TIRANA, June 9 – The abuse of fuel quality by concession companies operating in domestic oil extraction is estimated to have caused the state budget millions of euros in damage, not to mention damage to motor vehicles and the environment.
A report published by the country’s High State Audit after inspections in the first four months of this year has unveiled that the state budget lost around 11 billion lek (Euro 78 mln) in tax evasion by companies involved in oil extraction because of using adulterated fuels and not declaring the extra production. The practice is also widely used even in retail fuel stations where certified fuel is mixed with non-standard products to increase the volume at the expense of consumers and to avoid paying taxes.
The High State Audit does not mention which companies were involved in the scheme but says the concession companies also avoided 316 million lek (€2.2 million) in VAT payments for works and services carried out by their subcontractors. The oil exploration and production companies are supervised by state-run Albpetrol company which is scheduled for privatization.
The controls carried out in the first four months of the year included the 2012-2014 financial activity of the companies.
In a bid to reduce smuggling and informality, the Albanian government has taken some tight measures in the oil market following a decline in imports in early 2015 apparently fuelled by higher taxes.
The Albanian government has ordered a nationwide campaign to inspect fuel stations over alleged abuses with quality and quantity of oil, closing down dozens of retail stations. Abuse of fuel quality is estimated to cause the state budget $140 million in losses because of tax evasion, government officials have said, adding that consumers are robbed up to 35 lek/litre (€0.24).
A government decision has also banned wholesale and retail oil companies to trade fuel under a previous three-day deadline in case of problems with cash registers. “The cash registers were often intentionally made unavailable by companies or authorized technicians for untaxed sales in 72 hours,” says the Finance Ministry.
To prevent smuggling of fuel from neighbouring countries where fuel prices are lower due to lower taxes, the Finance Ministry has also limited the amount of tax-free fuel motor vehicles can carry when entering Albania to 200 litres. Local media have often reported cases of smuggling of fuel from Kosovo, Macedonia and Montenegro where fuel prices are considerably lower.
Finance Ministry data shows fuel imports in the first four months of this year dropped to 111,930 tonnes, down 7.6 percent compared to the same period last year and 5.3 percent less compared to 2013.
However, customs authorities say the situation is a result of higher domestic production by local Armo refiner which has been taken over by an Azerbaijani company.
Fuel prices in Albania have slightly increased to 182 lek/litre (€1.26) reflecting a hike in international oil prices which at around $66 a barrel, are almost half compared to their peak level in mid-2014.
Data published by GlobalPetrolPrices.com this week show Albania’s diesel prices stood at Euro 1.23/litre this week, higher than Macedonia’s Euro 0.9/litre, Montenegro’s Euro 1.19/litre.
Starting January 2015, the circulation tax, increased by another 10 lek (12 lek VAT included) taking it to 27 lek litre (Euro 0.19), not to mention the excise tax at 37 lek/litre, the carbon tax at 1.5 lek/litre on petrol and at 3 lek/litre on diesel, VAT at 20 percent, and other customs duties which make fuel prices in Albania among the highest in the region and Europe despite the country having one of Europe’s lowest GDP per capita.
Fuel imports, which meet the overwhelming majority of the country’s needs rose to 481,775 tonnes in 2014, up 4.8 percent compared to 2013, but down 0.5 percent compared to the peak level of 484,392 tonnes in 2010.
