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Up to € 500 million losses a year due to illegal sales of fuels

12 October 2010 / 15:10:44  GRReporter
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The state loses up to € 500 million due to the black market and lack of control of the fuel market in Greece, said representatives of the refineries in the country. "Why don’t they cope with fuel smuggling instead of reducing pensions and salaries," told the Chief Executive Office of Hellenic Petroleum Yiannis Costopoulos to the Greek edition Ethnos. He said the Greek governments have been aware of the problems with the illegal fuel trade for many years, but for one reason or another, a little has been done to put this market in order.

Yannis Costopoulos argued that if the government really wants to deal with the illegal trade and to begin collecting the fuel trade accruing revenues it must solve eight major problems. The first of them, of course, is the black trade involving representatives at all levels - from wholesalers through carriers to retailers. Supervising bodies can not ignore the so-called piracy either if this phenomenon is to be broken. He gave as example stations that are marked with the logo sign of a specific petroleum company but sell the fuel of another company (often with lower quality and at much lower price). Thus, they reduce costs and increase profits while at the same robbing both the customers and the state.  

Lack of transparency and control enable many traders to dodge most of their revenues, while there are no accurate records on the VAT due. Yannis Costopoulos pointed out that the petrol pumps have not been connected with the cash registers of the private stations for 20 years now and millions of euros will flow out of the government’s hands while this continues. Currently, only the corporate stations of big refineries are using a uniform sales registering system. Following the implementation of the reform in the tax system, sole proprietors or private owners were forced to install ordinary cash registers, but it turned out they have not been even used in some cases. "They give me a receipt once in every five times I fuelled – this is not accounting," said a car owner from Athens to GRReporter.

The Chief Executive Officer of Hellenic Petroleum stated that there is no monitoring on the effective stocks of petrol stations and that no one really knows how distribution companies comply with stock levels for emergencies. There is no control on the quality of imported biodiesel either – whether it is pure or mixed with other ingredients. Yiannis Costopoulos pointed out another known problem, namely the fuelling frauds with heating and transport fuel. He said that very often the tanks that fuel households use a special method to account for a larger than the real amount of the fuel delivered. The state has not taken effective measures to stop the violations and the people have to watch out if the supplier is correct. In most cases, this could be found out after the offence was committed. As for the lack of control, Costopoulos asked rhetorically: "Why don’t they deprive the station owners that play with the health and pockets of consumers of their licenses?" He stressed that there is appropriate legal framework and conditions for this, but they are not applied in practice for some unknown reason.

Hellenic Petroleum experts suggest more stringent border control to deal with black trade. In many cases, the companies declare exports to countries such as Bulgaria and Albania, and then bring the same amounts of smuggled fuel exempt from tax and sell it on the black market. The company also offered special checks for the authenticity of documents, the origin and destination of the transported fuel to be held on the roads. Another measure is the introduction of a special mark on all tanks for public use, which has not been done so far. Intensifying the inspections from tax authorities and and supervisors from the Commission to control the movement and storage of fuel and balancing the heating and transport fuel excise duty.   

The huge losses of the state from the fuel black trading were revealed immediately after the heat of the debate between the Ministry of Finance and the Station Owners Federation on who and how to finance the beginning of the heating season in the country. The root of the problem lies in the fact that generally heating fuel is being taxed at a lower duty than transport fuel. Gas station owners who are also retailers buy heating fuel paying the higher duty as for the transport fuel. Then they sell it to households at a lower price. They call this process pre-payment of excise duty, which the state subsequently refunds to them. This year, owners of gas stations, like many other retailers in the country, are experiencing serious difficulties with liquidity and the Federation have warned still in May that the gas stations owners will not be able to follow the last years’ procedure.

The present situation implies that either the Ministry will yield and allow retail distributors to buy heating fuel with lower excise duty or gas stations owners will set up a boycott on October 15, which means that households will not be able to buy heating fuel. The good news is that according to data presented by the Ministry of Economic Development, gas stations owners represent only 20% of the heating fuel distribution chain in the country. If they do not deliver fuel to retail customers on October 15 this will hamper the deliveries to some extent but will not block them.

Tags: EconomyMarketsFuelsBlack tradeHellenic Petroleum
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