Mar 19, 2016 News
The questionable acquisition of fuel for the Guyana Oil Company (GuyOil) is continuing to engage
the attention of authorities.
Yesterday, Lance Hinds, Chairman of Guyana Energy Agency (GEA), the agency that oversees oil imports to the country, disclosed that since the new Board was appointed in January, a number of issues were being examined. These include details of the billions of dollars spent annually for fuel to GuyOil.
However, the official declined to go into specifics.
But GEA officials confirmed that the GuyOil Board, headed by former Parliamentarian, Lance Carberry, is looking into several aspects of the shipments from the Trinidad oil company– PetroTrin.
The oil shipments are but part of a number of burning issues that has placed GEA under the microscope in recent times.
The agency is under fire for its seeming inactions to stop what appears to be significant smuggling of fuel into the country.
It appeared that fuel was not only being smuggled in modified fishing vessels from Venezuela, but also in from established border free zone areas. The fuel from those border areas is supposed to be used within those areas because of the absence of monitoring, but there are indications that fuel is smuggled to the city and to the mining districts.
It was estimated by GEA and other government officials that more than half of the fuel brought in the country is not being declared.
Official figures indicated that annually, Guyana, a non-producer, officially imports an average of five million
barrels of oil, annually. In 2011, the oil purchases were US$561M. It accounts for biggest chunk of foreign currency spending annually.
It was disclosed recently that GuyOil was sharing costs with a private supplier to ship oil to Guyana from Trinidad.
It raised questions as Government in January disclosed that the country only has two weeks supply of fuel at a time. Guyana has storage capacity of up to 80,000 barrels of oil at any one time, it has been reported.
GuyOil, it was reported, contracted two ships last year to fetch oil from PetroTrin and instead of using the entire ship, decided it will team up with a local distributor to import the fuel, 50 percent of which went to GuyOil.
The Trinidad supply was taken after problems arose with the Venezuela shipments.
The transaction raised questions about the security of the country’s fuel reserves, which GEA, headed by Chief Executive Officer, Mahender Sharma, said was only two weeks.
Why GuyOil entertained the sharing of the shipment costs is what is baffling critics.
GuyOil recently announced that it fired it Managing Director, Badrie Persaud, for taking a number of unauthorized decisions.
And in the area of the Guyana Revenue Authority, the issue of the taxes lost has been worrying the administration which only came to power last year.
It is estimated that only about 60 percent of the taxes due to the Guyana Revenue Authority are actually being collected.
Earlier this month, Government announced that it will be launching investigations into GEA, Guyana,
GuyOil and the Guyana Revenue Authority (GRA) to determine how rooted these agencies really are in corruption.
This was confirmed by Minister of State, Joseph Harmon. A forensic audit on GuyOil was recently completed and handed in to Government.
His comments came in the wake of startling revelations concerning these agencies, by whistleblowers.
Harmon also made it clear that such an investigation would be separate from the investigation that the GEA’s Board of Directors has started, with Sharma and his staff having to provide details. He stated that it would cut across the respective agencies.
“Of course, there will always be investigations into matters like this where large sums of money is being spent, especially the people’s money,” he related. “So certainly yes, this is not just GuyOil. It has to be the Guyana Energy Agency and the Guyana Revenue Authority. So there is going to be an investigation.”
It was 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.
Minister Harmon also expressed surprise at the fact that Chinese Company, China Zhonghao Inc. has been granted a fuel export licence, despite the fact that Guyana is still years away from exporting fuel. The company’s licence was issued in such a way that even insiders were allegedly taken by surprise, as they are not aware of any prior grants.
“I thought that Exxon (Mobil) had started pumping and that licences were being
granted,” Harmon said. “But these are things that we will have to investigate because what (he) might be doing is buying fuel from one country and then allowing a company here to export it to another third party.”
The grant of China Zhonghao Inc.’s licence appears to have given the company the first jump in the country’s fuel export business. The details were published in the Official Gazette of February 13, last, and are raising eyebrows.
Indeed, the amended Petroleum and Petroleum Products Regulations of 2014 allow for applications to be made for an export licence for fuel. The licence for China Zhonghao will be the first.
The regulations indicated that an applicant desirous of exporting petroleum and petroleum products has to apply to the agency and must lodge supporting documents.
These documents are the same as for wholesale or import wholesale licences.
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