Feb 26, 2016 News
Guyana has to depend heavily on oil imports to meet its energy and transportation needs.
Regulating the oil imports for the country is the Guyana Energy Authority (GEA). The authority has been playing a key role in negotiating the purchases and ensuring that petroleum products are imported legally.
GEA’s annual report in 2014 shows that it spent US$561.6M on petroleum products imports – a little more than half was purchased from Venezuela under the PetroCaribe arrangement.
On every gallon of gas and diesel Government has been charging up to 50 percent tax, an indication of how much revenues Guyana has been raking in.
Revenues from both gas and diesel, especially, have been one of the biggest earners for Government over the years.
So much so that the new administration has been reluctant to drop the fuel tax after world oil prices fell by two-thirds over the past year. Government insisted that it needs the windfall to fund a number of critical projects and to carry out its programmes.
However, there is a massive corruption network in the fuel sector which is poorly managed at almost every level–from purchasing to distribution.
The unbelievable scale of corruption and mismanagement in the fuel industry trickles down to even the fishing, timber and mining sectors. It also involves key entities such as the Guyana Oil Company and Guyana Power and Light Inc.
However, half the amount of fuel that is being consumed locally is unaccounted for both at the level of the treasury or Guyana Revenue Authority.
Guyana is not getting a single cent for more than half of the fuel that is imported. As a result, the country has been losing tons of money annually in revenue. Fuel smuggling is rampant.
GEA reported that for last year alone, there were 25 joint operations with members of the Task Force on Fuel Smuggling and Contraband.
In addition to this, the Fuel Marking Programme recorded a mere nine convictions in 2015. Five new charges were filed. Two matters were dismissed of which one was appealed.
So what is wrong with this picture?
According to Government officials and ex-GEA inspectors who are familiar with the fuel import business, it is one of the most lucrative in the country along with gold and cocaine.
“We can find two cases of illegalities every day. If Guyana brings in US$600M in fuel annually and legally, then from what is taking place on the ground, it is widely believed that fuel brought in illegally is in excess of US$600M,” an ex-Fuel Marking inspector insisted.
Largely, the legal fuel for GuyOil comes from Trinidad – Petroleum Company of Trinidad and Tobago Limited (PetroTrin), Curacao and Venezuela.
The illegal fuel is coming from Venezuela and Trinidad.
Knowledgeable officials confirmed that GEA has been turning a blind eye to illegal fuel scheme for a number of reasons.
One reason is that the previous Government created what is known as the Border Trade Area.
Officials explained that boats bring illegal fuel into the country, fuel is picked up, and transported to various areas in the mining community in the hinterland.
“The reasons may be good to allow fuel in the Border Trade Area as it is logistically difficult to transport legally imported fuel to those outlying areas,” explained one of the ex-GEA inspectors.
He explained that the fuel being used in the Border Trade Area does not attract any tax.
“But the problem we have is that the fuel that is supposed to be used only in that area is being brought and sold in the city and along the coast. The smugglers escape paying taxes to the authorities and the fuel is leaked into the system. Can you guess how much monies Guyana is losing?”
According to one former GEA staffer, they have been facing difficulties in going after known smugglers.
“We would raid a location and find illegal fuel, but these cases would go nowhere. When you look at the number of cases that go before the courts and knowing the reality on the ground, you know people are being protected.”
Kaieteur News was also told that a significant amount of fuel is being brought in under the guise that it will be used for the fishing industry. Fuel for the fishing industry is duty free.
Boatloads of fuel drums have been coming down the Demerara River, stopping off at the various points and dropping off their loads. With no central point for the fishing industry where GEA would monitor, the situation has allowed for a free-for-all.
“Again, the fuel here ends up all over the place.”
But while smuggling would account for a large part of the illegal fuel, it appears that rackets were also being run using the legal supplies.
“We have persons who have import licences but have no vessels or storage areas for fuel. How did they get them? GEA is in charge of licensing vessels bringing fuel. Some of the fuel being brought in legally are not declared and are ending up in gas stations. Everyone is involved and they are getting a nice kickback,” a Government official said yesterday.
Revelations of how bad the situation with fuel smuggling and corruption is would mirror concerns by the Guyana Revenue Authority (GRA) which said recently that leakages of revenues remains a major concern.
GRA is working to revamp its systems with a new Board of Directors, headed by Rawle Lucas now in place.
Last month, Government installed a new board of GEA with private sector executive Lance Hinds as the new Chairman. The other members are Nadia Sagar; Mark Bender; Dr. Mahender Sharma and Dr. Vincent Adams.
Sharma is also the current Chief Executive Officer of GEA.
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