Feb 29, 2016 News
The oil and gas industry is of critical concern for nations across the globe, providing both the fuel that drives transport and global distribution and the excise tax revenues that sustain governments and support national economies.
But fuel adulteration, commingling, smuggling, franchise abuse and excise tax evasion pose serious threats to the revenues of governments and energy companies worldwide.
So says Authentix, a Texan, US-headquartered company. Authentix is the company that the Guyana Energy Agency (GEA) has been using to determine whether imported fuel is legal or not, under systematic and random sampling.
Authentix estimates place the losses in revenue from these illegal practices near US$100 billion per year to governments and private companies. With such large revenues at risk, the integrity of the fuel supply and efficiency of fuel tax collection is of vital importance.
Through a fuel marking program, supplied by Authentix, GEA, like many other similar regulatory agencies around the world, have been using a special mixture to determine whether fuel is being sold illegally or being adulterated. Fuel imported into Guyana is supposed to be marked so that if later checks are made, it will be ascertained that the fuel is legal and taxes have been paid.
GEA has different markers for fuel coming in under concession arrangements, like one specially for the fishing industry, and another for the domestic market.
As concerns continue to grow over the management of Guyana’s fuel importation business, there are strong indications that the Authentix fuel markers which are supposed to be tightly guarded by GEA have been making their way into the hands of smugglers.
Because of the money that is at stake from fuel smuggling in Guyana, fuel markers have been fetching a high price on the black market.
It has long been suspected that some fuel inspectors of GEA have been deliberately under-marking the fuel and selling the extra to smugglers. The under-marking has been discovered time and again but very little has been done by GEA to sanction the inspectors.
A lax control system of the markers in custody by GEA has been allowing seepages, causing hundreds of millions to be lost each month as smugglers use it to even pass the illegal fuel to gas stations.
More than three years ago, at GEA’s headquarters on Quamina Street, in Georgetown, 50 gallons of markers that are used on fuel destined for the domestic market, went missing.
Around the same time, five field testing kits that inspectors use while on field visits to locations, went missing. A number of staffers were dismissed but it was felt that the brains behind the marker’s disappearance were never caught. The marker remains missing.
The 50 gallons is a huge loss by any standards if it is taken into account that a little syringe of marker can be used for up to 50,000 gallons.
While Authentix markers are not very expensive, it can only be sold to authority regulatory bodies like GEA.
In the hands of smugglers, the markers are worth millions of dollars as there is no way that GEA inspectors can dispute that the fuel is not legal once it had been marked.
Even at GEA, itself, it is being claimed that markers are being stolen from the dispenser which is “jammed” so as not to record who is taking what.
With questions over GEA’s seriousness to stamp out smuggling and bring perpetuators to courts, insiders and persons familiar with the fuel marking situation are accusing GEA’s management of not doing enough to ensure smuggling is stamped.
GEA, it appears knows the players in fuel smuggling world, including the gas stations that are suspect of handling supplies on which no taxes have been paid.
GEA’s seeming unwillingness to go after smugglers and other wrongdoers in the fuel importation business was not more stark than last December when an inspector found himself in hot water for going undercover.
Reportedly, the inspector, who is involved in gathering intelligence for GEA, received information that a Region Three official was selling one of the stolen fuel markers.
The inspector, without police and backup, managed to track down the seller and working undercover made a “deal” with the man on the West Demerara area.
It was decided that the money for the marker would be handed over at the Parika stelling area, East Bank Essequibo.
However, near the Parika Police Station, the inspector informed the seller of the marker that it was suspected stolen from GEA and he will have to come to the police.
The seller begged for the matter not to be taken to the police and told the inspector to take it. He escaped from the area.
The inspector took the marker back to the GEA’s headquarters where tests confirmed it to be part of the 50 that had gone missing three years before.
Two days later, police came and arrested the inspector.
Someone from Leguan Island alleged that he had attempted to sell them the marker. The story swung the other way.
He was suspended.
GEA’s management disbelieved his story. So did the police. It was not until the inspector produced the video he had secretly made of the transaction that police released him. GEA was forced to take him back on the job.
According to Government officials and ex-GEA employees who have been talking about what is taking place at the agency, the missing marker and the seeming unwillingness of GEA to go after it is more than worrying.
“One has to ask who is benefitting. Is it the smugglers? Someone at GEA?” one source asked.
Inspectors had reportedly raised questions about the presence of fuel on a supply boat that comes from Trinidad for GuyOil.
Half of the fuel was for GuyOil and was marked. The rest, GEA’s management said, was to be left alone as it was only in-transit here in Guyana.
GEA, the agency charged with purchasing fuel for GuyOil and the Guyana Power and Light Inc., as well as monitoring/marking to ensure taxes have been paid, made the news in a bad way last week after whistleblowers accused management of overseeing a system that allowed widespread smuggling.
More than half of the fuel brought into Guyana is being smuggled, it was alleged.
With GEA officially importing US$561M worth in fuel back in 2014 for the country, the taxes lost from smuggled and illegal fuel would be staggering, especially for a small economy like Guyana which is already struggling from a compliance issue.
It is also being reported that Guyana loses more than $150M in taxes weekly from Venezuelan fishing boats that bring fuel here. While the fishing industry enjoys tax free concessions on fuel, the boats that brought them were reportedly selling them to others, including miners and gas station and wholesalers.
It was also reported on Sunday that GuyOil was footing the bill for oil tankers to secretly bring fuel from Trinidad for private importers.
Half of the vessel had fuel for GuyOil with the rest for the private importers. GuyOil reportedly paid the entire bill. The private importers were getting theirs free of shipping costs and without taxes being paid.
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