Albania to Rewrite Oil Deal with Bankers after Tax Tiff

Albania will renegotiate its oil output-sharing contracts with Bankers Petroleum and other oil firms and impose a limit on their recoverable expenses to improve tax receipts, Energy Minister Damian Gjiknuri on Wednesday.

 

Albania has accused corporations of understating profits made in the country to avoid its 50 percent profit tax. The dispute with oil firms stems from a clause in their contracts that allows firms to pay profit tax only if they have recovered their costs. None has paid profit tax, Gjiknuri said, only royalties, since they report they have not recovered costs.

 

Canadian firm Bankers temporarily settled a dispute over taxes after it agreed to pay in instalments $57 million, in what Albania claims is owed for 2011, so it could gain control of its Albanian bank accounts while it seeks a final solution through an third-party auditor or the court.

 

"...We shall renegotiate some of the current contracts, including the biggest contract of Albania, Bankers Petroleum," Gjiknuri told a meeting of the Extractive Industries Transparency Initiative (EITI).

 

Bankers Petroleum were not immediately available to comment.

 

"Our goal is to renegotiate the terms, once we have settled some contradictory or conflictive elements pertaining to the payment of the profit tax," Gjiknuri added.

 

Referring to Bankers' payments, Gjiknuri said the local agencies had worked hard to detail the real spending in the oil industry and so help put a cap on the firms cost recovery.

 

In the contracts being negotiated with Royal Dutch Shell (RYDAF) and Israeli's Delek Group, Gjiknuri said Albania was imposing a ceiling on costs, for the first time in Albania.

 

"This means that a portion of the oil, before the company recovers the costs, will be divided for profit. The oil to be split between the state and the private entity will flow from the first barrel to help the state get more than now," he said.


(Reporting By Benet Koleka, Editing by Elaine Hardcastle)