconsideredthattheEITIwasagoodtoolforAlbaniatobetransparentaboutmining,oilandgas,energyandwaterandcouldbeextendedfurthertofisheriesandforestry,astheMSGhadrecentlydiscussed.ACSOsrepresentativeraisedconcernsabouttheneedforgeneralawarenessraisingabouttheEITI,giventhechallengesforcitizenstounderstandthecomplexityofrevenuesgeneratedfromtheextractiveindustries.TheCSOalsonotedthatengagingLGUsandrelevantgovernmententitieswaschallenging,givenCSOs’owncapacityconstraintsandthatEITIprovidedavehicleforbuildingcapacityonextractivesgovernance.

AccordingtoanEITIimpactsurveyconductedinSeptember2016,citizensconsideredthatwhiletheextractiveindustriesshouldservetheeconomic,socialandculturaldevelopmentofcommunities,thiswasnotusuallythecase.Whenaskedwhoamonggovernment,companyowners,residentsand“powerfulpeople”weretherealbeneficiariesofpaymentsandrevenuesgeneratedfromtheextractiveindustries,only33%oftherespondentschoselocalgovernmentandnonechoseresidents(Alb-EITI,2016).Accordingtotheimpactstudy,roughly75%ofrespondentsdidnotknowofanypublicinvestmentmadewiththerevenuescomingfromtheextractiveactivitiesintheircity.Thesurveyshowedthatcitizensweremostlyconcernedaboutthesloweconomicgrowthandhighunemploymentratesintheirlocalareas.YetaquarterofrespondentsbelievedthatpublicworkscarriedoutinmanyAlbaniancitieswerefinancedthroughtheincomegeneratedbyextractiveindustries(Alb-EITI,2016).

Initialassessment

TheInternationalSecretariat’sinitialassessmentisthatAlbaniahasmadesatisfactoryprogressinmeetingthisrequirement.TheMSGhasreviewedprogressandoutcomesofimplementationonaregularbasis,includingbypublishingannualprogressreportsoverthepastfouryears.However,theprogressreportslackanimpactassessmentanddonotaddressallrecommendationsfrompreviousEITIReports.YetthereisevidencethatAlbEITIhasundertakenotherformsofimpactassessmentsthroughopinionpollsandimpactassessments.

Tostrengthenimplementation,theMSGcouldconsiderdiscussingtheroletheEITIcouldplayinachievingnationalprioritiesinreformoftheextractiveindustriesaspartofitsannualreviewoftheworkplan.TheMSGmayalsowishtoundertakeanimpactassessmentwithaviewtoidentifyopportunitiesforincreasingtheimpactofimplementation.



Table7-Summaryinitialassessmenttable:Outcomesandimpact


Validator’srecommendationoncompliancewiththeEITIprovisions(tobecompletedfor‘required’provisions)

Publicdebate(#7.1)

TheEITIReportsarepublishedonaregularandtimelybasisinhardcopiesandonline.TheAlbEITISecretariathasbeenthekeydriverofcommunicationsandoutreach,attimessacrificingmulti-stakeholderengagement,andwidelydisseminatedandpromotedEITIReportsintheregionsandonlinethroughvideos,newsitemsandsurveys.ThereissomeevidenceofuseofEITIdatafromsomestakeholdersincludinggovernment,journalistsandtoalesserextentcivilsociety.TheMSGhasagreedapolicyonaccess,releaseandreuseofEITIdatathatisalignedwiththebroadergovernmentagenda.


Dataaccessibility(#7.2)

Requirement6.2encouragestheMSGstomakeEITIreportsaccessibletopublicinopendataformats.TheMSGagreedontheOpenDataPolicyandincludedmoreaccessibledataasoneoftheobjectivesoftheEITIworkplan.SucheffortsareencouragedbutnotrequiredandshouldnotbeconsideredinassessingcompliancewiththeEITIStandard.

Lessonslearnedandfollowuponrecommendations(7.3)

ThereislimitedevidencetheMSGhastakenseriousactionstoactuponlessonslearnt,toidentify,investigateandaddressthecausesofdiscrepanciesandtoconsidertherecommendationsforimprovementsfromtheIAfortheEITIReports.TheMSGmeetingsminutesdonotshowthattherewerediscussionsontherecommendationsandlessonslearntfromthepublicationoftheEITIReports.TheIAprovidedthesamerecommendationsforthelasttwoEITIReportsandlittleactionwastakentoaddressthem.Tosomeextent,alimitedassessmentofMSG’sviewsonrecommendationswasprovidedinthe2016AnnualProgressReport.TheAlbEITIdevelopedaworkplantofollowuponrecommendationfromthe2015EITIReport.

Meaningfulprogress



Outcomesandimpactofimplementation(#7.4)

TheMSGhasproducedanaccountofactivitiesundertakenin2016throughtheirAnnualProgressReport.TheAPRnotesthestrengthsandweaknessesoftheEITIprocessinAlbania.DespitethelackofimpactassessmentintheAPR,thereisevidenceofMSGeffortstoassessimpactthroughothermeans,suchasopinionpolls.




2. TheMSGisencouragedtoprovidemoreEITIdatainopendataformats.

3. Inaccordancewithrequirement7.3,theMSGshouldtakestepstoactuponlessonslearnt,toidentify,investigateandaddressthecausesofanydiscrepancies,andtoconsidertherecommendationsresultingfromEITIreporting.TheMSG,inconsultationwithgovernmentstakeholdersinparticular,maywishtoconsiderinstitutionalisingitsmechanismsforfollowinguponrecommendationsfromEITIReportsandValidationasameansofensuringstricterattentiontoimplementation.

4. Tostrengthenimplementation,theMSGcouldconsiderdiscussingtheroletheEITIcouldplayinachievingnationalprioritiesinreformoftheextractiveindustriesaspartofitsannualreviewoftheworkplan.TheMSGmayalsowishtoundertakeanimpactassessmentwithaviewtoidentifyopportunitiesforincreasingtheimpactofimplementation.



8. Impactanalysis

(nottobeconsideredinassessingcompliancewiththeEITIprovisions)

DocumentationofprogressImpact

TheobjectivesofAlbania’sEITIimplementation,asagreedbytheMSG,includewell-establishednaturalresourcegovernance,shiftingtoanopendataformat,supportparticipationofcivilsocietyandtacklecorruption.Theobjectiveswereapprovedinearly2017anditisearlytoassesstheprogressontheirimplementation.However,thereisapositivedirectionoftravelinfulfillingmostoftheseobjectivesandtheoutcomesofimplementationhaveshownsomepositiveimpact.

TheEITIhasbeenanimportantplatformforstrengtheningtransparencyandaccountabilityofthegovernmentandextractiveindustriesinAlbania.TheEITIishelpingtoimprovegovernmentsystemsandprocedures,especiallywithregardtolicensing.Forinstance,theMinistryofEnergyandIndustryhasestablishedaminingregisterfollowingrecommendationsfromEITIReports.ThroughEITIreporting,thegovernmentrevealedsignificantbarriersforreceivingstatutorysubnationalroyaltytransfersentitledtoLGUs.In2014,theallocationformulaandshareofroyaltieshadbeenchanged,enablingactualexecution.

TheEITIreportingprocessinAlbaniaistimelyandgenerallywellmanaged.MinisterofEnergyandIndustryDamianGjiknuriandhisDeputyMinisterIlirBejtjahavedemonstratedarobustcommitmenttoEITIimplementation.TheAlb-EITISecretariatheadedbyNationalCoordinatorDorinaCinariiswell-established.

Thereisgrowingforeignanddomesticinterestinthehydropowersector,whichiscoveredinAlbanianEITIReports.TheEITIReportsprovidesolidbaseforopendata,bringclarityonlegalandfiscalframeworkgoverningthesector,andgiverecommendationstostructuralreforms.Improvinghydropowerconcessionregulationmaystimulatedevelopmentofthesector.

TheTrans-AtlanticPipelineprojecthasbecomeoneofthemainenginesofthecountry’seconomicandsocialdevelopment.TheEITIcouldsetaframeworkfortransparencyandaccountabilityoftheTAPprojectinAlbania.

InthelightofthepoliticalchangeafterParliamentaryelectioninJune,theissueofbeneficialownershipdiscourseisparticularlyrelevant.In2017Alb-EITIwillundertakeapilotprojectondisclosureofextractivecompanies’beneficialowners.Albania’sthree-yearbeneficialownershiproadmap(to2020)providesnextstepsinharmonizingdomesticregulationswithEUDirectivesrelatedtobeneficialownershipdisclosure.Theroadmapforeseestheestablishmentofapublicbeneficialownershipregisterin2018,whichwouldpotentiallybeintegratedintoexistingdatabasesforcorporateregisters.

Constructiveengagement:TheEITIhashelpedcreateopportunitiesfordialogueamongdifferentgovernmententitiesthatdidnotpreviouslycoordinateonextractivesissues.ManygovernmentrepresentativesagreedthatparticipatinginEITIreportingandattendingMSGmeetingshadenabledmorefrequentcommunicationbetweenrelevantentities.TheForeignInvestors’AssociationofAlbania(FIAA)



alsosignedanMoUwithAlbEITIinOctober2016tostrengthencooperationandtheindustryconstituency’scoordination.FIAAplanstoundertakewideroutreachtolocally-ownedminingcompaniesinordertoparticipatebothinFIAA,theEITIandpotentiallyontheMSG.However,thereislittleevidenceoftheEITI’simpactonenhancingcollaborationbetweenCSOsandbuildingtrustbetweenCSOsandotherstakeholdergroups.WhiletheEITIhassupportedthegradualemergenceoflinkswithinthegovernmentandindustryconstituencies,thereisscantevidenceoflinkagesormeaningfulcoordinationwithinthecivilsocietyconstituency.Inaddition,relationsontheMSGremaintenseandtrustbetweenMSGmembersfromdifferentconstituencieshasdevelopedinonlyfitsandstarts.

Economiccontributions:ThroughEITIreporting,thegovernmenthighlightedconstraintsinitsabilitytocalculatetotalextractivesrevenuesduetoitsinabilitytoseparateextractivescomponentsofcommontaxespaidbydiversifiedconglomerates.Nonetheless,throughtheEITIReport,thegovernmenthashelpeddevelopestimationsoftotalmining,oilandgasrevenuesusingtheEITIdata.BuildingonthefindingsofEITIReports,theIAhasrepeatedlyrecommendedreformingTreasurysystemstoaddressthegovernment’sinabilitytoprovideacomprehensivefigurefortotalextractivesrevenues.Inaddition,Albania’sEITIReportshavealsoshown,forthefirsttime,themechanismforcollectingroyaltiesandallocatingasharefortransfertoLGUs(5%ofroyalties),highlightingchallengesinfulldisbursementofsubnationaltransfers.

Publicunderstanding:AlbEITIconductedthreeopinionsurveysonEITIimpactamongstcommunitieslivingintheextractiveregions(Pogradec,Korca,Bulqiza,Burrel,Librazhd,Kukes,Vlora,Patos,Fier,Perrenjas,Rrëshen,VauiDejesandTirana)(AlbEITI,2014),(AlbEITI,2016),(Alb-EITI,2016).Thesurveysshowthat,despitebeingawareofextractivesoperationsintheirregions,citizensdidnotknowhowtheybenefittedfromtheseactivities,norhowmuchcompanieswerepaying.SeveralcompaniesnotedthattheyfoundEITIusefulfortheirpublicrelationsandthattheysawvalueandimpactintermsofimprovingthepublic’sunderstanding.SeveralgovernmentofficialsexplainedthattheyusedtheEITItoimproveAlbania’simageattheinternationallevel.

Strengtheninggovernmentsystems:ThroughEITIreporting,AlbanianstakeholdershaveidentifiedissuesofLGUsnotreceivingthestatutorysubnationalroyaltytransferstheywereentitledto.Inthepast,thetransferof25%ofroyaltiestoLGUswascontingentonLGUsachieving120%oftheirbudgetedlocaltaxes,whichwasimpossibletoachieveonaconsistentbasis.Theshareofroyaltieshadbeencutfrom25%to5%in2014,andthetransferswerenowactuallybeingexecutedwithoutconditionality.

Thegovernmentprovidedanenablinglegalenvironmentforcompanies’EITIreporting,includingprovisionsmakingEITIreportingmandatoryunderLaw10304ontheminingsectorandLaw7746(amended)onthehydrocarbonssector(Parliament,2010),(Parliament,2015).Article51ofLaw10304ontheminingsectorspecificallywavesanyconfidentialityprovisionsrelatedtolocalandnationaltaxpaymentsintheminingsectorandconfirmsminingcompanies’obligationtodisclosesuchpaymentstotheEITI(Parliament,2010).

Recognition:EITIhasbeenimportantforAlbania’sinternationalimage.AmidstnegotiationssurroundingtheTAPproject,theEITIhasbeenimportantinsettingaframeworkfortransparencyandaccountabilityincompanypaymentstogovernment,aswellassocialexpenditures.ImplementationoftheEITIhasalsobeenimportanttotheAlbaniangovernmentinsupportingitsreformagendaaspartofitsEUaccession



efforts.

Sustainability

Funding:TheMEIhasconsistentlyprovidedpartialfundingforEITIimplementation,coveringapproximatelyonethirdofannualAlbEITIfundingneeds.Thisfundingcoveredsecretariatstaffsalaries,administrativeprocurement,transportation,officespaceandotherfacilities.TheremainingtwothirdsoffundinghasbeencoveredbytheWorldBank’sEITIMulti-DonorTrustFund(MDTF)until2016anditsExtractivesGlobalProgrammaticSupport(EGPS)MDTFsince2016.Heavydependenceonexternalfundingimposesrisksonthesustainabilityoftheprocess.However,overthemediumterm,theembeddingofEITIreportingintogovernmentandcompanysystemsshouldensurethesustainabilityofEITIimplementationoverthelongerterm.

Institutionalisation:Alb-EITIhasdevelopedadraftlawonEITIinordertoembeditintothenationallegislativeframework.ThelawhasfoundpoliticalsupportwithinthegovernmentandwillbemostlikelyadoptedbeforeSeptember2017.ThegovernmenthasexpressedsupportfortheMSG’sdraftLawonTransparencyintheExtractiveIndustries,whichisalignedwiththeEUTransparencyDirectiveandenshrineskeyEITIrequirementsintonationallegislation.TheMoFhasalsosupportedadraftLawonAccountingandFinancialReporting,whichwouldintegratecompanies’certifiedEITIreportingintheirstatutorygovernmentreportingrequirements.



Annexes

AnnexA-ListofMSGmembersandcontactdetails168

HeadofMulti-StakeholderGroupMr.IlirBejtjaDeputyMinister,[email protected]+355692071156RepresentativesoftheAlbanianGovernmentMr.DritanSpahiu,[email protected]+355666059000Mr.SajmirLaçej,[email protected]+355676051100Mr.AurelLamç[email protected]+355694037144Mrs.BorjanaShakaGeneralDirectorateofTaxesborjana.shaka@tatime.gov.al+355689073400Mr.NikollKazaGeologicalAlbanianServicenikollkaza@hotmail.com+355684045759Mr.AzbiArapiNationalAgencyofNaturalResourcesazbiarapi@yahoo.com+355682055616RepresentativesofCivilSocietyMr.SamiNezaCenterforTransparencyandFreeInformationsaminezaus@yahoo.com+355682088602Mr.IlirAliajCenterforDevelopmentandDemocratizationsoftheInstitutionsnatolin02@yahoo.co.uk+355692095284Mrs.AnilaHajnajAlbanianCentreforDevelopmentandIntegrationanilahajnaj@gmail.com+355674109682Mr.BakiBajraktariMinersUnionBulqizabajraktaribaki@gmail.com+355686335686RepresentativesofExtractiveIndustriesOperatorsMr.AdriatikGolemiBankersPetroleumLtdagolemi@bankerspetroleum.com+355696078243Mr.SaimirBokaAlbchromes.boka@albchrome.al+355664020432Mr.PerparimAlikajFIAAalikajp@albmail.com+355682020101Mr.DritanDervishajANTEACementdervishajd@anteacement.com+355694060150Mr.TurkerSengonulShellUpstreamAlbania–[email protected]+35542440888PermanentContributorsofEITIProcessMr.MehmetHasalamiMinistryofEnergyandIndustrymehmet.hasanlami@energjia.gov.al355692091555Mrs.ArjanaDyrmishiGeneralDirectorateofCustomsarjana.dyrmishi@dogana.gov.al+355684086152Mr.OltionKukeGeneralDirectorateofCustoms+355682031218Mrs.JonidaKazaMinistryofFinancejonida.kaza@financa.gov.al+355692941950Mrs.EntelaMuhaMinistryofJusticeentela.muha@drejtesia.gov.al+355699982929Mrs.LauraCelaBankersPetroleumLtdlcela@bankerspetroleum.com+355662030715Mr.BilalKoç[email protected][email protected]+355674092730

168http://www.albeiti.org/multi-stakeholder-group/


Annexes


AnnexB–MSGmeetingattendance

Albania-EITIMSGmeetingattendancechart

MSGmeeting 13.fe

b.15

13M

arch2015

02.apr.15

2June

2015

21Ju

ly2015

16Oct2015

06.nov

.15

23Dec2015

6May2016

9June

2016

29Ju

ly2016

31Oct2016

31.jan.17 Not

attended

Attended

NotaMSGmemberatthattime

GovernmentMSGChair 9 4MinistryofEnergyandIndustry 2 11MinistryofFinance 13 -AKBN 5 8GeologicalAlbanianService 3 10MinistryofJustice 7 6GeneralDirectorateofTaxes 7 6CivilsocietySamiNeza,CenterforTransparencyandFreeInformation 3 10IlirAliaj,CenterforDevelopmentandDemocratizationsoftheInstitutions

4 9

AnilaHajnaj,AlbanianCenterforInstitutionalDevelopment 3 10BakiBajraktari,MinersUnionBulqiza 9 1 3MadlinaPuka(Vlore) 2 5 6

CompaniesAdriatikGolemi,BankersPetroleumLtd 5 8SaimirBoka,Albchrome 12 1PerparimAlikaj,FIAA 2 11DritanDervishaj,ANTEACement 3 10Shell 13

Notea .ShellwasappointedasmemberofMSGbyFIAAon02.05.2017b. OthercompanieswerememberofMSGon2015&2016 c. AlreadyrequesteddifferenttimestotheCSOstoreplacethemissingmemberofMSGandwehavehighlightedtothemthatMr.Bajraktarisincehisappointmenthasbeenattendingmeetingsonlyonceandaskedtothemtosolvethequestion.Untilnowwedon`thaveanyresponsefromtheCSOsinthisregard.


Annexes


AnnexC–CostofEITIReports

EITIReport Cost(USD)

Selectionprocess

MSGnoObjectionsonToR’s

Bank'sNoObjection

ContractSigning

Nameofconsultats

ContractCompletion

2011-2012EITIReport

109,000 CS-CQ 15-Mar-14 30-Apr-14 2-May-14

DeloitteAlbania

31-Oct-14

2013-2014EITIReport

100,000 CS-SSS 2-Jun-15 3-Jul-15 14-Jul-15 DeloitteAuditAlbania

30-Nov-15

2015-2016EITIReport

128,000 CS-CQ 6-May-16 13-Jul-16 18-Jul-16 DeloitteAuditAlbania

31-Dec-17

Source:AlbEITISecretariat.

148

ValidationofAlbania:ReportoninitialdatacollectionandstakeholderconsultationAnnexD-Listofstakeholdersconsulted


AnnexD-Listofstakeholdersconsulted

Government

ALBANAAGOLLI,DepartmentDirector,KLSH,HighStateAuditor

ARLINDARUMBALLAKU,staffmember,AlbEITI

ARJANADYRMISHI,GeneralDirectorateofCustoms

AURELLAMÇE,GeneralDirectorofSupportServices,MinistryofJustice

AZBIARAPI,DirectoroftheMiningDirectorate,NationalAgencyofNaturalResources(AKBN)

BORJANASHAKA,DirectorofEnforcementCollection,GeneralDirectorateofTaxation

BILALKOÇI,AlbanianGeologicalService(SHGJSH)

BLERIMBRAJA,HydropowerDepartment,NationalAgencyofNaturalResources(AKBN)

DORINACINARI,NationalCoordinator,HeadofAlbEITI

ELSADHULI,DirectorofEconomicStatisticsDirectory,StateStatisticsOffice(INSTAT)

ENTELAMUHA,MinistryofJustice

FRANBRAHIMAJ,DirectorateofBudget,MinistryofFinance

ILIRBEJTJA,DeputyMinister,MinistryofEnergyandIndustry

IRSIDANUELLARI,StateStatisticsOffice(INSTAT)

LAVDERIMSAHITI,HeadofDirectorateofTreasury,MinistryofFinance

MANJOLANACO,GeneralDirector,HighStateAuditor(KLSH)

MAJLINDAARUCI,HydropowerDepartment,NationalAgencyofNaturalResources(AKBN)

MEHMETHASANLAMI,DirectorateofPoliciesandMiningDevelopment,MinistryofEnergyandIndustry

MYNYRSINAMAJ,HydrocarbonDepartment,NationalAgencyofNaturalResources(AKBN)

NERTILAXHIVESHI,HeadofDirectorateofTaxes,MinistryofFinance

NIKOLLKAZA,DirectorofMineralResources,AlbanianGeologicalService(SHGJSH)

OLTIONKUKE,GeneralDirectorateofCustoms

RAIMONDABALILAJ,MayorofPatos

SAJMIRLACEJ,DirectorofDirectorateofFiscalPolicy&Analysis,MinistryofFinance

VALMIRABEBRI,StateStatisticsOffice(INSTAT)

Industry

ANISACANAJ,ALBPETROL

BLERIMAAZEMI,MiningFerroNickel


Annexes


DRITANDERVISHAJ,TechnicalDirectorforExploitation,ANTEACement

DRITANSPAHIU,ALBPETROL

HAMZACUM,YebeiShpkmoi

LAURACELA,BankersPetroleumLtd

LUCADIBENEDETTO,Ph.D,NorthGroupMiningSHPK

MARINELAJAZOJ,ExecutiveDirector,FIAA

PATRICKPASCAL,GeneralManager,SeleniceBitumiSha

PANOIBOMBAJ,SeleniceBitumiSha

PERPARIMALIKAJ,HeadofitsCommitteeonIndustryandMining,FIAA

SIBAAZEMI,MiningFerroNickel

SILVANAHYSENI,AccountingandComplianceAnalyst,ShellUpstreamAlbaniaB.V.

SOKOLMATI,NeskoMetalA.Ş.

CivilSociety

ANILAHAJNAJ,AlbanianCentreforDevelopmentandIntegration

ANIPLAKU,GenderImpact

BAKIBAJRAKTARI,MiningUnionofBulqiza

ERALDKAPRI,YouthMediaAlbania

ERIONBANUSHI,HeadofSectoroftheDevelopmentofPrograms,InternationalCooperationandCommunication,AgencyfortheSupportofCivilSociety

FROSTINAGJINO,ExecutiveDirector,AlbanianOccupationalSafetyandHealthCentre

HENKSCHRAMA,AlbanianOccupationalSafetyandHealthCentre

ILIRALIAJ,ExecutiveDirector,CentreforDevelopmentandDemocratisationofInstitutions

LORENCGORDANI,Chairman,AlbanianCentreforEnergyRegulationandConservation

LVISTANUSHI,AlbanianPoliticalNetwork

NERITASEJAMINI,NewPolicyGroup

SAMINEZA,CentreforTransparencyandFreeInformation

Independentadministrators

ELVISZIU,EngagementPartner,DELOITTEAlbaniaSh.p.k

JONIDAVESIU,ConsultingManager,DELOITTEAlbaniaSh.p.k

Developmentpartners

ELTONQENDRO,ProjectAssistant,GoodGovernanceinEconomicEnvironmentalIssuesDepartment,


Annexes


OSCEAlbania

FRANKNIKOLLA,EconomicAssistant,EmbassyoftheUSA

ILIRBASHA,AssociateBanker,EBRDAlbania

JEFFREYDBOWAN,Economic&CommercialOfficer,EmbassyoftheUSA

JENSREINKE,ResidentRepresentativeofIMFinAlbania

ORLENASHAPO,Anti-corruptionFocalPointforDGC,GIZAlbania

MATTEOCOLANGELI,HeadofMission,EBRDAlbania

PHILIPPKELLER,DeputyHeadofMission,EmbassyofSwitzerlandinAlbania

SIGITASTAFA,NationalProgrammeOfficerforEconomicDevelopment,EmbassyofSwitzerlandinAlbania

Media

ENIOCIVICI,InformationDirector,SCANTV

FEJZIBRAUSHI,AlbanianPoliticalJournalistsNetwork

LUTFIDERVISHI,journalist

VJOLLCAKOLGJONI,journalist

Others

ASMARAKLEIN,EITICoordinator,PWYP

EMILOMAROV,EurasiaRegionalCoordinator,PWYP

DRITANMEZINI,ManagingDirector,DMConsulting


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AnnexE-Listofreferencedocuments

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