Mr Senyo Hosi - the Chief Executive Officer of the Chamber of Bulk Oil Distributors

War against fuel smuggling: Nearly GH¢1bn saved in 2018

Jessica Acheampong Business News Oct - 01 - 2019 , 08:05

The fight against the illicit trade of refined petroleum products is yielding results, with the latest report on the activities in the downstream petroleum subsector showing that the country saved nearly GH¢1 billion, which would have otherwise been lost through smuggling of the products.

The report showed that GH¢952 million was saved from blocking the sale of illicit sale of petroleum products in the country in 2018.

This was a reversal from the losses made in the last three years – 2015 to 2017- through unaccounted stock and evasion of taxes.

The savings was as a result of interventions by the National Petroleum Authority (NPA) to curb the illicit trade of petroleum products and ensure that it was sold through official channels, the annual report of the Chamber of Bulk Oil Distributors (CBOD) has said.

“In 2018, no loss related to unaccounted stocks is estimated as it was revealed that 574.25 million litres more than the official stocks saleable in the country were sold. This indicates that smuggled stocks in the monitored depots must have been trapped as a result of the NPA’s regulatory interventions to curb the illicit trade of petroleum products and forced to be sold through official channels.

“This saved the nation GH¢797.49 million in taxes and GH¢154.93 million in regulatory margins yielding a total savings of GH¢952.42 million,” the report stated.

According to the report, the NPA, aided by elements of the central government made progress towards tackling the challenges of smuggling and tax evasion some of which were covered in the 2017 CBOD industry report.

“This was a welcome move in the industry and yielded tangible results even though there remains a lot to be done to bring sustainable finality to the illegal trade,” the report stated.

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The report further explained the interventions by the NPA minimised the evasion of official channels of distributions and, hence, an increase in official volumes of the most tax-evaded products, AGO regular and PMS, which shot up by 17 per cent and 19 per cent respectively.

Losses

A reconciliation of official national stocks movement data revealed that 54.36mn litres, 168.48mn litres and 794.75 million litres could not be accounted for in 2015, 2016 and 2017 respectively.

Also, the associated petroleum tax revenue evasion to these stocks stood at GH¢1.4 billion while the associated evaded regulatory margins amounted to GH¢238.96 million.

For the period 2015 to 2018, total taxes evaded based on official unaccounted stocks stood at GH¢1.3 billion while total under-reported taxes based on official accounted sale volume after adjustments for exemptions stands at GH¢1.2 billion.

“This implies that the country has lost a total of GH¢2.6 billion in taxes for the period. Combined with the evaded regulatory margin of GH¢231.53 million, a total GH¢2.790.59 million has been lost to the nation in taxes and regulatory margins for the period 2015 to 2018,” it stated.

Although the petroleum tax revenue increased on the back of reduced illegal trades which reflected in an increase in official volumes, under reporting of taxes on official sales by GH¢433.75 million in 2018 after adjusting for tax exemptions and waivers was not eliminated.

Gross consumption

Ghana’s gross national consumption reached 4.46 million metric tonnes (mt) in 2018. A total of 3.73mn mt was consumed by the non-power sector representing 83 per cent of gross consumption while 738,076 mt (17%) was consumed by the power sector as fuel oil for power plants, crude for power and propane.

Petroleum products consumption in 2018 was about 3.88mn mt, 12.3 per cent higher than 2017 consumption of 3.46mn mt.

“This rode on the back of successes realised in the fight against the illicit petroleum trade, thereby increasing official demand for gasoline, gasoil and LPG. This volume of consumption is the highest observed to date,” it said.