Ghana goes hard on fuel smuggling activities

Adnan Adams Mohammed

Following several calls by stakeholders in the energy sector for a stronger and coherent efforts and political will to fight a nuisance cartel in the fuel smuggling business, there seems a good response from industry regulators.

The National Petroleum Authority (NPA) has revealed that, stringent measures the Authority had put in place to curb fuel smuggling in the country.

The Chief Executive Officer of the National Petroleum Authority (NPA), Alhassan Tampuli at the Oil Trading and Logistics Downstream Week in Lagos, last week noted the his outfit is prepared to fight the syndicate of illegal fuel trade in the country.

He said the NPA, in collaboration with National Security, had recently confiscated 15 trucks which were found to be engaging in the said illegal acts. "By virtue of NPA's Act (Act 691) we are not able to use our law to sue them. So we are partnering with Custom Excise and Preventive Service in Ghana to use their Law to confiscate all these 15 trucks and we are about to put them on auction.

"When we are done, we will revoke the licenses of all these exporters and we will ban all their Directors from actively participating in the downstream petroleum industry. That is the way we think will bring sanity to the industry in Ghana," he stressed.

Ghana’s international reputation will suffer a dip if it fails to stop the illegal sale of petroleum products in the immediate term.

According to some petroleum industry watchers, the country could serve as an attractive destination for pirates as they would capitalize on the lax regime to perpetuate their illegal acts.

The caution comes days after the Association of Oil Marketing Companies warned that it will sack about 4000 workers as the businesses of its members are no longer profitable.

Their plight has been as a result of the impact of the activities of illegal traders of petroleum products.

The National Chairman of the General Transport Petroleum and Chemical Workers’ Union, Bernard Owusu has stressed that; the development will also be dire for the industry.

“This is very dangerous because, in the petroleum industry, rumor and quality are non-negotiable. When these things are allowed to continue in the country, what is going to happen is that those pirates that go out there with petroleum products will be coming into our country and that is very dangerous to our economy,” he observed.

Similarly, the Managing Director of GOIL, Patrick Akorli, has said Oil Marketing Companies (OMC’s) are shutting down and laying off staff due to the activities of some individuals who smuggle petroleum products into the country.

The illegal importation of fuel, according to the National Petroleum Authority, leads to an annual loss of GHS850 million due to tax evasion.

Reacting to the development, Mr. Akorli said the practice was leading to loss of jobs in the industry.

“We don’t know the type of products being brought because they are not going through the normal inspection channels so people’s vehicles would be affected. And added to that, the OMCs are losing revenue. Some have actually closed down, workers are being sent home…” he bemoaned.

Meanwhile, the Chamber of Petroleum Consumers-Ghana (COPEC) has charged state authorities to take robust measures to sanction individuals involved in such illegal importation of fuel.

“We call on the government, the National Petroleum Authority (NPA), and the Ghana Revenue Authority (GRA) to ensure immediate arrest and prosecution of all players in this criminal activity without fail as these people have all clearly benefited in one way or the other from criminal proceeds that destroy both the country and the downstream,” COPEC noted.

The chamber explained that these illegal operators load from depots mainly in Tema and Takoradi “where there is a heavy security presence and involvement of GRA officials together with National Security and the Bureau of National Security (BNI) officials”.

COPEC bemoaned the practice where vessels dock at the main ports and along the coastline to discharge illegal products onto bulk road vehicles “in the full glare of security officials whose active connivance emboldens these illegal operators to carry out these activities without anyone being arrested”.

For the Chamber, the menace of supposed “export” products marked for neighboring landlocked countries such as Burkina Faso and Mali which allows these illegal operators to pay about $0.46/litre instead of the market rate of $0.96/litre for sale by the genuine players downstream can only be blamed squarely at the doorsteps of NPA”.

It also emphasized that the NPA was aware of the growing menace where these operators evade taxes “in the name of exporting the products but eventually sell in Ghana”.

COPEC bemoaned how authorities had increased the number of export licenses to these players over the past year without any proper audit of the activities of the “illegal players they keep licensing by the day”.

According to COPEC, the issue which has been in the full knowledge of officials of state institutions tasked with monitoring and curbing such nefarious practices has now metamorphosed into a “full blown national crisis as illegal downstream operators are on record to have pocketed a colossal GHC850 million in the year 2016 alone”.

The cartel operates in very unsuspecting means, they pose as exporters, enjoy low taxes and subsequently divert fuel products they are expected to export to Mali and Burkina Faso back to Ghana and sell them at prices lower than those of the OMCs whose prices contain full blown taxes/levies.

The products, which are supposed to be exported find their way back onto the local market through illegal channels and are sold on table tops at lorry parks across the country.

The situation is so widespread it is normal practice to find motorists queuing for cheap and adulterated fuel being sold on table tops instead of purchasing them from designated fuel filling stations. The smugglers are believed to divert as much as GH¢1.5 per litre into their private pockets.

A highly-placed national security source revealed that steps were being instituted to stop the illegal practice and also, bring perpetrators to book.

But, the Executive Secretary of the COPEC, Mr Duncan Amoah has stated that, fuel fraud via tax evasion has robbed Ghana and other African governments of millions of US dollars in tax revenue annually with further losses to the unsuspecting public.

Delay in implementing measures against smuggling has emboldened the fuel smugglers to step up their operations from hitherto covert to now overt such that they now operate huge illegal tank yards dotted all over the country with most in the capital, he noted.

Most legitimate OMCs are known to be struggling with cost of utilities especially electricity charges for their operations thereby making the industry hardly profitable whiles the fuel smuggling syndicate also squeeze the remaining volumes from them in broad day light, Mr Amoah noted.

Fuel smuggling causes harm to environment, results in increased fuel consumption and worsen public health as most of the smuggled fuel remains largely untested and certified for public use but still finds its way to the pumps.

Smuggling also means that the many legitimate OMCs doing legal transactions are gradually being pushed to the periphery as these illegal operators now command a sizeable portion of the market, which should have been operated by the legal operators, most OMCs have lost huge sales volumes since the advent of this syndicate which is threatening to completely cripple some of the struggling OMCs out of business.

OMCs are shutting down and laying off staff due to activities of illegal fuel trade. This is leading to loss of legitimate jobs whiles the illegal fuel trade phenomenon seems to be on the rise lately.

The various OMCs and COPEC suggested various ways to curb the outlined challenges.

They have called for the tightening and enforcing of both physical and electronic tracking systems to improve security at the various entry and exit points which were likely to help curb and reduce if not eliminate the overwhelming influx of illegal fuel into the country and keep the genuine fuel traders in business whiles the consumer does not have to worry about standards or quality since there will not be any uncertified products dumped into the market.

Reviewing of licenses to exporters with proper audit and enforcement of proper electronic tracking of export of fuel to the neighbouring landlocked countries, immediate installation of tracking devices on all export bulk road vehicles will greatly enhance the operations of the Ghana Revenue Authority (GRA), which continues to lose several millions on a daily basis to the activities of these fuel smuggling syndicate.

They also suggested that legislation should be paired with strong enforcement of punitive measures to deter others.

COPEC has further proposed the immediate audit, investigation and open arrest and prosecution of ALL operators involved in this blatant evasion of taxes and subsequent dumping of untested products into our dumps and invariably into unsuspecting tanks of motorists; immediate dismissal or transfer and demotion of all security operatives who are paid to ensure such a creeping negative menace is checked and controlled and immediate halt of all petroleum ‘exports’ from the southern part of the country to the Bolga depot and escorting of same at the expense of the business people engaged in genuine exports.