PAC queries fuel marking contract with Swiss firm

Kampala, Uganda | THE INDEPENDENT | Members of the Public Accounts Committee of Parliament have questioned the procurement of a contractor to provide fuel marking services in Uganda.

Fuel marking services allow governments to mitigate tax evasion and subsidy abuse, minimize financial losses, and further improve tax collection effectiveness.

The MPs on the committee chaired by the Budadiri West MP Nandala Mafabi were Thursday meeting officials from the Ministry of Energy and Mineral Development.

The officials led by the accounting officer Under-Secretary Emmanuel Freddie Mugunga had appeared to respond to queries in the auditor general’s report on the Fuel Marking and Quality Monitoring Program for 2 consecutive financial years ending June 2019.

The Auditor General’s report states that the program revenue budget in the financial year ending June 2018 was 3.330 Billion Shillings but only 3.154 Billion Shillings was collected, as a result, the activity on national monitoring coverage of fuel quality was not fully undertaken.

The ministry attributed the revenue shortfall to a delay in procuring a new technology provider due to an administrative review of the procurement process.

Following the administrative review, the Energy ministry in May 2018 agreed with SICPA Global Fluids Integrity SA (GIF) to provide fuel marking services. The contract that runs until 2023 obliges GIF to charge 26 Shillings per litre of fuel marked exclusive of taxes. It remits 15% of collections to the ministry.

However, the auditor general’s report for the financial year ending June 2019 states that there were inadequate verification and reconciliation of revenues remitted by GIF hence a risk of understatement of the revenue declared to the program by GIF.

MPs noted that the contracting of a service provider has resulted in an un-quantifiable loss to the government since there is no clear mechanism to detail how much revenue is collected periodically by the provider.

Michael Tusiime, the Mbarara Municipality MP noted that he had compared URA domestic tax records with the Energy ministry financials and recorded a disparity in the revenue collected by GIF and the fuel imports.

The Commissioner of the petroleum supply department Rev. Frank Tukwasiibwe blamed this on lack of access to the URA Asycuda World Data System that would reliably indicate how much fuel has been cleared by the tax body to enter the country hence provide an accurate estimation of revenues from the fuel marking service.

But Mafabi accused the ministry of abdicating its responsibility and stated that the fuel marking service can be executed by the ministry as a Non-Tax Revenue source. He asked Mugunga to write to the ministry of finance for permission to take over the exercise as an Appropriation in Aid activity.

MPs also demanded that the ministry gets immediate access rights to the URA Asycuda World Data System. Tusiime highlighted the advantage of synchronized data.

Mugunga promised to put into consideration all the issues raised by the MPs.

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