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Energy body moves to tackle fuel fraud
October 6, 2016
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By Phillimon Mhlanga, Business Reporter

THE Zimbabwe Energy Regulatory Authority (ZERA) is planning to start fuel marking in an attempt to curb fuel crimes such as illegal fuel vending and lack of fuel quality assurance.



The Financial Gazette’s Companies & Markets (C&M) can report that ZERA is already working with global fuel authentication companies, Global Fluids International and Authentix, on institutional and technical requirements in implementing the measures.
ZERA is a statutory body established by the Energy Regulatory Authority Act (Chapter 13:23) of 2011.
The Act mandates and empowers the Authority to regulate the procurement, production, transportation, transmission, distribution, importation and exportation of energy derived from any energy source.
In Africa, the two companies have been engaged to mark fuel in Tanzania and Ghana and have helped the two countries reduce fuel crimes, dropping the level of fuel adulteration that has resulted in increased tax revenue for the two governments.
Last week, ZERA launched the fuel marking scheme and immediately began consultations to ensure that consumers get clean and unadulterated fuel.
To combat fuel fraud, this concept involves the introduction of a bio-chemical liquid (fuel marker) into the petroleum products at the loading depots prior to delivery of the products to the retail outlets.
This means that any level of dilution is quickly detected and proper enforcement procedures are then initiated.
Permanent secretary in the Ministry of Energy and Power Development, Partson Mbiriri, said the implementation of the fuel marking programme is expected to enable government reduce fuel smuggling and recover revenue that would have been lost through illegitimate sales and tax evasion.
He highlighted that non-taxed fuel was being smuggled into the country and sold illegally to retail sites.
With this, taxed fuels would then be adulterated with non-tax fuels such as paraffin and Jet A1.
“Government through my ministry has seen it prudent to embark on fuel marking due to a number of reasons. After noting numerous incidences of extremely low priced fuel in a number of unregistered outlets, an increase in the importation of paraffin and uplifting of Jet A1 from depots for use as paraffin and several cases of poor quality fuel from some outlets, it became clear that some unethical fuel traders were involved in illegal activities,” said Mbiriri.
The activities pointed to adulteration of diesel with paraffin or Jet A1, products which are imported duty free, resulting in substandard fuel and loss of revenue to government.
Studies indicated that such practices were not unique to Zimbabwe but are prevalent in the oil industry the world over.
To stamp out these malpractices, countries have resorted to fuel marking in order to identify offenders and punish them accordingly.
Government officials have visited Tanzania and Ghana to study how the two countries were running the programme.
“We had our team visiting the two countries (Ghana and Tanzania) in order to get first hand information from both countries on benefits and marking modalities. The report by the team which visited the two countries that I distributed to my colleagues in government leaves no doubt as to the importance of embarking on fuel marking,” said Mbiriri.
He said punitive sanctions such as fines, imprisonment or both shall be applied against those caught diluting petroleum products.
ZERA will sample and monitor fuel at retail outlets and other points of consumption across the country.
This will be done in the presence of site representatives.
The country’s energy sector regulator will be working with Zimbabwe National Roads Administration and the Zimbabwe Revenue Authority, to enable ZERA to monitor the quality of petroleum products, as well as recover fiscal tax revenue from the sale of these products.
Fuel marking ensures maximisation of revenue collection by minimising dumping of duty-free export or transit fuel in this market, smuggling and adulteration of dutiable fuel with non-dutiable fuel.

Permanent secretary in the Ministry of Energy and Power Development, Partson Mbiriri



A lot of money and property is saved by ensuring that the general public is not buying substandard fuel that damages their assets.
It forms a solid base for gathering accurate fuel importation and consumption statistics and protects genuine oil industry players by putting in place an enabling fuel quality monitoring and enforcement mechanism that weeds out undesirable elements.
Fuel marking, which some consider to have been overdue in Zimbabwe, will be done by an independent organisation at the point of entry or when loading at a bulk depot.
Such marking must be witnessed by drivers or oil marketing companies’ representatives.
To give legal effect and force to the fuel marking programme, ZERA’s senoir economic regulations manager, Learnmore Nechitoro, said the Petroleum Act (Chapter 13:22) gives the Minister of Energy and Power Development the authority to make regulations in consultation with ZERA.
Nechitoro said: “The proposed regulations are the Petroleum (Marking and Quality Control) Regulations.
“The regulations apply to petroleum service providers, oil marketing companies, transporters and petroleum product marking companies.
“But what needs to be done first is to repeal the Statutory Instrument (SI) on control of goods (Petroleum Products Prices) Order of 2005, which allows individuals to import 2 000 litres of fuel with licences. The SI is being administered by the Ministry of Industry and Commerce.”
Under the regulations, Nechitoro said it shall be an offence to store, sell, offer for sale or transport a petroleum product which is not marked with an approved marker.
It will also be an offense to hinder or to refuse to allow an inspector to carry out any of the lawful activities under the regulations.
The purpose of the regulations is to provide for a petroleum product marking programme, preserve and protect the quality and purity of the petroleum products.
The regulations will also provide for the detection and prevention of the adulteration, dumping and dilution of petroleum products.
This will also assist the regulator to monitor the quality and purity of petroleum products.
Although some analyst said this was a noble idea, there are others who are concerned that funding for the programme might be problematic, and could end up including the fuel marking cost into the price of fuels.
Although government’s position is that fuel prices should not increase, fuel marking is likely to result in additional costs being borne by consumers to cover for operations of the fuel marking company that includes overheads, security, equipment for the fuel marking and field verification.
There are also costs incurred by the regulator for monitoring and enforcement.
In Tanzania, the fuel marking fund is collected by oil marketing companies by paying the marking company invoices directly.
In Ghana, the fund is collected through the regulator who pays the fuel marking company directly.
This may be problematic if funds are not remitted to regulator on time.
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[frs1960]

Who has the best product, the best connections and the best network, GFI-SICPA or Authentix? Frankly I become tired as I'm SH for exactly 13 months right now. The only thing holding me is that I will loose 17 % if I sell at 0.15 and I don't like loosing money. I thought (and understood) that SICPA was already working on selling GFI technology before buying it from Eurocontrol. Why is it