B&FT Editorial: Curbing illicit activities of bulk road vehicles transporting petroleum products

Bawumia NPP Conference Dr Mahamudu Bawumia, Vice President of Ghana

Wed, 15 Jan 2020 Source: Business & Financial Times

Vice President Dr. Mahamudu Bawumia's passion for digitization as a means of curbing corrupt acts is legendary, and he launched a Command Centre for Bulk Road Vehicles (BRVs) and Electronic Cargo Tracking Scheme yesterday.

By this innovation, the National Petroleum Authority (NPA) is confident of curbing losses of about US$200 million per annum from illicit trade of petroleum products. This is because about 98 percent of petroleum product transportation is from BRVs and this mode of transportation is associated with several challenges - including product shortages, smuggling, diversion and false haulage claims - leading to huge losses.

Introduction of the two innovations is aimed at tightening control in the supply chain, and also providing a reliable platform for planned control measures at retail outlets. This must be commended, since it will ensure maximum tax revenue mobilization for the state.

The technology also provides real-time information about BVRs and their contents.

Vice President Bawumia used the occasion to admonish the NPA to enhance its collaborative activities with the National Security Council and Ghana Revenue Authority in finding a lasting solution to illicit activities in the petroleum downstream industry.

Due to the absence of an effective tracking system in the past, transport service providers exploited the NPA's lack of capacity to independently conform the delivery of petroleum products to retail outlets. This subjected the UPPF (the fund) Fund to abuse through the presentation of false claims for costs incurred in transporting petroleum products.

It is estimated that the revenue loss as a result of these fraudulent practices amounts to about 12.3% of annual freight paid. For instance, in 2014 an estimated revenue of GHC43million was lost - thereby threatening the Fund's sustainability.

Illicit activities in the petroleum downstream constitute an emerging threat that impacts negatively on the country's maritime security, as well as the nation's efforts at mobilizing tax revenue from the sale of petroleum products.

Source: Business & Financial Times