THE government saved nearly 2trl/- last year as a result of tight fuel regulatory measures that include implementation of a chemical “mark” on imported petroleum products, a new report shows.
Energy and Water Utility Regulatory Authority (EWURA) released its 2016 downstream petroleum sub-sector performance report here Saturday indicating fuel marking had helped curb entry of substandard or smuggled fuel which deprives treasury billions of shillings annually.
Between January and December last year, Tanzania imported 5.48billion liters of petroleum products (diesel, petrol, kerosene, Jet-A1 and HFO), a 6 per cent increase on the previous 5.16billion liters.
Out of the imported products, 3.30billion liters was for domestic market, and as the remaining 2.19billion liters being for transit to Zambia, DRC, Rwanda, Malawi, Burundi and Uganda. Ewura’s Director General Mr Felix Ngamlagosi says “the authority conducted a fuel marking exercise on 2.8billion liters. Every imported liter, say, diesel is subject to 648.40/- fuel duty.”
The cost for marking fuel is however 13.50/- per liter. This means of the imported 2.798billion liters, the government generated 1.776trn/- at the price of 634.9/- per every marked liter of fuel. The amount is three times the 502bn/- which was generated by the same authority between 2010 and March 2014.
Mr Ngamlagosi acknowledged that since the introduction of the system in 2010, the government c o n t i n u e d to improve its revenue c o l l e c t i o n thanks to a substantive increase in volume of i m p o r t e d p e t r o l e u m products for local markets.
“ T h e r e were numerous reason why the authority will go on implementing fuel marking exercise,” Mr Ngamlagosi said. Detailing among key reasons includes preventing dumping of transit fuel, tracking tax exempted fuel and curbing importation of smuggled fuel for the benefit of the consumers.
Fuel markers range from simple coloured dyes to unique covert markers. This does not affect the properties of fuel or its use, and can be analysed or tested using various methods. Fuel that is chemically marked is certified as having all relevant taxes paid.
Tanzania being the entry port for goods and products for majority of neighbouring landlocked countries suffered, becoming a dumping ground of substandard fuel, while cheap and undeclared petroleum products disguised as being in transit also ending up on the local market. The new study involved conducting fuel marker detection exercise to 785 petrol stations, 19 resellers and 3 trucks.
“About 37 petrol stations and 3 trucks equivalent to 5 per cent of all sampled facilities failed the marker test,” it reported. In 2015, the authority conducted similar exercise on 493 oil facilities with 43 petrol stations failing the marker test. Although the exercise received severe criticism from oil marketing companies and business operators, the authority admits that there has been an increasing level of compliance.
“There are indeed dishonest businessmen who are campaigning against the program so they can escape the government’s tax hand,” he said. “There is huge monies should one evade the fuelimposed duties.”
The money generated from each taxed fuel is apportioned to the road fund, water fund and the Rural Energy Agency (REA). Prof Honest Ngowi, an economist said the government has a number of untapped potentials where if fully exploited would improve her revenue collections.
The economist spoke at length over the weekend during the launch of “The One Billion Dollar Question; How Much is Tanzania now Losing in Potential Tax Revenues?”, a report published by three faith based organisation; Tanzania Episcopal Conference (TEC), National Muslim Council of Tanzania (BAKWATA) and the Christian Council of Tanzania (CCT). The report highlighted that the country lost 7.2trn/- as a result of an extraordinary tax holiday that include corruption, crime and tax evasion.
Mr Dotto Biteko, Chairman of the Parliamentary Committee on Energy and Minerals wondered why it took so long for the government to implement the system. He said “it would be a dormant mind” should the government heed businessmen who are heavily championing against the adoption of a fuel marking exercise. A number of African governments have as a result also adopted a similar process to add-up to their sources of revenues.
The process is also common in United Arab Emirates. As it execute its duties, the regulator had been verifying standards of imported and used fuel but observers hit back that more efforts must be made to contain importation of smuggled fuel and adulterated products.
A taxi driver in Dodoma Mr Meshark Juma says cases of adulterated fuel among several fuel stations have gone down to nearly nothing. “I have been driving for nearly ten years now.
In 2000s it was terrible, most of our engines got unexpected problems … such cases can now be counted,” he said. The Authority embarked on surprise visit to fuel stations carrying out frequent and random sampling for quality and marker tests.
Ewura’s Manager for Communications and Public Relations, Mr Titus Kaguo said the authority has been taking punitive measures including suspending operators and delicensing those found guilty.