DOWNSTREAM OIL THEFT

Downstream Oil Theft: Global Modalities, Trends, and Remedies
“For many years, diesel
has been cut with
government subsidized
kerosene, and gasoline
has been cut with
premix fuel intended for
fishermen and the poor. ”
Legislative Fraud
In December 2015, amid considerable controversy,
the Ghanaian parliament passed the Energy Sector
Levies Act, imposing a steep tax hike on fuels that
was intended to cover legacy debts accrued by major
entities in the country’s energy sector, such as the
Volta River Authority, the Electricity Company of
Ghana, and the Ghana Grid Company. Retail prices for
fuel rose 22 to 27 percent; the price of liquid petroleum
gas (LPG) rose 18 percent. President John Dramani
Mahama defended the controversial law, insisting that
without such revenue enhancement Ghana’s entire
energy sector might collapse. 182
It did not take long for questions to arise about how
revenues from the new levy were being allocated,
especially given the stress inflicted on both businesses
and private citizens by the attendant price increases.
Though economists and industry experts generally
applauded the effort to clear outstanding debts,
some pointed out that only a portion of the revenue
generated by the levy was officially earmarked for debt
relief, but there was little or no transparency about
the fate of the remaining revenue. 183 Shortly after the
bill’s passage, a ranking member of the Mining and
Energy Committee publicly complained about the
lack of transparency in the legislative process, and
other groups, citing the historic lack of transparency
regarding levies used to recover debt for the Tema
Oil Refinery, openly questioned the integrity of the
process and the fate of the revenue. 184
qz.com/671274/nigerias-ban-on-jerry-cans-for-fuel-will-leavemillions-in-the-dark/.
182 “Energy Sector Levy Was Tough but Necessary—Mahama,”
Citi FM Online, February 26, 2016, http://citifmonline.
com/2016/02/26/energy-sector-levy-was-tough-butnecessary-mahama/.
183 “Concerns Raised over the Energy Sector Levy,” News Ghana,
July 15, 2016, https://www.newsghana.com.gh/concerns-raisedover-the-energy-sector-levy/.
184 “Fuel Price Hikes: ‘NPA Perpetrating Fraud on Ghanaians,’”
Ghana Web, January 5, 2016, http://www.ghanaweb.com/
GhanaHomePage/NewsArchive/Fuel-price-hikes-NPAperpetrating-fraud-on-Ghanaians-405478;
“Ghana Civil
Society Groups Advocate Accountability of Energy Sector
Mitigation
Adulteration, which goes hand in hand with smuggling
and siphoning in many places, is a problem in Ghana,
as well. For many years, diesel has been cut with
government subsidized kerosene, and gasoline has
been cut with premix fuel intended for fishermen
and the poor. As is always the case with adulteration,
these long-standing practices have led to noticeable
economic loss, mechanical issues, health and safety
problems, as well as shortages of kerosene in rural
Ghana. 185
In an attempt to reduce adulteration of petroleum
products, Ghana has launched a Petroleum Product
Marking Scheme (PPMS). The PPMS began with a
short-term trial in February 2013. 186 The pilot program,
overseen by the NPA, was deemed successful, and in
early 2014 the NPA fully launched the PPMS under
the legal authority granted by Legislative Instrument
(LI) 2187. 187 Under the program, molecular markers are
mixed into fuels coming into Ghana, enabling NPA field
inspectors to screen retail fuel stations efficiently and
immediately determine whether their fuel is, in fact,
legal. All subsidized fuels are also marked. Part of the
program’s logic is that high-octane petrol need not
be marked, as the goal is to detect the presence of
lower-grade fuels in more expensive ones. 188 Thanks
to its legal authority, however, the PPMS is not just
about detection, but also about penalizing offenders.
The PPMS has had almost immediate effect on the
domestic illicit activity in Ghana. Figures indicate that
fuel adulteration in Ghana has dropped by 78 percent
as a result of the PPMS. 189
The PPMS was rolled out alongside an extensive
public awareness campaign about fuel adulteration.
Oil majors also participated in the broader push
against the activity. As a result, the percentage of
Levies” All Africa, February 18, 2016, http://allafrica.com/
stories/201602191583.html.
185 “Instilling Sanity in the Petroleum Downstream Sector,”
National Petroleum Authority, June 3, 2014, http://npa.gov.gh/
npa_new/newsitem.php?id=Il4215.
186 “NPA Introduces Fuel Marking Scheme To Check Adulteration,”
Modern Ghana, March 11, 2014.
187 “NPA Blocks Criminal Petroleum Adulterations Business,”
Ghana Herald, March 14, 2014, http://theheraldghana.com/npablocks-criminal-petroleum-adulterations-business/.
188 “Fuel-Marking Programs - Helping Governments Raise
Revenue, Combat Smuggling, and Improve the Environment,”
The Governance Brief 24, Asian Development Bank,
September 2015, http://www.adb.org/sites/default/files/
publication/174773/governance-brief-24-fuel-markingprograms.pdf.
189 “Imani Africa Report - How to Prevent Fuel Fraud in Africa,”
IMANI Center for Policy & Education, April 21, 2016, http://www.
imaniafrica.org/2016/04/21/imani-africa-report-prevent-fuelfraud-africa/.
ATLANTIC COUNCIL
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