Fuel smuggling collapsing local OMCs - Petrosol CEO

Some Oil Marketing Companies (OMCs) in Ghana are losing huge sums of revenues as a result of smuggling of fuel into the industry by unscrupulous individuals and entities.

The Chief Executive Officer (CEO) of PETROSOL, Mr. Michael Bozumbil, said some of these fuel smugglers team up with other unethical operators in the industry to sell their products without paying the requisite taxes to the state. Some also claim they are exporting the products to Mali and Burkina Faso, only to turn around and dump them on the local market at reduced prices because export products attract very little or virtually no taxes.

According to Mr. Bozumbil, who is also the Vice Chairman of the Association of Oil Marketing Companies, the oil marketing business in Ghana since 2016 has been suffering from what could be termed "fuel galamsey" which is coordinated by cabals within the industry whose activities could make the government lose over Ghc1.0Billion, by the end of this year, and lead to job losses of over 4,000 workers, based on industry estimates.

“This issue could even turn out to be more serious than the “galamsey” in the mining industry we are grappling with as a country, if we allow it to grow further. This is because these activities have serious national security implications since the operators, if allowed to continue, could accumulate so much illicit money to serve as potential destabilizing agents to destroy the peace and security that the country currently enjoys”, Mr. Bozumbil indicated.

“We are operating in an environment where when you suffer to do the right thing, your efforts are destroyed by the activities of those who do the wrong things, without the state institutions coming to your defence, which can be very discouraging, especially given the fact that as indigenous operators we borrow at interest rate of around 33% to invest in doing the right thing”, he lamented.

He said this when the Energy Media Group (EMG) team called on him to present a copy of the quarterly Energy Magazine to him and to announce the upcoming Ghana Energy Awards in December. The team was led by the CEO Mr. Henry Teinor.

The magazine is about 60 pages which deals with issues confronting the energy sector in the country, Africa and the world at large.

Mr. Bozumbil argued that the cabals in the industry, in addition to them evading the taxes and levies, which constitute about 40% of the ex-pump price, also bring fuel vessels with substandard products and flood them on the Ghanaians market to compete with the quality ones, which the average consumer is unaware.

“Pricing is very important in our business. Therefore, if they succeed in bringing substandard products and also evade the huge taxes, how do you expect us the genuine operators to compete in this same environment with them?” he asked. He said, whilst the OMCs margins over between 5-6%, these unscrupulous operators can make about 40% margin once they are not paying taxes.

He said another worrying trend is that the influx of these products has led to the highly inflammable products now being sold in gallons in unauthorized places such as lorry stations, table-tops, galamsey sites, posing serious danger to lives and property.

He indicated that the industry thought a change in government would bring an end to the activities of these nation-wreckers but unfortunately it is rather escalating. He said some of their filling stations are not selling yet they are compelled to be paying their staff and utility bills at the end of every month, but this certainly cannot continue.

“We are appealing to the government to bring an end to this before things get out of hand. We are confident the President will bring this to an end, given the urgency of the issues involved”, Mr. Bozumbil stated.

Mr. Bozumbil mentioned that in 2016 export of petroleum products increased by about 400%, far in excess of the normal trend. This certainly should tell us that there is something seriously wrong. What economic new and major activities have taken place in Mali and Burkina Faso to warrant such significant export volume increase?” he asked.

This, according to him, is an indication that a significant portion of what was meant for export could have been diverted into the domestic market.

According to him, officials of the National Petroleum Authority(NPA) and other relevant agencies and sector Ministries are aware of these issues in the industry because the industry players have briefed them. He said even though they keep assuring them that action would be taken, the issue keeps escalating as the days go by and destroying businesses whilst making government lose huge revenue.

He therefore asked the government to be resolute and seal the loopholes in the industry if the government really needs more revenue to execute its projects,” he reiterated.

Mr. Teinor, on his part, called on the industry players to take up the mantle and fight the matter through the media rather than relying upon or waiting for the government to solve this menace.

He agreed that fuel smuggling poses more danger than even activities of galamsey in the mining sector. He cited the cartels that have raided the Nigerian oil industry, as an example.

He called on the OMCs to have an independent body in place to monitor and check some of these issues and come out with data for the media to help fight the menace.

Mr. Michael Bozumbil thanked the team for the visit and subscribed to the magazine