Albania

The Secretariat’s assessment is that Albania has fully met the objective of ensuring that the annual planning for EITI implementation supports implementation of national priorities for the extractive industries while laying out realistic activities that are the outcome of consultations with the broader government, industry and civil society constituencies. The annual EITI work plan is a key accountability document for the MSG vis-à-vis broader constituencies and the public. There is no evidence to suggest that there has been backsliding on Requirement 1.5, which was assessed as ‘satisfactory progress’ in the previous Validation. The work plan reflects strategic objectives agreed by the MSG, aligned with national priorities and stakeholder needs. The work plan is publicly accessible via the Albeiti website. The workplan would still benefit from a clearer link between objectives and how activities will deliver outcomes to achieve them. Additionally, civil society stakeholders noted financial constraints that can limit stakeholders’ ability to fully deliver on activities. As the Albeiti workplan almost exclusively depends on a single development partner there is scope to identify domestic and external sources of funding and technical assistance to ensure timely implementation of the agreed work plan.

The Secretariat’s assessment is that Albania has fully met the objective of this requirement to enable evidence-based public debate on extractive industry governance through active communication of relevant data to key stakeholders in ways that are accessible and reflect stakeholders’ needs. Significant aspects of the requirement have been implemented, and the broader objective of the requirement is mostly fulfilled. There is no evidence to suggest that there has been backsliding on Requirement 7.1, which was assessed as ‘satisfactory progress’ in the previous Validation. Disclosures and reporting are widely accessible to the public via the Albeiti website. The MSG increased outreach to regions and broader civil society including academics, think tanks and journalists, though stakeholders noted that the 2019 earthquake and COVID-19 pandemic adversely affected communication and outreach activities with limitations on movement and in-person participation. Albeiti collaborated with the OSCE and Ministry of Interior on the impact of the extractive industries in local communities, raising awareness among regional stakeholders and supported advocacy work on subnational payments. Albeiti may still wish to sharpen the focus of the communications strategy to also specify target audiences that would potentially use these tools for public debate.

The Secretariat’s assessment is that Albania has fully met the objective of this requirement to enable the broader use and analysis of information on the extractive industries, through the publication of information in open data and interoperable formats. The broader objective of the requirement has been fulfilled, and all required aspects of the requirement have been addressed. There is evidence that the MSG made efforts to improve open data access. Albeiti have developed an Open Data Portal and a Mining Cadastre, where data about the oil, gas, mining and hydropower sectors can be downloaded in various open formats. Summary data was completed in due course subsequent to publication of EITI reports. These efforts, while recently expanded could be further improved by ensuring real-time linkage to government systems.

The Secretariat’s assessment is that Albania has mostly met the objective of this requirement to ensure that EITI implementation is a continuous learning process that contributes to policymaking, based on the MSG regularly considering findings and recommendations from the EITI process and acting on those recommendations it deems are priorities. The level of progress has deteriorated since the previous Validation. There was some progress in addressing recommendations originating from EITI reports. MSG representatives contributed to drafting a new legal framework for royalties. Through the Ministry of Infrastructure and Energy (MIE), Albeiti contributed to drafting a law on beneficial ownership and a decision to create a BO register. The contribution included convening an expert group who prepared a legal review of transparency in the extractive industries as input to the MIE for what became Law 112/2020 on the “Register of the Beneficiary Owners.” The previous Validation in 2019 noted that Albeiti had belatedly established a working group with a time-bound plan to act upon lessons learnt, to identify, investigate and address the causes of any discrepancies and weaknesses of the EITI process and to consider any recommendations for improvements by the IA. This Validation confirmed the MSG process for learning, review and action on recommendations includes a Working Group on Corrective Actions. However, the Secretariat’s consultations and documentation review was unable to locate any evidence of group’s discussions or decisions since the 2019 Validation. Additionally, Albeiti did not respond to several corrective actions (see requirements 4.1, 4.6 and 4.9), in particular related to challenges of the reconciliation exercise. In combination these issues call into question the MSG’s mechanisms for consistent follow-up on recommendations and corrective actions. It is still important to note that the 2017-18 EITI Report does provide a reference to progress, or lack thereof, on addressing findings and recommendations from EITI reporting and validations.

The Secretariat’s assessment is that Albania has fully met the objective of this requirement to ensure regular public monitoring and evaluation of implementation. There is no evidence to suggest that there has been backsliding on Requirement 7.4, which was assessed as ‘satisfactory progress’ in the previous Validation. The MSG tracks outputs, outcomes and impact through surveys, annual progress reports (APRs), and meetings with stakeholders. Consultations found that the COVID-19 pandemic had reduced overall EITI engagement including feedback collection. The 2021 APR highlighted social and environmental impact studies, including recommendations to closely monitor rights of vulnerable groups, including gender implications of the extractives sector.

The Secretariat’s assessment is that Albania has fully met the objective of this requirement to ensure a full, active and effective government lead for EITI implementation. There is no evidence of back-sliding since the previous Validation, in which Requirement 1.1 was assessed as “satisfactory progress.” A broad range of government representatives expressed support for the mission of Albeiti and consultations clearly revealed a full, active and effective engagement, with strong coordination across various ministries led by the MSG Chair, the Deputy Minister of Infrastructure and Energy. The government funds the National Secretariat including staff salaries and operating expenses but does not financially support implementation activities. The MSG confirmed this through its comments to the draft Validation report, and clarified that the government did fund certain communication

The Secretariat’s assessment is that Albania has mostly met the objective of this requirement to ensure that extractive companies are fully, actively and effectively engaged in the EITI, both in terms of disclosures and participation in the work of the multi-stakeholder group, and that the government ensures an enabling environment for this. The level of progress has deteriorated and there is evidence to suggest back-sliding since the previous Validation. The MSG Terms of Reference state that the industry constituency shall include “five business representatives selected from the largest companies operating in the country in the extractive sector and hydropower, as well as the Association of Investors in this sector or Chambers of Commerce with a focus on natural resources.” In practice, there were three vacancies on the MSG between 2019 and 2021 which indicate that industry has not been fully and effectively engaged (unrelated to the COVID-19 pandemic). While the participation of two industry members since 2019 is commendable, the appointment of three remaining business representatives in September 2021 occurred just before commencement of Validation. Weaknesses in industry engagement are also reflected in company reporting practices since the last Validation. A relatively low share of material companies participated in EITI reporting for 2017-2018, despite company reporting constituting a key corrective action related to Requirement 4.1 from the last Validation. For Albania to improve on company participation in EITI reporting and to progress further on systematic disclosures, the engagement of the wider extractive industry and awareness of the benefits of corporate disclosure is key. The constituency’s inability to engage with non-reporting extractive companies therefore suggest that there are additional efforts needed for Albania to ensure that extractive companies are fully, actively and effectively engaged in the EITI, both in terms of disclosures and participation in the MSG’s work. As part of the MSG’s comments to the draft Validation report, it was noted that these findings may highlight the need for review and amendment of legal aspects in order to ensure data disclosure for the public.

The Secretariat’s assessment is that Albania has fully met the objective of this requirement to ensure that civil society is fully, actively and effectively engaged in the EITI process, and that there is an enabling environment for this. The level of progress has improved since the previous Validation. There is no evidence of any barriers to civil society participation or input to the EITI process related to freedom of association, expression, operation, or access to public decision-making. Albania’s corrective action from its previous Validation mandated the civil society constituency to implement all provisions of its Code of Conduct in practice, including those related to regular coordination and canvassing of views, and ensure that adequate outreach is undertaken towards all CSOs with potential interests in EITI implementation. Evidence and stakeholder consultations indicate that such improvements have occurred during the period under review. The nomination procedure, codified in December 2018, is publicly available on the website of Albeiti and has been followed in practice during the last round of nominations in 2019. The AlbNet is leading the constituency, coordinating most of the outreach and dissemination activities, and strengthened its engagement, outreach, and coordination. Stakeholders did note that there are financial constraints that may limit participation in all EITI activities, though this was not cited as a concern related to civil society members’ abilities to engage within the MSG. There was a clear consensus among stakeholders that the constituency had expanded the group to newer organisations, with more regularly coordination with a broader constituency. The MSG comments to the draft Validation report clarified that future World Bank funding is foreseen to consider financing civil society activities, which remains to be assessed in future Validations. Civil society in its broader sense uses and disseminates EITI data in research and local communities. A particular emphasis has been on issues related subnational transfer of royalties, and environmental and social impact, though there is scope to broaden some of AlbNet’s areas of focus in the coming years.

The Secretariat’s assessment is that the MSG includes appropriate stakeholders relevant to the extractive industries in the country. There is no evidence to suggest that there has been backsliding on Requirement 1.4, which was assessed as ‘satisfactory progress’ in the previous Validation. The MSG operates under Terms of Reference agreed in 2016. Meeting minutes are published on the Albeiti website. The format and quality of the minutes varies. Members operated according to the Code of Conduct and there was no evidence of conflict of interest in carrying out responsibilities. Stakeholders indicated the MSG process was effective in the inclusion of all constituency groups in decision-making. MSG members generally appear to have sufficient capacity to carry out their duties. However, industry’s representation on the MSG was not complete in the 2019-2021 period. Still, these gaps appear to reflect broader weaknesses in the industry constituency and are thus assessed in conjunction with the broader constituency’s engagement in EITI (see Requirement 1.2). Knowledge of MSG members on some subjects such as subnational payments was particularly strong, though MSG members could benefit from building their capacity to work on licensing issues and new requirements including beneficial ownership and contract transparency. EITI peer learning opportunities within the Eurasia region could support capacity building.

The Secretariat’s assessment is that Albania has fully met the objective of ensuring public access to an overview of the extractive sector in the country and its potential, including recent, ongoing, and planned significant exploration activities. There is no evidence to suggest that there has been backsliding on Requirement 3.1, which was assessed as ‘satisfactory progress’ in the previous Validation.

The Secretariat’s assessment is that Albania has fully met the objective of ensuring a public understanding of the extractive industries contribution to the national economy and the level of natural resource dependency in the economy. There is no evidence to suggest that there has been backsliding on Requirement 6.3, which was assessed as ‘satisfactory progress’ in the previous Validation. Albeiti provides data for the extractive sector’s contribution to GDP, government revenues, and exports. Additionally it provides employment data disaggregated by gender, as well as providing an estimate of artisanal and small-scale mining activities in the country, and the extractive sector’s contribution to investments.

The Secretariat’s assessment is that Albania has fully met the objective of ensuring public understanding of all aspects of the regulatory framework for the extractive industries, including the legal framework, fiscal regime, roles of government entities and reforms. There is no evidence to suggest that there has been backsliding on Requirement 2.1, which was assessed as ‘satisfactory progress’ in the previous Validation. The level of fiscal devolution is clarified, though documentation is not provided as to how/where LGUs are awarded authority to impose taxes and fees (this issue is highlighted under EITI Requirement 4.6). MSG comments on the draft Validation report did highlight the relevant legislation, though the MSG could also ensure to cover this in EITI reporting. Additionally AlbEITI could improve on providing a precise indication of where applicable laws and regulations, identified in EITI reporting, are systematically disclosed.

The Secretariat’s assessment is that Albania has partly met the objective of this requirement to ensure the public accessibility of all licenses and contracts underpinning extractive activities. Significant aspects of the requirement have not yet been addressed: It remains unclear whether the full texts of all licenses, concessions and contracts awarded in 2021 are publicly disclosed. There is currently no clear government policy, though the MSG appear to deem the legal framework and practice conducive for comprehensive disclosure of the contents of future or current licenses and contracts. It appears that general practice is to (at least partially) publish production sharing agreements (PSAs) through the Official Gazette and mining licenses issued through the National Business Registry (QKB). Albeiti also appears to collate the most complete list of licenses that exists in Albania, but does not indicate what documents would constitute a comprehensive disclosure of appendixes, addendum or riders of a concession, contract or license. While Albanian stakeholders confirm their intention to publicly disclose the contents of concessions, contracts and licenses entered or amended from 1 January 2021, it still remains unclear (i) what the MSG considers as "the full text of different licenses, concessions and contracts, including any of their appendixes, addendum or riders", and (ii) whether Albeiti maintains a list of licenses, contracts or concessions that are publicly accessible at present. While MSG comments to the draft Validation report identified several companies that were awarded mining permits in 2021, the comments did not appear to address the two issues highlighted above. While Albeiti appears to maintain lists of active licenses and contracts, they do not appear to provide references to whether or (precisely) where the full text of these documents can be accessed, covering both the body of the contract and license as well as any annexes, amendments and riders where applicable. Lastly, Albeiti's workplan for 2021 references a study to explore the legal framework for contract or license disclosure, but the execution of this study remains unclear. Stakeholders from different constituencies did not seem to be aligned in whether this requirement’s objective is fulfilled.

Requirement 6.4 is an encouraged aspect of the EITI Standard and is therefore not assessed in Validation unless there is evidence that the country has exceeded the requirement. Still, the Secretariat’s assessment is that Albania has met the objective of providing a basis for stakeholders to assess the adequacy of the regulatory framework and monitoring efforts to manage the environmental impact of extractive industries, and to assess extractive companies’ adherence to environmental obligations. The report clarifies the role of various government agencies, including requirements for extraction rights holders, and identifying AKBN as the agency assessing companies' compliance with environmental terms of licenses and concessions. However, the EITI Report does not strictly reference public documents where e.g. Environmental Impact Assessments, can be accessed. Still the MSG provided information about several reports including the annual National Environmental Monitoring Plan and specific forms for Environmental Rehabilitation requirements for companies. Albeiti also appears to have provided inputs to legal amendments with an emphasis on environmental considerations.

The Secretariat’s assessment is that Albania has mostly met the objective of providing a public overview of awards and transfers of oil, gas and mining licenses, the statutory procedures for license awards and transfers and whether these procedures are followed in practice. Progress has especially been made towards the corrective action from the previous validation with regards to describing the process for transferring or awarding licenses in the mining sector including the specific technical and financial criteria. Where licenses were awarded through a bidding process during the year under review in the mining sector, the government has also disclosed information on the list of applicants (including non-winning applicants) in accordance with Requirement 2.2 (c). This is despite perceived legal barriers to disclosure of non-winning bidders as documented by the IA. Albeiti, however, has not yet provided documentation of how the MSG assessed whether there are any non-trivial deviations in the allocation or transfer of licenses in the mining sector in accordance with requirement 2.2 (a) (iv), especially considering that the EITI Report was “not able to conduct an assessment”. No license allocations or transfers were made in the oil and gas sector in the year under review, also confirmed through MSG comments on the draft Validation report.

The Secretariat’s assessment is that Albania has fully met the objective of ensuring the public accessibility of comprehensive information on property rights related to extractive deposits and projects. There is no evidence to suggest that there has been backsliding on Requirement 2.3, which was assessed as ‘satisfactory progress’ in the previous Validation. Albeiti maintains a mining cadastre as well as a bi-annually updated mining license register and hydrocarbons license register. All datapoints required under Requirement 2.3 are disclosed by Albania online and systematically, except for date of license applications for many mining licenses and all oil and gas licenses, though in Albania’s second EITI validation the EITI Board took the view that the lack of publicly accessible dates of application was a marginal issue that did not affect Albania’s progress in meeting the overall objective of transparency in license information. This view is being retained in the current validation as well. It is to be noted that while the dates of expiry of mining and hydrocarbons licenses are not explicitly provided, these can be surmised from the dates of award, and duration of licenses which have been provided in the online license register for the mining and hydrocarbons sectors. In its comments to the draft Validation report, the MSG confirmed this possibility and Albeiti’s intention to provide this data in the future.

The Secretariat’s assessment is that Albania has mostly met the objective of this requirement to enable the public to know who ultimately owns and controls the companies operating in the country’s extractive industries. Most aspects of Phase I of beneficial ownership requirements have been addressed, in that BO data has been requested from all companies in Albania (not merely those holding and applying for extractive licenses). However, in the MSG’s assessment of comprehensiveness and reliability of BO disclosures, Albeiti does not reference publicly accessible information per company (only publishing their conclusions, not the underlying BO data). The MSG has also not assessed disclosures through the newly launched beneficial ownership registry of the National Business Centre (QKB). Albeiti does not appear to maintain a list of material companies’ legal or BO owners themselves at present. The Beneficial Ownership Register also appears to have some gaps in its beneficial ownership disclosures and does not indicate in any way which companies are publicly listed on (foreign) stock exchanges. While the register does include some BO information, it does not currently indicate whether beneficial owners are publicly exposed persons (PEPs), and current legislation does not appear to guarantee that all PEPs are indicated as BO for any company, regardless of their level of control. Legal ownership of extractive companies is disclosed by the QKB. Lastly, the EITI Report clearly indicates that there are no current verification methods or means by the government agencies, with the exception of penalties for failure to disclose or incorrect disclosures.

The Secretariat’s assessment is that Albania has fully met the objective of the requirement 2.6, ensuring an effective mechanism for transparency and accountability for well-governed SOEs and state participation more broadly through a public understanding of whether SOEs’ management is undertaken in accordance with the relevant regulatory framework. Albpetrol is considered the sole SOE of the upstream extractive sector, given that the Hydropower sector is not covered by Validation. Additionally, two SOEs in the midstream sector are highlighted, though not material: Transnafta Sh.a. and Albgaz. State participation in Albpetrol gives rise to material revenues through Albpetrol’s payments of dividends to the state as its sole shareholder. These payments are determined on the same terms as private companies, and through its sale of the state’s in-kind revenues. The 2017-2018 EITI Report clarifies the rules and practice related to Albpetrol’s ability to raise third-party financing and document the changes in state participation in the year under review. On the practice of SOE governance, the EITI Report draws from the publicly available audited financial statements of Albpetrol to document two loans from private banks to Albpetrol. The 2017-2018 Report also notes the absence of state loans to private companies in the mining, oil and gas sector including (the lack of) state guarantees.

The Secretariat’s assessment is that Albania has fully met the objective of this requirement to ensure transparency in the sale of in-kind revenues of minerals, oil and gas to allow the public to assess whether the sales values correspond to market values and ensure the traceability of the proceeds from the sale of those commodities to the national Treasury. The 2017-2018 EITI Report provides volumes collected, volumes sold and sales proceeds for both the share of oil production under PSAs as well as Albpetrol’s equity oil. Disaggregation between equity and profit share of production does not occur. Albpetrol also systematically discloses each sale and auction process on its own website. Compared to the previous Validation, the sales are not disaggregated by cargo anymore, which is encouraged, though there is no evidence to suggest that there has been backsliding on required aspects Requirement 4.2, which was assessed as ‘satisfactory progress’ in the previous Validation.

The assessment of the Secretariat is that Albania has fully met the objective of the requirement 4.5, ensuring the traceability of payments and transfers involving SOEs and strengthen public understanding of whether revenues accruable to the state are effectively transferred, as well as the level of state financial support for SOEs. There is no evidence to suggest that there has been backsliding on Requirement 4.5, which was assessed as ‘satisfactory progress’ in the previous Validation. There might be scope for replicating additional details covered on hydropower SOE transactions to be published for the petroleum sector as well. This would be increasingly important as EITI reporting begins to cover the flows from Albania’s gas transportation SOE, Albgaz. The level of progress in addressing this requirement have been maintained since the previous Validation.

The Secretariat’s assessment is that Albania has fully met the objective to ensure public understanding of extractive commodity(ies) production levels and the valuation of extractive commodity output, as a basis for addressing production-related issues in the extractive industries. The methodology for estimating production values is based on export sale prices. While comments from the MSG to the draft Validation report implied that there could be missing commodities from the published data, Albeiti's data portal does include data on the highlighted commodities. Thus, there is no evidence to suggest that there has been backsliding on Requirement 3.2, which was assessed as ‘satisfactory progress’ in the previous Validation.

The Secretariat’s assessment is that Albania has fully met the objective to ensure public understanding of extractive commodities export levels and the valuation of extractive commodity exports, as a basis for addressing export-related issues in the extractive industries. The Report notes however that 10% of mineral exports came from companies that did not hold mining permits. There is no evidence to suggest that there has been backsliding on Requirement 3.3, which was assessed as ‘satisfactory progress’ in the previous Validation.

The Secretariat’s assessment is that Albania have mostly met the objective of ensuring comprehensive disclosures of company payments and government revenues from oil, gas, and mining as the basis for detailed public understanding of the contribution of the extractive industries to government revenues. The level of progress in addressing this requirement have been maintained since the previous Validation, i.e. without significant improvements. In determining material revenues and companies, it does not appear the MSG has made progress on the corrective action from the 2019 Validation to reconsider materiality thresholds for selecting mining companies. The methodology appears to be unchanged since last Validation, and the report indicates that no thresholds were used for determining material flows [revenues].The International Secretariat also cannot conclude that the government in Albania provides a full government disclosure of revenues from the extractive sector by individual revenue stream. The EITI Report states that it does not provide full government disclosure, and multiple revenue streams appear to have been excluded seemingly without consideration of their individual total values. Mining companies continue to be selected based on production, without a per-company breakdown of companies’ contribution to government revenues, followed by an ex-post confirmation only determined for a single revenue stream. Given that 31 of 137 companies did not report, this remains a significant challenge for determining the comprehensiveness of reporting, in combination with uncertainties related to full government disclosure of revenues. Lastly, two government entities did not report for either 2017 nor 2018; Ministry of Finance and Economy (MFE) and the Ministry of Tourism and Environment (MTE).

The Secretariat’s assessment is that Requirement 4.3 remains 'Not Applicable' in Albania in the period under review. The level of progress in addressing this requirement have been maintained since the previous Validation, though the MSG is advised to re-confirm its non-applicability annually, through the EITI reporting process.

The Secretariat’s assessment is that Requirement 4.4 remains 'Not Applicable' in Albania in the period under review. The level of progress in addressing this requirement have been maintained since the previous Validation, though the MSG is advised to re-confirm its non-applicability annually, through the EITI reporting process. There are no SOEs or government agencies regulating the transportation of minerals, and though the EITI Report identifies some companies and public-private partnerships (PPP) in the midstream petroleum sector (oil and gas transportation), stakeholder consultations confirm that any such arrangements were inactive or under development during the period under review. The SOE Transnafta Sh.a. was inactive during the period, and while Albgaz was subject to gas transportation tariffs set by ERE, it was not operational during the 2017-2018 period. A PPP arrangement involving La Petrolifera Italo-Albanese Sh.a. (PIA), indicates and descriptions of the Trans Adriatic Pipeline (TAP) indicate there were no remunerations to the Government of Albania in 2018.

The Secretariat’s assessment is that Albania have mostly met the objective of this requirement to ensure disaggregation in public disclosures of company payments and government revenues from oil, gas and mining that enables the public to assess the extent to which the government can monitor its revenue receipts as defined by its legal and fiscal framework, and that the government receives what it ought to from each individual extractive project. The level of progress in addressing this requirement have been maintained since the previous Validation, i.e. without full incorporation of the requirement’s new aspects. The EITI reporting highlights significant challenges for government systems to publish revenue data disaggregated by revenue stream, company and government entity, due to issues of prior consent of licensees for the disclosure of tax and customs data. However, the EITI Report does disaggregate data for those companies that provided consent to such publication. In terms of project-level reporting (PLR), Albania applies definitions of projects in line with the EITI Standard; a single Petroleum Agreement for the oil and gas sector and "each license " for mining sector. Royalties are the only revenue stream deemed to be imposed at project levels. However, there are also substantial challenges related to PLR due to mining companies holding multiple licenses, though government systems only recording per unique company ID. Stakeholder consultations do imply that AKBN, or other agencies than the General Tax Administration, receive regular declarations from license/concession/contract holders on a per-project basis, which may reveal a potential for project-level reporting through government systems. Regardless, Albeiti sought to collect PLR data from companies to overcome this issue, to which it has been partially successful. The data provided through Validation templates and in the 2017-2018 EITI Report so far does not indicate that Albania comprehensively reports data per project, in line with Requirement 4.7 of the EITI Standard.

The Secretariat’s assessment is that Albania has fully met the objective of ensuring that public disclosures of company payments and government revenues from oil, gas and mining are sufficiently timely to be relevant to inform public debate and policy making. There is no evidence to suggest that there has been backsliding on Requirement 4.8, which was assessed as ‘satisfactory progress’ in the previous Validation.

The Secretariat’s assessment is that Albania has mostly met the objective of ensuring that appropriate measures have been taken to ensure the reliability of disclosures of company payments and government revenues from oil, gas and mining. The aim is for the EITI to contribute to strengthening routine government and company audit and assurance systems and practices and ensure that stakeholders can have confidence in the reliability of the financial data on payments and revenues. The level of progress in addressing this requirement have been maintained since the previous Validation, i.e. without significant improvements. Statutory audit procedures are clear in the EITI Report. However, no government entity or state-owned enterprise (SOE) submitted their audited financial statements or reports to the Independent Administrator (IA) for 2018, and only 25 companies published results of external audits, without information broken down per reporting company. The report indicates that only 45% of reconciled revenues were audited in 2018 (42% of oil & gas, 8% of mining and 89% of hydropower). Furthermore, the report highlights that the MSG did not opt for a different method in assessing assurances related to the 2017-2018 reporting process and contest that they followed the Standard TOR for Independent IAs. The EITI Report does not clarify how the MSG influences the design of reporting templates, citing an outdated template approved in 2011, with an additional template for beneficial ownership data (see Requirement 2.5). MSG comments on the draft Validation report appears to provide examples of how reporting is discussed and decided by the MSG, by submitting extended MSG meeting minutes for 27 July 2021. The meeting minutes and MSG comments clarify that these issues are under discussion though the MSG have not reached a clear decision on additional assurances and/or reporting templates. The outcome of these discussions should be reassessed in future Validations. The EITI Report provides multiple, and at times contradictory assessments of comprehensiveness, though does not provide an explicit conclusion on the reliability of EITI data. Even when given the limitations above, it does not affect the MSG’s view of the comprehensiveness of the EITI Report. Assessments are included per individual revenue stream, even if contradicting other limitations on total extractive revenues (see Requirement 4.1). Lastly, limitations of providing an ex-post verification of the company selection reveal that comprehensiveness is only assessed towards a single revenue stream, not towards total coverage.

The Secretariat’s assessment is that Albania has fully met the objective of ensuring the traceability of extractive revenues to the national budget and ensuring the same level of transparency and accountability for extractive revenues that are not recorded in the national budget. There is no evidence to suggest that there has been backsliding on Requirement 5.1, which was assessed as ‘satisfactory progress’ in the previous Validation. All of Albania’s mining revenues are recorded in the national budget, alongside 72% of the oil and gas revenues. Extractives revenue streams that are not recorded in the national budget mainly consists of Albania’s Share of Oil Production and Bonuses that are received by Albpetrol, with its financial statements available online. The report also identifies AKBN as collecting and retaining a minor portion of oil and gas revenues in 2018 (bonuses).

Progress in addressing Requirement 5.3 is not assessed in Validation unless there is evidence that the country has exceeded the requirement. The Secretariat’s assessment is that Albeiti have met the objective of strengthening public oversight of the management of extractive revenues, the use of extractives revenues to fund specific public expenditures and the assumptions underlying the budget process. There is no evidence to suggest that there has been backsliding on Requirement 5.3, which was assessed as ‘satisfactory progress’ in the previous Validation.

The Secretariat’s assessment is that Albania has mostly met the objective of enabling stakeholders to gain an understanding of benefits to local governments through transparency in companies’ direct payments to subnational entities and strengthening public oversight of subnational governments’ management of their internally generated extractive revenues. Albania established that six reporting LGUs were material based on production and subnational transfers of royalty. However, some subnational payments to LGUs are reported by companies under “Other Payments made to the LGU”, not per revenue stream, though only partially and with delays and discrepancies (2017-2018 Albania EITI Report at pp.186-187). The EITI Report (p. 152) as well as the Albeiti MSG confirm most of the payments to the LGUs are local taxes unrelated to the extractives sector. Still, Albania’s progress does not address the corrective action of the EITI Board, that the MSG should undertake appropriate scoping of direct subnational payments by extractive companies to LGUs, establishing a comprehensive basis for the MSG’s materiality discussions regarding direct payments to LGUs. MSG comments to the draft Validation report clarify the precise law which awards LGUs with the mandate to impose local taxes and fees (see Transparency template attached to this Validation report), though does not clarify the value of each LGU’s revenues in accordance with the law in the period under review. Other recommendations on Requirement 4.6 have also not been fulfilled, to ensure all extractive payments to subnational government units, when material, be disclosed and reconciled, and to publicly disclose a detailed explanation all types of local payments. The prevailing scenario brings to question the comprehensiveness of reporting sub-national direct payments in Albania.

The Secretariat’s assessment is that Albeiti has fully met the objective of enabling stakeholders at the local level to assess whether the transfer and management of subnational transfers of extractive revenues are in line with statutory entitlements. There is no evidence to suggest that there has been backsliding on Requirement 5.2, which was assessed as ‘satisfactory progress’ in the previous Validation. While the process of allocation of 5% royalties to the LGUs is done by the Directorate of Local Finances in the Ministry of Finance and Economy, the actual transfers are executed by the General Directorate of Taxes through the government’s single treasury system. The 2017-2018 Albania EITI Report describes statutory subnational transfers of royalties, provides the general formula, and budgeted and actual transfers for 2017 and 2018. However, Albeiti stops short of specifying the budgeted subnational transfers disaggregated by LGU, nor compare any strict 5% calculation of royalties that should have been distributed per LGU. This prevents the assessment of any discrepancy between the budgeted and actual amount transferred, disaggregated by LGU. This was accepted by the EITI Board as sufficient in their previous Validation, and Albania’s progress towards this requirement has been maintained. Additionally, as part of MSG comments on the draft Validation report, a recent development of 2021 is the opening of a dedicated account in the Unified Treasury System: 7204100 “Local Unit Grants from the Participation in the royalty tax”. While the comments do not influence the assessment of fully met, the comments indicate that government systems will improve further on its monitoring revenues earmarked for subnational transfers from mineral royalties collected in 2022 onwards.

The Secretariat’s assessment is that Albania has mostly met the objective of enabling public understanding of extractive companies’ social and environmental contributions, and providing a basis for assessing extractive companies’ compliance with their legal and contractual obligations to undertake social and environmental expenditures. The level of progress in addressing this requirement have been maintained since the previous Validation, i.e. without full incorporation of the requirement’s new aspects. Social payments are not mandatory in Albania, but the EITI Standard 2019 also cover environmental payments to government. Environmental payments are mandated by law and as reported in the EITI Report 2017-2018, made to the Ministry of Tourism and Environment (MTE), and are classified as environmental/social expenditures. Therefore, while social payments may be excluded from the purview of reporting, the materiality of environmental payments must be assessed. Aggregate environmental payments by revenue stream for all sectors (and not just extractives) are directly disclosed online by Albeiti and are available at: http://www.instat.gov.al/en/themes/environment-and-energy/environmental-accounts/. For the year under review 2018, these payments amounted to Albanian Lek 51,146 million. This total amount far exceeds the materiality thresholds established by Albeiti for reporting its extractives revenue streams. Although it is unclear how much of these environmental payments are attributable to extractive industries, it raises the possibility that they might be material. However, the Albeiti MSG has not discussed the materiality of these payments. The fact that the universe of government revenues has not been disclosed in accordance with Requirement 4.1 further complicates such calculation. Stakeholder consultations during validation revealed that some of these environmental payments may be substantial for mining exploration companies. As another example, while the Albania 2017-2018 EITI Report discloses carbon tax for the oil, gas and mining sectors (tables 14 and 23), it is akin to an excise duty in Albania (See also: The United Nations Economic Commission for Europe’s (UNECE) third environmental performance review of Albania at p.37). The Albeiti MSG has not discussed whether it has considered carbon tax or other environmental payments as material environmental payment. MSG comments on the draft Validation report confirmed that there are mandatory environmental payments to be paid by extractive companies, though the precise type of tax and mode of calculation remains unclear.