Asian countries lose hundreds of millions of dollars each year to fuel smuggling – ADB

Asian nations lose hundreds of millions of dollar tin tax earnings o fuel smuggling, the Asian Development Bank (ADB) said in a report, adding that a robust fuel-marking programme would allow governments to not only decrease smuggling and fuel-related tax fraud, but also provide an analysis of each stage of the fuel supply chain.

It said governments worldwide have developed fuel tax programmes to help pay for essential services that benefit their citizens. In many cases, these taxes represent a significant portion of a country’s total tax income, especially in the case of lower-income countries.

“When fuel subsidies result in major fuel price discrepancies, there is the temptation to engage in fuel smuggling or tax fraud that diverts low-cost, subsidized fuels away from the people who need it,” the ADB said.

According to the report, the low-priced subsidised fuels of some Asian countries, such as Bangladesh, Indonesia, and Malaysia, are smuggled to countries that charge international market prices, depriving people in the source country of the intended benefits.

Due to smuggling, the Philippines has adulterated fuel products in its supply chain, costing the country as much as $750 million a year in lost tax revenue, according to some analysts, the ADB said.

It poined out that fuel fraud also causes harmful auto emissions, increased fuel consumption disrupted supply chains, and loss of confidence in national governments, and urged governments to make better use to fuel marking systems.

To detect smuggling, governments often use fuel marking systems that blend an invisible marker into fuel at very low concentrations—often measured in parts per billion—to track fuel as it moves through the supply chain.

Even at very low concentrations, the presence or absence of markers in fuel can be detected at retail outlets with sophisticated but easy-to-use analyzers.

Fuel marking systems can monitor every stage of a fuel supply system, beginning with the country’s refineries or fuel depots and following products through wholesale depots, the transport network, including trucking firms and pipelines, right down to retailers like roadside filling stations.

While fuel-marking systems have been in use since the 1950s, recent technological developments have now made them extremely accurate and effective, the ADB said, adding that the ultimate effectiveness of a fuel-marking program is realized when it mitigates fuel fraud, resulting in the return of stolen revenues to state coffers.

 

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