Finance Ministry data show fuel imports dropped by 5.6 percent to 457,300 tonnes in 2011, reflecting the unaffordable prices in the domestic markets
TIRANA, April 9 – Concerned over staggering fuel prices, Albania’s business community represented by Konfindustria says fuel prices are having a direct impact on domestic industrial production. The Association claims fuel prices have to a large extent affected the poor performance of the industry sector in the final quarter of 2011 when it shrank by 7.8 percent year-on-year and 5.8 percent compared to the previous quarter, according to INSTAT data.
Konfindustria describes the situation in Albania where international oil price fluctuations are being directly reflected on oil price increases, as unacceptable for a country where domestic production accounts for a minor but significant market share.
Blaming privatization and regulatory policies during the past 20 years, the business community says poor fuel quality and measurement remains another concern.
The Association describes Albania’s fuel market as the country’s biggest with an annual turnover of around USD 1 billion annually, accounting for 10 percent of the GDP.
With fuel prices at historical record high of almost 200 Lek (Euro 1.4), another threat is posed to the country’s economy this year, which international financial institutions such as IMF say will keep Albania on the brink of recession. As domestic consumption fails to recover, the country’s industries are facing higher production costs and a drop in demand.
Apart from deteriorating the households’ budget in this time of crisis, rising fuel prices are having a negative impact on several industries such as transport, industrial production, agriculture, construction and fishing considerably raising costs at a time when demand remains low, experts have warned.
The staggering oil prices are making owning a car a burden for average Albanians, which is also revealed by less traffic and lower fuel imports. Finance Ministry data show fuel imports dropped by 5.6 percent to 457,300 tonnes in 2011, reflecting the unaffordable prices in the domestic markets.
The Business Albania Association says the increase in fuel prices registered during the first months of this year is more a reflection of rising oil prices in international markets and the depreciation of the Albanian Lek against the US dollar rather the an additional 2 lek/litre tax car owners are paying starting from Jan. 1 2012.
Business Albania which also represents the Association of Hydrocarbons has dismissed price abuse claims saying the real price increase is a result of oil prices in international markets rising by 50 to 60 USD tonnes. According to experts of this association stock exchange prices and domestic tax obligations account for 98 percent of the final oil prices. Association officials also complain the port storage taxes are among the highest in the region including other tax obligation such as VAT.
The high tax burden, with excise tax currently at 37 lek/litre, VAT at 20 percent, the newly increased carbon tax, port taxes and transport expenditure, all contribute to the final high price of oil.
Fuel marking
Government says it will contract a specialized company to mark fuel and monitor the market in order to respect fuel quality and prevent tax evasion. The Finance Ministry has announced the final deadline for bids submission is May 14. The winning bidder will be awarded a 10-year concession contract. Prime Minister Sali Berisha says the measure will protect consumers and prevent any kind of smuggling.
Several oil companies were suspended and had their licences revoked last year because of trading fuel not meeting standards and smuggling. In early 2011, a massive fraud scheme involving the gasoline and diesel distribution system, selling mixed premium products with inferior byproducts that could have damaged thousands of vehicles and cost consumers millions was unveiled. The probe led to charges for 13 men, both public officials and businesspeople.
