Massive corruption in fuel importation…Govt launching probe into GEA, GuyOil, licensing
Government will be launching investigations into the Guyana Energy Agency (GEA), Guyana
GEA head, Mahender Sharma
Oil Company (GuyOil) and the Guyana Revenue Authority (GRA) to determine how rooted these agencies really are in corruption.
This was confirmed by Minister of State, Joseph Harmon, yesterday. His comments came in the wake of startling revelations concerning these agencies, by whistleblowers.
Harmon also made it clear that such an investigation would be separate from the investigation that the GEA’s Board of Directors has started, with GEA Head, Mahender Sharma, and his staff having to provide details. He stated that it would cut across the respective agencies.
“Of course, there will always be investigations into matters like this where large sums of money is being spent, especially the people’s money,” he related. “So certainly yes, this is not just GuyOil. It has to be the Guyana Energy Agency and the Guyana Revenue Authority. So there is going to be an investigation.”
GEA, the agency charged with purchasing fuel for GuyOil, and the Guyana Power and Light Inc (GPL), as well as monitoring/marking to ensure taxes have been paid, made the news in a bad way
Former Managing Director of GuyOil, Badrie Persaud
last week after whistleblowers accused the management of overseeing a system that allowed widespread smuggling.
More than half of the fuel brought into Guyana is said to be smuggled. With GEA officially importing US$561M worth in fuel back in 2014 for the country, the taxes lost from smuggled and illegal fuel would be staggering, especially for a small economy like Guyana which is already struggling from a compliance issue.
The ex-staffers also alleged that stolen fuel markers from GEA, used to track legal fuel, has helped the country lose billions of dollars as the fuel is sold by some gas stations and even taken to the gold mining and logging camps.
It is also being reported that Guyana loses more than $150M in taxes weekly from Venezuelan fishing boats that bring fuel here. While the fishing industry enjoys tax free concessions on fuel, the boats that brought them were reportedly selling them to others, including miners and gas station and wholesalers.
A forensic audit was recently completed and handed in to Government, with GuyOil’s Board of Directors taking a decision to sack Managing Director of GuyOil, Badrie Persaud, effective from Monday last. They had stated that they had no confidence in the official’s ability to execute his duties “honestly, objectively and efficiently.”
Chinese company’s fuel licence
Minister Harmon also expressed surprise at the fact that Chinese Company, China Zhonghao Inc. has been
Minister of State, Joseph Harmon
granted a fuel export licence, despite the fact that Guyana is still years away from exporting fuel. The company’s licence was issued in such a way that even insiders were allegedly taken by surprise, as they are not aware of any prior grants.
“I thought that Exxon (Mobil) had started pumping and that licences were being granted,” Harmon said. “But these are things that we will have to investigate because what (he) might be doing is buying fuel from one country and then allowing a company here to export it to another third party.”
The grant of China Zhonghao Inc.’s licence appears to have given the company the first jump in the country’s fuel export business. The details were published in the Official Gazette of February 13, last, and are raising eyebrows.
Indeed, the amended Petroleum and Petroleum Products Regulations of 2014 allow for applications to be made for an export licence for fuel. The licence for China Zhonghao will be the first.
The regulations indicated that an applicant desirous of exporting petroleum and petroleum products has to apply to the agency and must lodge supporting documents.
These documents are the same as for wholesale or import wholesale licences.
In early January, Government disclosed that a multi-million-dollar bulk fuel importation operation on the East Bank of Demerara was on hold, with the Chinese owners asked to dismantle an unauthorized wharf construction.
According to Minister of Public Infrastructure, David Patterson, the operation called “Falls” and located at Coverden, reportedly built a larger-than-authorized wharf.
Officials from the Maritime Administration Department (MARAD) reportedly unearthed the unauthorized works during inspections. The matter was reported to the Ministry, with the company ordered to do corrective works.
The fuel operation is reportedly associated with Rong-An Inc., which came into the spotlight more than two years ago after applying for fishing licences.
The application had come under fire from local fishing companies who feared that the industry, already facing problems from over-fishing, will be further threatened.
In 2013, Rong An launched a US$4M shipyard at Coverden. Zhanghao Shipyard is reportedly owned by Tresey Su, who is also said to be heavily involved in the logging and mining industry. Su is said to be a naturalized Guyanese.