Massive corruption unearthed…Govt. footing bill to bring in illegal fuel

Feb 28, 2016 News

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As questions continue to increase over the mismanagement of the country’s fuel import business,

more details have emerged.
Government’s oil supplies from Trinidad and Tobago are also far from transparent.
According to documents, the Guyana Energy Agency (GEA) has been bringing in shipments of petroleum products, including diesel, weekly.
Guyana Oil Company (GuyOil) pays for the charter of two oil ships to bring oil from Trinidad. An estimated $4M is being paid daily for the two ships.
However, only half of the shipments have been coming for GuyOil. The other half, shockingly is coming, free of shipment costs, to private importers.
Guyana had turned to the Twin Island Republic after supplies from Venezuela, under the PetroCaribe arrangement, were halted last year.
Under the arrangements, GuyOil would sell the fuel and remit the proceeds to GEA.
According to Government officials and ex-GEA employees who are privy to the scheme, the entire Trinidad purchase stinks to high heavens, and involves hundreds of millions of dollars in lost revenues to Guyana and Trinidad.
“What is wrong with the transactions is that the vessels have also, according to documents, been bringing in fuel for third parties. In essence, someone is jockeying and riding free on the vessel while taxpayers are footing the bill,” a GEA official explained.
The arrangement with the vessels- one of which is the MT Tradewind Union- would raise questions as to why GuyOil and GEA did not move to increase their volumes on each shipment. It is not a question of storage.

Insiders noted that GuyOil has storage capacity of up to 80,000 barrels at its facilities in the three counties.
According to a GuyOil document on a recent shipment, the company’s weekly gasoil (diesel) import is 8,007 barrels. This is the same as what the private importer brings in on the same vessel, weekly (8,000 barels.)
“From indications, the importer’s 8,000 barrels were not marked and we don’t know where it went. More importantly, it appears no taxes were paid.”
It was GEA’s Chief Executive Officer, Mahender Sharma, who last month said that he was worried about the Trinidad supply. He has reported to Government that Guyana only has two weeks supply at any one time.
As a result, a new GEA Board of Directors installed last month was asked to look for an alternative supplier to Trinidad.
While GEA would mark the fuel imported for GuyOil as part of the process to make it legal for sale, there are no indications that the fuel for the private importer is marked. Nobody knows where it goes and how it is being disposed of.

The document would also raise questions whether a smaller vessel could not have been procured for the Trinidad shipments.
It would seem that GuyOil did not get the best price for the charter of the vessel.
According to one of the recent documents, the MT Tradewind Union was time chartered leaving Petrotrin, the Trinidad company which the oil is coming from, on January 30. The vessel arrived in Guyana on February 2.
“From the documents, the whole deal stinks and we don’t know how long it has been going on. GEA, it appears, overlooked multi-billion-dollar purchases for the state without ensuring care was taken to ensure that the state benefits. Was it corruption? Was it carelessness?”
The presence of the private importer’s fuel being on the boat from Trinidad and why it was not being marked had been raised with GEA’s CEO, Mahender Sharma, and Head of the Fuel Marking Division, William Holder.
However, both officials reportedly indicated that the fuel brought in by the private importer was in-transit in the country and there was no need.
GEA came under the microscope last week after a number of ex-staffers and Government officials blew the lid off what is taking place in the country’s fuel importation trade.
More than half of the country’s fuel supply comes from smuggling and other illegal means, it was alleged.
The country, as a result, has been losing billions of dollars annually in revenues from the taxes that are being charged on every barrel of fuel brought in.
Earlier this year, those taxes amounted up to 50 percent on diesel and gas. In 2014, when gas was over US$100 per barrel, Guyana spent over US$561M to import over 4.934M barrels of oil to meet its energy and transportation needs. This rose to over five million barrels last year.
It was also alleged that almost $150M in taxes is lost weekly from fuel smuggled into the Demerara River, to a number of drop-off points.
Yesterday, following the report, a number of GEA officers reportedly descended on fishing boats from Venezuela, moored at Ruimveldt, Georgetown.
The inspectors were reportedly checking for documents, among other things.
The new Government has been complaining that it is only collecting about 60 percent of the taxes due.

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