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State of the Albanian refineries: debt, corruption and bankruptcy

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Since the Albanian state lost its control over its formerly highly developed and profitable oil industry after privatization, the former state-owned oil refineries are taken over by new owners and increasingly unsuccessful leaderships, and the only ones who really care about the recovery of refineries and the entire sector are the hard working employees.

Early in the morning of December 27, 2017, three hundred workers gathered at the ARMO refinery in Ballsh, one of the last industrial cities in Albania. They started marching toward the center of the region, the town of Fiero, where they met with workers of another ARMO refinery. Together they protested outside the center of the regional government. Although it was nearing the end of December, they still did not receive salaries for November. Refineries have not been working for several weeks, and companies have not paid contributions for almost a year, not to mention disrespect for other workers’ rights, such as overtime payments.

After workers marched nearly two hours without great confidence in the empty words of local officials, they decided to head to Tirana, away from Fiera more than 70 kilometers. They formed a line along the main highway, accompanied by the occasional harassment of the police forces, they were able to wind up almost halfway. After a half-day walk, they decided to continue by taking a bus next to the town of Rrogozhine. After only two kilometers of driving, the police stopped the buses and ordered the drivers to ask the workers to leave. The Fiber Chief of Police offered to transfer them with police vehicles back to Fier and Ballsh. They tried to prevent them from reaching Tirana with all available means.

But the workers did not agree. Exhausted, they continued to walk toward the goal. Several Tirana citizens, appalled by the behavior of the police and the government’s indifference, drove personal cars to the highway, picked up some of the protesters and brought them to the capital. They arrived at about midnight and were housed in the social center Log and Shkendijes.

Unions on the wrong line

A few months before this march, workers from Ballsha and Fiera complained to trade union representatives. To local trade unionists with increasing doubts, they look more like representatives of the owners of the company, not the workers. And tyrannical union officials are mostly considered servile and corrupted clicks that are under the influence of the central government and involved in unfair and non-transparent relationships with refinery chiefs. On several occasions, during the labor march, trade unions were begging to be traitors, and once or twice this almost ended with a fight.

As several activists from the political platform of the Politics Organizations testifying to the workers on their way from Ballsha to Tirana testify – the majority of workers are more than convinced that the whole union is corrupted, and that the local representatives are given salaries higher than the salary of ordinary workers for months they were allowed not to come to work at all. It is no surprise that the activists’ have repeatedly asked them to help establish a new and autonomous union.

Morning after the march, the workers gathered in front of the building of the Ministry of Economic Development, Trade and Entrepreneurship. After several hours of protests, the minister agreed to meet with workers’ representatives and, in front of one of the management board members, promised to pay them at least from the previous month in 24 hours. Tired and on the verge of despair, the workers decided to return to their cities. The next day more than a thousand employees of both refineries stood in front of the banks and waited for the final pay to sit on the account. Finding that the salary for November was paid, many of them cried into wages, which is due to the immediate sense of happiness, which is due to a long accumulated rage. Some of them have said that they can at least give something to their children for the New Year.

From privatization to bankruptcy

The causes of the refinery problem should be sought in the process of its privatization, one of the most corrupt examples of privatization in the country. The oil industry was built during socialism and was one of the most profitable sectors of the socialist economy. A few thousand workers were employed in refineries, and the entire region was industrially developed precisely because of that sector. ARMO was a petroleum refining company operated by the state, full 16 years after the fall of socialism. Despite poor management and corrupt bureaucrats, its refineries were profitable. In the early 2000s, they employed more than two thousand workers and made millions of profits each year, after paying taxes and paying the central government some other liabilities (about $30 million each year).

However, in 2008, pressed by the International Monetary Fund and the European Union, the government led by the Democratic Party decided to privatize ARMO. The businessman who became the owner of ARMO, Rezart Tachi, was regarded as a close associate and client of important government members, especially former Prime Minister Sali Berisha. Immediately after privatization, ARMO entered into a long spiral of crises. He became embroiled and then stopped paying taxes and other obligations to the state, apparently with his tacit consent. In addition, he did not fulfill its contractual obligation to invest in new technologies. The only thing that the administration managed to “achieve” was to cut labor in half. Worse, the company increased its debts to banks and was always on the verge of bankruptcy.

Rezart Tachi sold the ARMO in 2013 to a company from Azerbaijan. Reports of many investigations have raised doubts that behind the company is still an Albanian boss who is now trying to build an illegal network linked to the newly formed Socialist Party government. However, the Azerbaijani owner did not invest anything in the refinery for almost a year, and in 2014 decided to rent it to the other two companies. Panorama remains the same: in months, the workers were out of work, they were not paid several salaries, etc.

The constant waves of workers’ protests in Ballsh, Fier and Tirana in 2016 forced the government to intervene. There were some changes in the refinery management. Two refineries, Ballsh and Fier, although still owned by an Azerbaijani businessman, were hired by an offshore company, IRTC, registered in the British Virgin Islands. Minister of Finance and Economy Arben Ahmetaj and Prime Minister Edi Rama claimed that this is a serious multinational company, whose investments in the oil processing industry will revive this industry.

Refineries on permanent sale

From the reports of independent journalists, we find that in the management of IRTC, Mitat Sulaj, the brother of an influential Albanian businessman, Besnik Sulaj, who is considered one of close associates of Prime Minister Rama and Mayor of Tirana, Erion Velia, whose city administration approved several of his companies building permits in the most sensitive parts of Tirana.

However, decay continues. The new bosses continued with the practice of non-payment of taxes and non-payment of salaries to workers. The company is even more burdened with debt. It is estimated that they owe to several agencies, from tax offices to a petroleum firm, to banks, valued at several hundred million dollars, and the state should also be paid off over a hundred million.

In the past months, one of the banks managed to obtain, in doubtful circumstances, a court order to confiscate all the assets of the company and to be considered a legal majority owner of the company. Today, Credins Bank tries to rent or sell the company’s assets to investors who do not exist. Although ARMO owes more to the state through taxes than to banks, the Albanian government has withdrawn from any demand for company property.

In this complex and extremely corrupt process involving several actors, from government agencies to manufacturing firms and banks, the result is that refineries are closed. Ballsh City is an economic downturn. Workers are out of work and salary. They continue to protest and demand from the government to nationalize the refineries. But the government unscrupulously rejects the proposal and sees it as a private matter to be solved between banks and private pretenders.

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