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INDUSTRY: Excise Tax Recovery

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East Africa Case Study

The Issue.
The petroleum economies of Kenya, Uganda, Tanzania and Zambia are closely linked with the transport of legal and illegal fuel across their national borders. Tax exempt fuel destined for export was being diverted and sold internally with the loss of tax revenue to governments. In addition, taxed diesel and gasoline were being diluted with tax-free paraffin and other low tax solvents, with consequent losses of revenue to governments and brand owners alike. Conventional systems for fuel marking using dyes were ineffective - being visible they could be copied or removed easily.

The Solution.
To solve the issue, a program of container fuel marking with low molecular weight markers was undertaken. Utilizing extremely low concentrations at parts per billion levels, the markers could only be detected by our patented ‘marker pair technology,’ in which each marker has a unique and specific recognition molecule that detects and extracts the marker from the fuel. With this method, genuine tax paid and tax-free fuel could be differentiated and dilution of one with the other measured. Coupled with our Track and Trace data management system, and an extensive program of forecourt testing, movement of fuel could be monitored and culprits identified.

The Outcome.
From a total implementation cost of under $3m, annual revenue recovery for governments and brand owners were as follows:
Country Issue Tackled Tax Sales
Kenya Export $30m $50m
  Adulteration $15m $25m
Tanzania Smuggling & Adulteration $25m $55m
Uganda Smuggling $35m $15m
Zambia Smuggling $25m $35m
Annual Total   $130m $180m
   




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