GH¢2,7 billion lost to taxes, margins in petroleum downstream sector

Ghana lost GH¢2.7 billion in taxes and regulatory margins in the petroleum downstream sector from 2015 to 2018, the latest report on activities in the downstream petroleum sub-sector has indicated.

The report, prepared by the Ghana Chamber of Bulk Oil Distributors (CBOD), showed that the country lost GH¢2,559.08 million in taxes and evaded regulatory margin of GH¢231.53 million within the three-year period.

“For the period 2015 to 2018, total taxes evaded based on official unaccounted stocks stand at GH¢1,390.73 million, while total under-reported taxes based on official unaccounted sale volume after adjustments for exemptions stand at GH¢1,168.33 million,” it added.

Illicit trade

At the launch of the report in Accra yesterday, the Chief Executive Officer of the CBOD, Mr Senyo K. Hosi, said petroleum tax revenue increased on the back of reduced illegal trade, which reflected in an increase in official volumes, saying the under-reporting of taxes on official sales was GH¢433.75 million in 2018.

The report reviewed the policy, finance, market and infrastructure sectors and issues related to the period under review. It also shared an outlook and recommendations on the downstream market and its happenings.

Mr Hosi said the fight against illicit trade in refined petroleum products was yielding results, leading to the country saving nearly GH¢1 billion, which would have otherwise been lost through smuggling.

He said about GH¢952 million was also saved from blocking the sale of illicit petroleum products in the country in 2018, a result of the interventions by the National Petroleum Authority (NPA) to curb illicit trade in petroleum products.

According to him, a reconciliation of the official national petroleum stocks movement data revealed that 54.36 million litres, 168.48 litres and 794.75 million litres could not be accounted for in 2015, 2016 and 2017, respectively.

“The associated petroleum tax revenue evasion to these stocks stands at GH¢1,438.75 million, while the associated evaded regulatory margins amount to GH¢238.96 million,” he added.

National consumption

On national consumption of petroleum products, Mr Hosi said it was about 3.88 million tonnes in 2018, 12.3 per cent higher than the 2017 consumption of 3.46mt.

A total of 3.73 million tonnes was consumed by the non-power sector, representing 83 per cent of gross consumption, while 738,076 million tonnes (17 per cent) was consumed by the power sector as fuel for power plants, crude for power and propane.

Out of the 165 registered oil marketing companies (OMCs) and LPG marketing companies (LPGMCs) in 2018, he said, 14 were active, 63 sold products above 10,000 million tonnes, while 88 sold volumes below 10,000 million tonnes.

Recommendations

In his recommendations, the CEO said the Tema Oil Refinery should be privatised to ensure effective management.

He described actors in the illegal trade in petroleum products as a deep-rooted cartel with partners across the echelons of politics, security and industry and said the success of any intervention would require political ruthlessness to enforce a change.

Mr Hosi further urged the government to take steps to block leakages that led to tax evasion in the sector.

Significance

The Chief Executive officer of the National Petroleum Authority, Mr Alhassan Tampuli, said the existence and operations of the CBOD were vital in sustaining the development of the petroleum downstream industry in Ghana.

He said a number of game-changing interventions were made in 2018 to improve the licensing regime.

He mentioned a major intervention in the sector to include the promulgation of an LPG promotion policy which, on full implementation, was expected to change the mode of supply of LPG via marketing approach to guarantee safety and also increase LPG penetration to 50 per cent by 2030.