OMCs to loose license over fuel smuggling business

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A good news coming from the National Petroleum Authority (NPA) has said petroleum service providers that sell products meant for export on the local market risk losing their licences, as it intends to “go hard” on the tax evasion practice.

This news comes weeks after the Authority had impounded about 15 trucks, containing fuel supposedly meant for export to Mali but were being rerouted back onto the local market.

According to the field report, each of the trucks carried 54,000 litres of either petrol or diesel, worth some GH¢1.4 million in total.

It was explained by the NPA that the trucks, which had Malian number plates, were driven to a hideout at Kpong where the number plates were replaced with Ghanaian ones.

This is just confirmation of the numerous complaints and red flags raised in past years of the syndicate of the illegal trade in the country.

Oil Marketing Companies in the country have been wailing over the impact of the practice on their volumes, as it undercuts them and makes them sell less.

The incentive for the smugglers lies in the fact that, due to ECOWAS protocols, products meant for neighbouring countries do not attract levies, taxes and margins, which constitute up to 51% of the pump price of products sold locally.

By diverting products meant for export back onto the Ghanaian market, the illegal operators are able to sell at lower prices and undercut genuine operators.

The NPA Boss narrating the story to journalist stated that, “We have taken custody of those trucks. They are parked at the NPA yard in Kpong. What we intend to do is to go hard on people who deliberately try to evade tax”.

“What we will be doing, in the fullness of time, is to confiscate the products, confiscate the trucks and revoke the licences of that particular petroleum service provider and ban the directors of those companies from ever playing any roles in the downstream petroleum industry. That is the way to go. We are not going soft on any of such malfeasance.”

Energy Minister, Boakye Agyarko had earlier also expressed worry over the illegal fuel trade. “The practice has created an artificial increase in export volumes. Export volumes for Diesel, especially, grew by an astronomical 1829% from just above 10million litres to over 196million litres, while petrol grew by 102%.”

The volumes, he said, did not match the volumes recorded by the Malian and Burkinabe regulators as official imports from Ghana, confirming that most of these products do not reach the declared destinations.

The OMCs have long been calling for sanctions, threatening to lay off workers if the government did not clamp down on the underhand activity.

“Until somebody is arrested and processed and sent to prison, this thing will never ever stop,” William Tewiah of Zen Petroleum said during an interaction with the Energy Minister, in May.

As part of measures to curb the dumping of products meant for export on the local market, government has decided that the Bolga depot of the Bulk Oil Storage and Transportation Company (BOST) should be the sole export depot for the northern sector and its Accra Plains depot as the sole export depot for the southern sector.

If this is effectively implemented, a truck with a Burkinabe or Malian number plate is not supposed to be seen down south in the name of carting fuel for those countries.

Among the negative consequence of this activity in the downstream oil sector is that, 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 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 afterAlso, among some of the economic effect was evident by the call made the Association of Oil Marketing Companies recently threatening to 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 related that, the development will also be dire for the industry.

“This is very dangerous because, in the petroleum industry, rumour 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.

“I understand the ministry is working on tracking vessels that convey these products but I think we should go beyond that and ensure that we have good security and network that will be working with personnel with integrity because there are a lot of money involved in this illegal trade,” he stated.

Also, the Non-Performing Loans (NPLs) of commercial banks is likely to worsen if the government fails to stop the illegal trade in the petroleum downstream sector.

According to the Association of Oil Marketing Companies (AOMCs), the development has made it difficult for their members to repay debts due to the low sales.

“It’s a very dire situation in that if this one continues we will not be able to service our debt obligation as we ought to because we rely on this sale of fuel to generate our revenue. So if the revenue is not forth coming it remains difficult to determine where you could get money to service your debt on a monthly basis,” the CEO of the AOMCs, Kwaku Agyeman Duah said.

Consequently, the Executive Director of the Chamber of Petroleum Consumers of Ghana (COPEC), Duncan Amoah, has suggested that illegalities in the sale of contaminated fuel is more costly than illegal mining hence requires a strong political will and adequate resources to tackle it.

According to him, Ghana lost about GH¢850 million in just one year as a result of the illegal fuel trade.

He again suggested that some security agencies will require the backing of the president before any military intervention to address the menace of illegal contaminated fuel trading in the downstream petroleum sector.

“There is a greater problem downstream and those down here are very much aware of the challenges, yet when you talk to some NPA officials, some will tell they will tell you they will need the backing of the president with the military to be able to destroy those illegal makeshift facilities where our fuel is mixed and contaminated daily.”

“If you compare the fuel mafia currently, it is bigger than the galamsey operators. In one year, Ghana lost $850m to these operators of which Zup Oil is part and other illegal operators dotted across the Kpong area. These facilities exist physically,” he added.

Duncan Amoah believes much more resources must be committed by the President to address the illegal fuel trade.

He added that, “Security agencies are unable to deal with them effectively because you will go on and a bigger person from somewhere will call and say you should leave.”


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