Response to Articles Published in Kaieteur News February 26 to 28, 2016

Georgetown, February 29, 2016: Dear Editor, in response to the articles published in Kaieteur News Friday February 26 to Sunday February 28, 2016, the Guyana Energy Agency (GEA) wishes to issue the following response:

In response to the recent slew of articles published by the Kaieteur News seeking to malign the efforts of GEA’s committed and diligent employees, the GEA wishes to assure the public that the Agency remains compliant with its mandate. All acts of wrong-doing, malfeasance detected by, and within the purview of the Agency, will continue to be investigated and appropriate action will be taken.

The article published on Friday February 26 stated that “There is a massive corruption network in the fuel sector which is poorly managed at almost every level–from purchasing to distribution.” The allegation that the fuel sector is poorly managed and also that that the Guyana Energy Agency (GEA), in collaboration with the other Organizations mentioned, is part of a network that abets Fuel Smugglers is quite unfortunate. GEA has a strategic approach in combatting Fuel Smuggling. All tips, intelligence, sites and persons found to be dealing with illegal fuel are recorded, tracked and monitored to inform strategic operations.

Additionally, the success of the Fuel Marking programme recorded from the time of its establishment to date also bears witness that the allegations are incorrect. If the programme is scrutinized, what will be revealed is that in 2004 there was significant smuggling of fuel into Guyana, with about one third of the fuel used in Guyana believed to have been smuggled. The Fuel Marking Programme was established to combat this issue. The success of the program can be seen from the statistics which show that from 2006 to 2015 the percentage of sites found with significant dilution in at least one tank has progressively decreased from 34% in 2006 to 3% in 2015.

Further, the Agency has always sought to strengthen its capacity to effectively combat the issue of Fuel Smuggling. Hence GEA became part of a Task Force on Fuel Smuggling and Contraband which was convened in 2007 under the auspices of the then Ministry of Home Affairs (now Ministry of Public Security) to coordinate the efforts of the different law enforcement agencies in the fight against fuel smuggling and contraband. The resulting cooperation between the Guyana Police Force, Guyana Revenue Authority, Guyana Energy Agency, Guyana Defence Force Coast Guard and Customs Anti-Narcotics Unit (CANU) aided in several interdictions of illegal fuel and assistance in capturing, escorting and securing various transport vessels (both land and water). Cooperation from the Guyana Police Force in the detention of suspects and the GDF Coast Guard and Guyana Revenue Authority (GRA) in joint operations have proven invaluable in combating the illegal fuel trade. Of the 25 joint operations conducted with members of the Task Force on Fuel Smuggling and Contraband, 8 would have resulted in finds of illegal fuel: 6 are currently under investigation, one was prosecuted and the Defendant convicted and in the final one, the individual requested to pay compensation and the file is currently at the Chambers of the Director of Public Prosecutions awaiting advice.

Every report made to the Agency is investigated. Where field tests indicate that the fuel does not contain the required concentration of marker, further samples are sent to the GEA’s Laboratory for additional analysis. A decision is then taken on whether to institute criminal charges or not based on the advice of GEA’s prosecuting Counsel, the Task Force on Fuel Smuggling and Contraband and the Chambers of the Director of Public Prosecutions. Alternatively, compensation may be accepted in the matter under Section 33A Guyana Energy Agency Act and in some cases, written warnings are issued to suspects. Where persons request to have matters settled, the matters are sent to the Honourable Minister for review and approval as per the statutory requirement. Warnings are primarily issued where the value of quantity of illegal fuel detected/seized is particularly low in comparison to the cost that would be incurred in prosecuting same. To prosecute someone knowing that there is insufficient evidence to support the charge merely because he/she is suspected to be involved in fuel smuggling is not only an abuse of the Court’s process but may be viewed as a misuse and waste of the Court’s and GEA’s resources in conducting a fruitless prosecution.

As it relates to the statement that “two cases of illegalities (can be found) every day. If Guyana brings in US$600M in fuel annually and legally, then from what is taking place on the ground, it is widely believed that fuel brought in illegally is in excess of US$600M,” GEA wishes to state that the figure of discovering two cases of illegality every day is a grossly overstated and inaccurate. If one is to come up with a fair analysis of the Fuel Marking Programme it is pertinent to make a distinction between fuel legitimately imported under the accepted Border Trade Policy and fuel being illegitimately imported outside of the border areas. In the former case, fuel sampled and found not to have the required concentration of marker is not, from a policy perspective, deemed illegal, and therefore would not be recorded as an incident. Hence, logically, such cases would not attract prosecution. In the latter case however, the procedure mentioned in the preceding paragraph will be followed. The following are the number of reports made each year from 2007 to date: 2007-3, 2008-41, 2009-46, 2010-51, 2011-21, 2012-13, 2014-51, 2015-36, 2016-4. While systems are in place to combat illegal fuel operations, there will be opportunities for improvement. In this regard, the Minister had requested a review of the “Border trade area” or “blind eye” approach. The overarching policy remains ‘zero tolerance’ for fuel smuggling.

GEA also wishes to state that, contrary to what was stated, there is no record of the grant of ANY Import/Importing Wholesale Licences that have not satisfied the statutory requirements, specifically, statement of locations for storage of petroleum and petroleum products contrary to what was stated in the article. As stipulated in the Petroleum and Petroleum Regulations 2014, as enacted under the Guyana Energy Agency Act 1997 (as amended), anyone applying for a wholesale licence or an importing wholesale licence must lodge with the Agency, the application, together with any documents or records as may be required by the Regulations. One such document is a list of all storage facilities including location, capacity and ownership of said facilities.

Additionally, an Import licence will inherently include a Storage Licence, premised on the submission of a Petroleum Licence from the Guyana Fire Service, Environmental Permit from the Environmental Protection Agency and right to occupy premises evidenced by documentation from the Central Housing and Planning Authority. Upon consolidation of information submitted, GEA seeks ministerial approval prior to the grant of ALL fuel Importing/Importing Wholesale Licences, as all imports into the country will impact on national energy security and management of resources to ensure country-wide availability of petroleum and petroleum products on the market. If during the course of operations there is change in the storage facilities, this must be communicated to the GEA, upon which site visits by Inspectors and Licensing Officers are conducted. The Licensing process is vetted by the GEA in collaboration with sister agencies responsible for issuance of requisite documentation under the Regulations.

In relation to the statement that “Some of the fuel being brought in legally are not declared and are ending up in gas stations. Everyone is involved and they are getting a nice kickback”, GEA would like to state once more for the record that if anyone has any information and proof of any GEA official being involved in corrupt practices then they should report and present same to the GEA and other relevant bodies including the Guyana Police Force. Further, the declaration of imports is done by the legitimate importer to the GRA, evidence of which is provided to GEA for the purposes of marking based on volumes imported. If the products are not declared, then it inherently suggests that such importers are not paying relevant taxes, but are distributing to other retail sites and garnering the profits from such sales. This is exactly the type of operations that the GEA along with GRA aims to address to through regular sampling of sites, site verification activities to ensure licensing operations and legitimate fuel being sold and stored on site, marking of fuel, and monitoring imports and tracking of fuel distribution. Further, the GEA adds a specific marker to the imported petroleum and petroleum products for the purpose of identification and legitimacy.

In 2005, the then Government of Guyana entered into an Agreement with the Guyana Association of Trawler Owners and Seafood Processors under which diesel imported by designated vessels by the Association would be untaxed and marked by the GEA with a specific duty free marker. This fuel would be discharged into designated trawlers and utilized only by members of the Association in their fishing business. In 2016, this Agreement was renewed by the present Government of Guyana and expires on December 31st, 2016. Where fuel marked with the distinctive marker is found in an unauthorized location, the suspects are liable to be prosecuted. In fact, there has been one recorded incident of the marker being found at an unauthorised location. The individual, was charged with being in possession of illegal fuel. He subsequently requested to pay compensation and did so in 2015 after which the charge against him was withdrawn. GEA has always been diligent and strategic in its duties. This diligence ensures that no ‘free for all’ situation exists contrary to what is stated in the article.

According to the KN, “GEA neglects to carry out mandatory checks and balances along the Demerara, Essequibo and Cuyuni Rivers”. However, the facts are very different. The fuel inspection unit of the GEA conducts regular monitoring on the Pomeroon, Essequibo and Demerara Rivers to curb fuel smuggling. In addition, such monitoring is done at the confluence of the Mazaruni and Cuyuni Rivers with the Essequbo River, and along the Berbice River. This strategy is done at times with the direct support of sister agencies on the Task Force on Fuel Smuggling and Contraband. Whenever vessels are encountered on the waterways of Guyana the standard operating procedure for sampling and testing is applied. Locally registered vessels that ply routes within Guyana usually have ‘marked’ fuel since they would have purchased their fuel stock from local, official sources. Locally registered vessels that ply international routes invariably would purchase fuel from international sources and declare same through customs documents as ‘ship stores.’ Internationally registered vessels that come into any of Guyana’s ports of entry would also declare their fuel through customs documentation. The latter would invariably then not contain the domestic marker.

The ‘Venezuelan’ vessels that come at Ruimveldt are moored in an area that is immediately bounded to the west by the GDF Coast Guard and to the east by the Guyana Police Force (Marine Division). Checks made on these vessels in the past have typically shown that fuel on board is in their driving tanks. Drums on board usually contain freshwater or are empty with little indication of fuel being present. Examination of customs document generally concur with fuel present on board. Notwithstanding, the inspection unit has continued to monitor this area and other wharves where international and national vessels are moored. Surveillance activities and other tactics continued to be employed in these areas to combat cases/potential cases of smuggled fuel.

The responsibility to track the movement of boats and their cargoes is that of GRA. Boats entering Guyana should be declaring with the Customs boat house their cargo and fuel upon entry and departure. Fuel for the vessel’s own propulsion is usually declared as Ship Stores to GRA. The vessel should check with GRA on departure to declare said volumes on Board to determine whether any was offloaded improperly.

According to KN report “the Guyana Energy Agency (GEA) has been bringing in shipments of petroleum products, including diesel, weekly…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”. Contrary to what KN has reported, the GEA is a Regulatory body responsible for licensing the importation, distribution, marking and testing of fuel. The GEA is not responsible for the freighting of fuel, rather, the Oil companies and other importers are responsible for freighting their fuel. The issue of what volumes to be imported and the available storage are decisions made by the respective importer and not GEA, and the issue of payment of taxes remains under the direct purview of the GRA. GEA remains adamant about the submission of all documentary evidence to support ports and details of discharge, and distribution networks of imported fuel to monitor country-wide availability.

GEA is further guided by previous legal rulings that have mandated the role of the Fuel Marking Programme relating to the aforesaid issue under the GEA Act. Although such rulings and juridical environment may appear to constrain the operational activities of the Agency, GEA shall continue to operate within its statutory jurisdiction and mandate so clarified by such precedent.

As a regulatory body, GEA is not directly involved in the negotiation of prices for fuel imports, but serves as a facilitator in the importation of product through the granting of requisite licences where proposed importers satisfy all statutory requirements, and subsequently monitor downstream operations through the marking of imported product and licensing of sites to ensure legitimacy in the distribution of petroleum and petroleum products.

The decision to institute charges is based on the evidence available to GEA and on advice received and the institution of charges is not the only means by which incidents are resolved. No individual has been or will ever be “protected” by the GEA.

GEA emphasizes that its employees must carry out their duties with highest levels of integrity and professionalism, and where there is proven, misconduct action will be swift and condign.

Fuel smuggling affects everyone. Combatting it effectively requires partnership with not only relevant Agencies but the public at large. Hence, GEA has always had an ‘open door’ policy in place whereby persons, as well as stakeholders can report incidents of fuel smuggling and provide feedback. The feedback received, whether in the form of a complaint or recommendation, assists the Agency to better serve the Guyanese populace at large. The media also has a role to play in the process. In recognition of this GEA has always willingly engaged the media; answering any questions they may have regarding the operation of the Agency.