Ghana loses GH¢700m to smuggling of petroleum products
As a result, the perpetrators are making enormous profit without honouring their tax obligations to the government.
This was disclosed by the Deputy Minister of Energy, Dr Mohammed Amin Adam at the GOIL Dealers and Trade Area Awards last Friday in Accra.
The minister ,therefore, called for a strong collaboration among players in the petroleum industry to help curb the influx of smuggling and illegal activities confronting the downstream petroleum sector in the country.
He said the collaboration should precede the creation of a robust petroleum sector that would thrive on a strong commitment to ethics rather than fueling people who were bent on collapsing the industry, as well as deny the government of the necessary revenue to develop the country.
“I urge you to be ambassadors of your own industry and help us arrest those who are bent on killing the industry,” Dr Adam said.
He explained that the sales margins of Oil Marketing Companies (OMCs) declined by 13 per cent for diesel and six per cent for petrol every year as a result to the perennial smuggling of products in the country.
“What this means is that apart from the sales margin of these OMCs going down, their profitability levels are also going down and their income for which they are able to pay their workers is also going down and unemployment is likely to occur if this is not addressed,” he articulated.
But apart from this, those doing legal business who sales volume had gone down are unable to pay the taxes they paid when their sales volume were high and this is how the government loses money,” he noted.
He said this revenue could have supported the government in the areas of education, health and infrastructure for its citizenry across the country.
“Therefore, it is incumbent on all of us to join the government to be able to tackle this illegal trade in the petroleum industry,” Dr Adam said in response to a called made by the Group Chief Executive of GOIL, Mr Patrick Akorli.
The master plan
He said the ministry was in the process of developing a petroleum infrastructure master plan to serve as a blueprint to transform the downstream petroleum industry in Ghana.
The master plan, which is expected to be tabled before cabinet for approval before the end of the year, is to serve as a national document to regulate how petroleum infrastructure such as ports, petroleum depots and refineries will be deployed across the country.
He observed that plans were far advanced for the preparation of the documents to regulate the downstream petroleum industry in the country.
“We are developing a petroleum infrastructure master plan to help transform the downstream petroleum industry in terms of how to regulate the establishment of petroleum infrastructure such as ports, petroleum depots and refineries across the country.”
He said such a master plan was to guide and detail the establishment of petroleum infrastructure where to deploy it and which partners needed to be able to develop such infrastructure.
Mr Akorli said the greatest challenge confronting the downstream petroleum sector today was the influx of illegal products which was having enormous strain on the viability of many OMCs and denying the government huge revenue.
The illegal activities of perpetrators are in three fold.
First, there are those whose products get certified to be exported but clandestinely return and dump the products cheaply on the local market, denying the state of revenue.
The second category of these illegal transactions involve the illegal importation of oil products which are not captured for duties and levies. The state thus loses huge revenues.
The third practice sabotaging the sector is the ploy where subsidised diesel meant for fishing vessels find their way onto the retail market.
The Group CEO called for a collective approach to fight these illegal activities which could destroy the downstream petroleum industry.