The ministry of Energy and Mineral Development plans to introduce high profile equipment at Uganda's border points to ensure that all fuel entering the country is tested before it gets marked. In the current arrangement, Global Fluids International (GFI) occupies the border points on behalf of Uganda National Bureau of Standards (UNBS).
GFI's responsibility is to mark fuel entering the country. Marking fuel involves the application of easy to trace chemical technology into the fuel to reduce on adulteration, dumping and smuggling. This responsibility is, however, more concerned with fuel quantity than quality.
Rev Frank Tukwasibwe, the Commissioner of petroleum in the ministry of Energy, said there was a need to beef up the surveillance.
"We believe that sometimes GFI marks fuel that is already adulterated because of the absence of sophisticated UNBS testing services at the border," he said.
"If we are to fight the vices of dumping, smuggling and adulteration, we need to test all fuel entering, instead of waiting for it to reach depots and retail outlets." Tukwasibwe was speaking at a recent stakeholders' meeting in Kampala.
Adulteration is an illegal malpractice in the fuel sector, which involves illegally mixing kerosene with petrol or diesel, by some dealers. It is done to maximise profits through indirect tax evasion. It is alleged that some truck drivers connive with highway fuel retailers to whom they cheaply sell some petrol and then top up with kerosene.
"Fuel is a fast selling product like perishables. If adulterated fuel is undetected at the border points, the dealers can quickly sell it off before UNBS can come for routine testing," Tukwasibwe said.
Previously, UNBS would do both fuel marking and monitoring. This, however, resulted in concerns by some stakeholders who questioned the bureau's transparency and impartiality. In November last year, the ministry of Energy contracted GFI to carry out fuel marking at the borders, while UNBS concentrated on testing and monitoring.
It was, however, discovered that much of the fuel was tampered with during transportation. James Malinzi, a supervisor of customs audit at URA says that though there are no figures to show how much revenue the country loses through adulteration, this vice remains real and dangerous.
"If someone mixes 200 litres of kerosene with 10,000 litres of petrol, it means that the country shall indirectly make a loss on 200 litres since this person is going to sell the product at the rate of petrol," he says.
Kerosene is charged a tax of Shs 200 while petrol is Shs 900, which means that government loses Shs 700, in tax, on every litre of kerosene added to petrol. The effect is also felt by consumers because mixed fuel drastically changes the specifications of the product and once used in a car, it can damage the engine.
Despite these challenges, UNBS officials maintain that the new arrangement has yielded results. By sharing responsibilities, the target was to reduce on fuel adulteration, dumping and smuggling.
With more concentration on quality monitoring, UNBS increased their capacity in May this year when they acquired two more mobile laboratories. The mobile vans came with modern GPRS technology, where test results would be relayed in record time to the central servers both at the ministry of Energy and UNBS offices.
Peter Kitimbo, the quality assurance coordinator at UNBS, says that the new vans have seen the bureau's frequency in the field increase from 29 per cent to 43 per cent. This means that the bureau can visit at least 500 of the 1200 outlets registered with UNBS.
"Because of our increased frequency and unpredictability, conformity has improved. The failure rate (adulteration) has reduced from 29.7 per cent to 3.7 per cent," Kitimbo said.
With the introduction of a single customs territory to the region, however, it means that fuel marking would have to be shifted to the port. Tukwasibwe said that although Uganda Revenue Authority and GFI will have to shift their offices to the port, these should also remain at border points because fuel was always tampered with during transit.
"Fuel will remain subject to testing and marking at the border entries even with (the introduction of) single customs territory," he said.