Lominda Afedraru
8 July 2009
Kampala — Petroleum giant Shell Uganda Ltd is in legal battle with Uganda National Bureau of Standards for breaching a contract the parties entered to mark fuel imported into to country for purposes of minimising smugglers who import the product minus paying taxes.
The company, through its lawyers Sebalu &Lule Advocates, filed a case against UNBS claiming refund of Shs834.2 million it paid to the latter as fees for bio-coding its fuel products imported into the country.
According to the petroleum company, in 1999 it entered into an arrangement with a company called SGS Uganda Ltd for bio-coding fuel as a way of checking the then rampant fuel smuggling into the country to protect the business of participating oil companies and government revenue.
However, later government assumed the role of bio-coding the fuel and the company in 2008 entered into an agreement with the government were it was agreed that under the petroleum marking and quality control regulations, the government is mandated to mark all petroleum products imported into the country.
The government was further entrusted to carry out surveillance check in the company's distribution network and issue a report to that effect.
The petroleum company agreed to pay Shs3 per litre as bio-coding fee and between the period of January to December 2008, the company paid Shs768.2 million for the same exercise for the 360 million litres of imported petroleum.
The company paid extra Shs66 million for its two petroleum stations, Shell Kaazi and Shell Kibuye.
According to Shell Uganda Ltd, in January 2009, UNBS officials carried out a sampling inspection of petroleum products on its two stations and its main depot in industrial area. The company is accusing UNBS of illegally closing the two stations for one and half days on unjustified reasons that the petroleum products were adulterated
The company is accusing UNBS of acting negligently because it failed to take into account the fact that the dispensing inventories issued by the former did not mention whether any marker was introduced in the products.
According to the petroleum company, due to the careless acts of the standards body, Uganda Revenue Authority went ahead to make tax assessments on its imported petroleum products, which its management disputed but requested the revenue body to conduct investigations into the allegations to establish that it was evading tax.
Uganda Revenue Authority carried out an audit but found that the allegations of shell Uganda Ltd importing adulterated petroleum was inaccurate.
The company contends that UNBS in breach of its statutory obligation failed to undertake surveillance checks on its outlets but went ahead to falsely accuse it of possessing products on which it had not paid tax.
The company contends UNBS failed to Bio-code the products as required and failing to check with URA to confirm that taxes were paid on the products.
Shell Uganda Ltd wants an order compelling UNBS to pay damages with interest for defaming its name in the media as well as costs.
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