BURS to plug multi-million pula fuel tax leaks

Mbongeni Mguni | Monday July 3, 2023 06:00

The BURS will collect the National Petroleum Fund (NPF), the Road Levy Fund and the Security of Supply Margin, on top of the fuel levy which it already collects.

The move comes as reports from the local oil industry suggest that amounts ranging up to P100 million each year could be lost to shady practices such as under-pricing of products and non-declarations by fuel importers.

The loophole has also reportedly fostered fuel smuggling and questionable quality of some imports flowing into the country, a situation spotted by some whistleblowers who have seen their bids in certain tenders heavily undercut by dubious dealers.

The ministries of Minerals and Energy as well as Transport and Public Works, signed a Memorandum of Understanding with the BURS this week, giving the agency full control of all levies associated with petroleum product imports.

“We have been receiving complaints of under-priced products from some traders and there were suspicions, mark my words, suspicions, that there was fuel smuggling,” Ellen Richard-Madisa, the Minerals and Energy permanent secretary, said at the MoU signing on Tuesday. “In addition to this, we have been inundated with issues pertaining to the questionable quality of products that are getting into our borders, hence the need to be more innovative in our approach. “As a ministry together with our counterparts, we sat down and reviewed the process of collection of levies and found it was fragmented. “We felt that as government we were not benefiting from the levies that are being collected currently through points or agencies.”

The ministries have been engaging the private sector since at least 2015 to improve the recovery of levies, culminating in the decision to appoint the BURS as the central collection agency.

The country’s fuel price, both bulk and retail, contains several levies and taxes that importers are required to collect and remit to government.

However, BusinessWeek is informed that while the fuel levy collected at the ports of entry shows a certain volume of products entering the country, collections through the NPF, road fund levy, and security of supply margin show that importers are not paying their full obligations. By law, fuel importers have their own margins built into the fuel price and are not entitled to retain the statutory levies and taxes due to government.

Department of Energy director, Midas Sekgabo, told BusinessWeek that analyses of the petroleum product sector over the years had revealed issues with the collections of levies.

“It was a long journey and there are a lot of issues that we found not adding up,” he said. “We make a budget, such as with the NPF, where we expect, say P13.5 million monthly, but found ourselves getting P10 or P11 million. “So we found that the levies we were getting were not tallying up with the volumes recorded by the BURS. “The fuel levy from the BURS was showing a totally different set of volumes from what we were getting.”

Minerals and Energy minister, Lefoko Moagi, said centralising petroleum product levies and taxes collection under the BURS was part of government’s Reset Agenda which stresses efficiencies and greater public service delivery.

“It is important to note that the purpose of the NPF is to, inter alia, stabilise petroleum product prices, cater for engineering, construction and operational costs of government strategic storage facilities as well as stock. “Ineffective collection and remittance of this levy compromise implementation of this important government mandate to a very large extent. “Equally important is the inadequate collection and remittance of the Road Fund Levy which compromises the maintenance of the existing road infrastructure for the country. “That road infrastructure is used by the very trucks ferrying this fuel. “This, in turn, impacts negatively to the poor consumer who will have paid the required levy and taxes for provision of the necessary services required to ensure a better quality of life,” he said.

Commissioner General Jeanette Makgolo of the BURS said the agency would fully enforce its new role in the collection of fuel levies and taxes, in order to ensure that all stakeholders play their part in supporting the country’s economy.