Fuel smuggling remains a threat to legitimate dealers, Guyana Energy Agency Head, Mahender Sharma said yesterday as he emphasized the need for marking fuel imported into the country.
Responding to a letter in yesterday’s Stabroek News penned by Reggie Bhagwandin, who questioned whether it was still necessary to mark fuel given the changing dynamics in the sector, Sharma said “yes,” since it is an important task that helps to monitor the fuel coming into the country and determine whether it is legal or illegal.
He said that while the situation has changed in neighbouring Venezuela and Trinidad and Tobago, where fuel was subsidized by the governments and sold at a cheaper rate, the biometric marking of fuel remains relevant to monitor the import of fuel.
“It is important to note that diesel continues to be sourced from Venezuela. As recent as last week, the captains of two separate fuel vessels reported sourcing their diesel from Venezuela,” the GEA head said.
Bhagwandin argued that the circumstances under which fuel was marked are no longer prevalent and the GEA should consider abolishing the system.
“Clearly the situation no longer presents itself as a primary source for fuel smugglers to operate in these two countries, therefore we should ask the quintessential question whether fuel smuggling is still a threat to legitimate dealers. If our review shows that it is not then we should do away with the Biometric marking system and its associated cost on the price at the pump,” he said.
In the letter Bhagwandin noted that Trinidad has closed down its refinery and is now importing all its fuel requirements for local consumption and export. It has removed the subsidy and all their fuels are now sold at market prices. Venezuela, he said, has gone through a complete reversal from having fuel being smuggled out of their country to fuel now being smuggled into the country due to the tremendous shortages caused by dysfunctional refineries.
He noted that the Biometric marker on fuel came at a cost which GEA charged to the oil companies and they in turn factored this into their selling price at the gas stations.
However, the GEA said that this cost is minuscule at present at only G$0.60 per litre for large fuel importers. “Today’s (Nov. 18, 2020) price for gasoline at Guyoil is G$155 per litre. The marking fee represents 0.39% of the cost per litre,” Sharma stated.
“The point should be emphasized that the intent of smugglers is to avoid payment of local taxes. The fuel marking programme utilizes forensic technology to identify taxed and untaxed fuels,” the energy agency head said while noting that the record of the GEA has shown that with the advent of the marking programme the ‘percentage of sites found with significant dilution in at least one tank’ has been reduced from 34% in 2006 to less than 1% in 2019.
It was pointed out that, among other things, the biometric marking is a plus for the sector as estimates have shown that taxes collected from legitimate imports will move from over US$40M in 2021 to nearly US$60M by 2025.
In addition it stated that the marking ensures that the fuel imported is of an appropriate quality as in many cases “smuggled fuel is notorious for being of low and substandard quality. This causes more harmful emissions.”
With low quality fuel off the market, damage to machinery and equipment can be averted resulting in optimum use of fuel, the GEA head explained further.
Sharma said that the marking programme provides direct employment to over 50 employees of the GEA.
