21 November 2018

Botswana: Govt Loses Millions On Fuel Levy

Government is said to be losing millions of pula in fuel levies due to lack of mechanism to ensure that oil companies especially citizen owned companies, which mostly supply government, pay the fuel levy.

Information unearthed by this publication suggests that some oil and lubricants companies engaged by government to supply various departments are not paying the fuel levy. "If they do pay the levy they do sojust voluntarily as there is nothing that compels them to do that because there are no mechanisms to ensure that they are paying," revealed an industry player.

Government ministries and departments which have fuel stations include Botswana Defence Force (BDF), Botswana Police Services, Central Transport Organization (CTO), all district councils through their Central Transport Units , hospitals and Directorate of Intelligence and Security Services (DISS).

According to a report released this year regarding undeclared fuel, on a monthly basis an average of 20 million litres of fuel is undeclared to BERA with fuel levy losing on average P2, 400 000 per month. Fuel levy is pecked at 12thebe per liter and annually loses could reach a whooping P28, 800.000.

The oil companies are also sucking the Road Fund which is perked at 90thebe per liter and is the most hard hit with monthly loses of around P18 million while this amount escalates to P216 million. The road fund is used to help in the maintenance and construction of new national road network around the country.

The corruption prone National Petrol Fund (NPF) levy which is currently struggling financially due to the recent scandal gets 13.5thebe per liter translating into two million seven hundred thousand Pula loses monthly and thirty-two million four hundred thousand Pula annually.

Regarding the security of supply margin which is 17.5 thebe per litre on a monthly basis, loses stand at P3,5 million while annually this amounts to P42 million. "Annually government loses P331, 200,000 through the leakages mostly caused by oil companies supplying government department/ministries," revealed the industry player.

The biggest culprits are said to be oil companies supplying government fuel points as there is no audit on those filling stations, which makes it impossible to collect any levy. "This is a money spinning industry because you don't pay any levy yet it is included in the pricing during the tender process, the only charge they pay is the Import Parity Price," said another oil industry player.

Imported Parity Price (IPP) is the price of a product that is imported at the border, which includes transportation costs and tariffs which in Botswana is P8, 34. Currently government is struggling to pay the four oil companies close to P1 billion as arrears from the money collected. Even after the cumulative slate settlement for period up to November 2017, Government would still be owing the Oil industry more than P378 million.

Appearing before the last session of the Public Accounts Committee (PAC), Botswana Energy Regulatory Authority (BERA) Chief Executive Officer Rose Seretse informed the committee that they do not have any audit mechanism to monitor the payment of the fuel levy especially to government departments/ministries. Asked by PAC member, Dr Phenyo Butale, if they have auditing mechanism on the oil companies to pay the levies, Seretse said that they are working on it and stated that it will be ready next year.

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