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The Chamber of Bulk Petroleum Distributors (CBOD) revealed that the Ghanaian government and people lost GH1.9 billion ₵ due to tax evasion in 2019.
The Chamber attributes the losses to a compromised Petroleum Product Marking System (PPMS).
Speaking at the virtual launch of the 2019 Ghana Oil Industry Report in Accra, Mr. Senyo Hosi, CEO of CBOD, said that the PPMS, which was established in 2012 by the National Petroleum Authority (NPA) to responding to the increasing occurrences of oil smuggling, dumping of untaxed products and adulteration of petroleum products may be compromised in depots.
He noted that the perpetrators of these illegal activities, who often distribute their products through traditional channels such as retail outlets and wholesale outlets, lead to significant losses of government revenue and compromise the quality of the products, further resulting in damage to vehicle engines and damage to the environment and health standards.
Mr Hosi added that unmarked petroleum products that have found their way to pumps are often diluted and / or adulterated.
According to him, some retail outlets during the field visit were assessed and rated as Pass, Suspect, Suspicious Point or Fail. Those marked as failed mean that there has been a clear dilution and / or adulteration of the sample. At the start of phase two of the PPMS in 2019 with the new MSX 2000 device, unlike the LSX 2000 used in the first phase, the average retail outlet failure rate was 1.99%, an increase of 0 , 64% compared to that recorded in 2018.
Mr. Hosi said, “The PPMS is a mechanism of the NPA to properly monitor and track products. So we actually have spiked chemicals in our products and these are supposed to check if the products at the pump are well declared in the whole trading system i.e. the quality is declared and certified. and that taxes on these products are also collected.
For general brand products, the assumption is that the quality has been verified by the state and that taxes have also been paid on these products.
“So when you walk into a gas station and it is tested and NPA does that test and there is a failure in this product as far as the market is concerned, it suggests that illegal products are indeed. entered the gas station and maybe the quality itself. has been compromised. “
According to Hosi, the failure rate in 2019 fell slightly from 1.35% to 1.99%. In August 2019, the retail outlet failure rate was 5.2%, which was the highest of the year.
At the end of the November 2019 monitoring exercise, the point of sale failure rate was 2.7%. The reduction in the failure rate could be attributed to the consistency of the monthly monitoring exercise from August 2019.
“In 2019, there was a slight change from 1.35% in the failure rate to 1.99%. When you juxtapose that to oil tax losses, you will realize that the lowest failure rate was in 2018 and it works perfectly with what we also observed with the tax evasion recorded for 2018.
This is the lowest for the period covered. But for us, having just a marginal change in 2018 but an astronomical change in reported tax evasion of GHC 1.9 billion in total raises a major question. This suggests that the current marking in the repositories may be compromised, ”Mr. Hosi said.
“If you don’t identify a large number of these products out of the 855 million GHC that cannot be counted and yet we still don’t really identify them at the pump level, it is possible that our tagging system is compromised – in that, you have illegitimate products entering certain markets and that calls into question the entire effort to tackle the challenge of illicit petroleum products facing the industry. “
Mr Hosi called on policymakers to take more concrete steps to address the shortcomings that continue to bleed the industry.
“This is something that is a major concern and policy makers will need to learn from this [Petroleum Industry] report and examine it much more in depth. “
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