Fuel scam hit Zim | Business Times

 

PHILLIMON MHLANGA

 

Smuggling of fuel into Zimbabwe in huge volumes has reached unprecedented levels, hampering government ability to collect taxes and shortchanging consumers as they pay for poor quality fuel that has potential to damage their vehicles, the energy sector regulator has said.

The Zimbabwe Energy Regulatory Authority (ZERA) CEO Addington Mazambani said despite efforts by tax and law enforcement agents to stop the scourge, the cartels engaged in smuggling of fuel have become a menace and threat to economic development.

While it is easy to import fuel into Zimbabwe, legal imports are subjected to excise duties and the smugglers have set up schemes to enable fuel imports without paying, boosting their profits in the process.

Other taxes and levies, such as the carbon tax, ZINARA levy, and debt redemption tax, are imposed on imported fuel in addition to excise duty.

Some smugglers are known to declare fuel entering Zimbabwe as being in transit and not subject to excise duties because the paperwork indicates the fuel will not be used or sold in Zimbabwe.

However, the fuel is offloaded in Zimbabwe by the smugglers, who either use it or sell it here. It is understood that in certain cases, the tanker is filled back up with water, sealed, and the water is declared as diesel at the next border to finish the acquittal procedure and enter Zambia or any other neighbouring nation.

Taxes do not apply to goods that are in transit.

Mazambani said the rate of delinquency has skyrocketed and warned the fuel smuggling syndicates that ZERA would be merciless.

“We are experiencing a lot of fuel smuggling into the country giving unfair competition. We will be ruthless in cancelling offenders’ licences,” he warned.

He also warned dishonest dealers saying: “It’s a sector we have allowed to grow and it’s now an area (sector) where some elements are in to clean their money.”

It comes at a time when ZIMRA, country’s tax collector, is fighting a fuel smuggling ring that includes clearing agents, transporters, and some of its own officers who have a habit of falsifying  fuel quantities and descriptions. This was acknowledged in ZIMRA’s latest report.

It has been reported that some unscrupulous fuel dealers are mixing diesel with paraffin, taking advantage of paraffin’s low price and the fact that paraffin, regarded as a basic commodity, was exempt from duty and levies.This has been giving ZERA serious headaches.

In addition to the government losing out on possible revenue, consumers suffer because they have to pay more for fuel that is of lower quality, which could harm their cars.

Apparently, Mazambani  revealed that six service stations nationwide have been prosecuted for selling tainted and blended fuel under the false pretence of being unleaded, breaking standard operating procedures, and misleading  motorists.

“Meizon Amakhosi, Bulawayo, was fined US$$300 for selling contaminated diesel, Petromoc Exor, was charged for selling blended fuel as unblended and was fined US$300, Clean Liquids has also been charged for selling contaminated diesel and fined US$300, the same with Clean Easy which was fined US$400, Heaven S/St, Bulawayo was fined US$150 for selling contaminated diesel and Oil Twenty 20 was fined US$400 for selling contaminated fuel,” he said.

According to Mazambani, the prosecution of the service stations was a component of an effort to promote national compliance.

“Service stations are required to meet EMA and Fire Departments’ safe storage of fuel requirements.

“Ultimately, service stations need a ZERA  license to operate and before they are given the license, they must demonstrate compliance with the key standards or codes for the petroleum industry.”

It also coincides with the recent three-year prison sentence and US$12,780 fine for former deputy minister of finance Terrence Mukupe and his three accomplices for evading customs duties on over 138 000 litres of diesel.

This was discovered when the ZIMRA crack team at the Chirundu border post busted the customs evasion scheme by stopping Mukupe-owned trucks and discovering that they were carrying water rather than diesel. According to reports, the tankers were carrying diesel intended for the Democratic Republic of the Congo, but in Zimbabwe, water was filled up into the tankers instead of fuel.

In order to promote compliance, Mazambani stated that ZERA would also hold training sessions for stakeholders to raise their awareness of the standards and best practices.

 

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