Petroleum revenue losses in taxes and regulatory margins from smuggling and export dumping in 2017 is estimated to be GHS1.4 billion.
The amount, according to the Chamber of Bulk Oil Distributors (CBOD), marks a 64.71 percent increase in revenue loss from the NPA’s 2016 position of GHS850 million.
Last year, the National Petroleum Authority, NPA, identified over 230 premix truck diversions which potentially cost the state about GHS5.2 million in illegitimate subsidies.
Addressing industry players at the 2017 Petroleum Downstream Sector Report launch in Accra yesterday, CBOD’s CEO, Senyo Hosi explained that last year’s amount is estimated on a smuggled volume of about 856,000 metric tonnes which was deduced from analysis of historical data adjusted by sub-sector consumption growth.
The shore smuggling operations using built-for-purpose homemade canoes with 60,000 litre capacities, Mr. Hosi noted, has also increased despite regulatory efforts by the NPA as there was little commitment from government in arresting culprits.
The report indicated that the illegal trading of petroleum products continues to be the bane of the industry since smuggling of premix and marine gas oil (MGO foreign) and the diversion and export product dumping accounts for majority of the illicit petroleum trade.
The report mentioned unlawful profiteering through tax evasion and subsidy abuse which continues to incentivize the illicit trade in premix and other petroleum products, with taxes and regulatory margins for example, averaging 40 percent of pump prices as premix subsidies stood at about 49 percent of the full pass-through pump price.
CBOD cited the absence of strong political will by the central government to deal with this trade, despite the modest arrest recorded.
“Reports received by CBOD and other key stakeholders from 2016-2018 continue to suggest that officials in the National Security, GRA-Customs Division, as well as operatives at the Presidency and others may be complicit,” Mr Hosi said.
However, efforts by the central government to stem these illegal practices despite several complaints leave a lot to be desired and as a result, the commercial viability of BDCs and OMCs continues to suffer.
Launching the report, Energy Minister, Mr. Boakye Agyarko, disclosed that a policy on the trading of petroleum products is being developed to provide a direction for the import and export of petroleum products. Its development will address challenges of the illicit trade in petroleum products especially exports.
Meanwhile, the NPA has revised its guidelines on the export of petroleum products per the directive of the economic management team in the wake of the negative impact of illicit trade on the industry.
“By the end of this year, there shall be a comprehensive policy that will provide the framework for trading in petroleum products in view of the growing export trade. We are also conducting a review of the current strategic stock programme undertaken by BOST,” Mr. Agyarko explained.
By Wisdom Jonny-Nuekpe