– PM says special border arrangement in place
Operations smuggling fuel from Venezuela to Guyana have been flourishing for more than a decade, according to opposition leader David Granger, who says that government knows who are the beneficiaries and is deliberately protecting them.
Fuel smuggling in the North West District (NWD) recently came into focus after a fuel boat exploded at Port Kaituma last month, leaving a teenager badly burnt and millions of dollars in damage in its wake.
“It is regarded as a sort of everyday activity in the hinterland and I am quite sure that without smuggled fuel some enterprises would probably be paralysed,” Granger told Stabroek News during a recent interview.
He opined that much of Guyana west of the Essequibo is treated as frontier territory where laws are not robustly enforced and where there is a high tolerance of illegality. Crimes, including trafficking of persons and contraband as well as banditry and murder occur frequently.
According to Granger, the smuggling of contraband is important to persons involved in the mining and logging industries. He pointed out that the fuel coming out of Venezuela (Puerto Ordaz) goes directly to regions One, Two, Seven, Eight and Nine, where the main economic activities are logging, mining and quarrying. Such activities, he said, consume a large amount of fuel, which is also needed for economic activities such as power generation. “It has been going on a long time and at least 11 years ago President [Bharrat] Jagdeo had said that the country is losing $5 billion a year from the evasion of duties on fuel,” he pointed out.
Asked why this situation of tax evasion was not corrected, he said, “The government is tolerant to that form of contraband and I assume the government is aware of the persons who are beneficiaries and [has] deliberately chosen not to enforce the law against them.”
Granger added that the unfortunate aspect of this matter is that the Guyana Defence Force’s Coast Guard, the Guyana Police Force and the Guyana Revenue Authority do not have the capability to interdict fuel smugglers. He said it is because of the government’s desire to protect the beneficiaries of the illegal trade that these three agencies are being kept deliberately weak in terms of the provision of maritime assets as is evident from this year’s budget.
Granger said the country cannot survive if there are two economies existing—one lawful and one lawless. “I think that it is just a matter of time before the lawless part of the economy will have to be lawful and that is one of the reasons why we are struggling now to introduce the Anti-money Laundering and Countering Financing and Terrorism bill,” he added.
‘Special border situations’
While many persons in the Port Kaituma community have told this newspaper that the majority of the fuel that ends up there is illegal, having been smuggled across the border from Venezuela, Prime Minister Samuel Hinds says that there is no illegal fuel there.
“I don’t think there is illegal fuel in Port Kaituma,” he told Stabroek News recently while explaining that government has been treating Port Kaituma “as a border situation; meaning that things can come across just like at Lethem and other places.” The movement he was speaking to relates to items coming into Lethem from neighbouring Brazil.
When asked if such occurrences are supposed to happen, Hinds said, “It happens. In Guyana and elsewhere. There are always special border situations.”
Asked if he is concerned about this situation, he said, “…We would like to get to a regular situation as soon as it is possible and practical” and that the matter is being looked at.
In March, Canadian traveller Amos Sarrouy wrote in the Stabroek Business about his encounters with the fuel smuggling operations. In search of Guyanese living in Venezuela in the light of the longstanding territorial controversy between the two countries, his attention was soon shifted to fuel smuggling between the two countries. He said his investigation brought him face to face with Guyanese whose interest in Venezuela had much more to do with business than with the territorial claim.
He spoke of his arrival at a ferry terminal in Puerto Ordaz, Venezuela, where he saw two or three vessels that resembled broken tugboats lined up near the terminal. About fifty blue fuel drums stood nearby.
He noted that Venezuela is one of the biggest producers of oil in the world and the state has significant control over oil production and keeps prices low. He said at the current black market rate a 55-gallon barrel of gasoline can be bought in Venezuela for two US cents. “Put differently, in Venezuela, you can fill your car three times for two US cents. No Guyanese would be able to get his or her mind around those numbers,” he explained. “On the Venezuelan side the practice is ignored. On the Guyana side there is little that the authorities can do to stop it. Indeed, there are those who contend that, in a sense, smuggled fuel is not at all bad for the Guyana gold industry. Cheap fuel keeps operating costs down and that would mean a higher gold yield, even though it is widely suspected that much of the gold produced in Guyana is exported illegally.”
He said he was told that it has become common for smugglers to pay off officials in Venezuela to get access to the country’s ridiculously cheap fuel.
“If the number of barrels I saw approximates the volume of fuel moved by the men I met then I estimate that an operator with a single boat moves an average of US$15,000 worth of fuel on every trip. That amounts to US$780,000 annually. This may seem like a modest amount given that Venezuela reportedly produces 800,000 barrels of oil per day for domestic use. On the other hand it is estimated that in excess of 100,000 barrels of gasoline are smuggled out of Venezuela every day,” he stated.
Meanwhile, Port Kaituma resident Richard Allen says that illegal fuel in the community coming from neighbouring Venezuela has proven to be more reliable for the region.
He said the presence of this illegal fuel had been discussed at the level of the regional administration in 2004 and 2005 and was also raised at seminars with GuyOil, which at one time had a bulk supply of legal fuel at Morawhanna, in the region. It was explained to this newspaper that the fuel came directly from Georgetown and would have been marked by the relevant authority, the Guyana Energy Agency (GEA). However, he said, a number of years ago the operation closed its doors.
According to Allen, the Venezuela arrangement came into being after Georgetown was unable to meet the demand in Port Kaituma. “It is not a bad arrangement but they ought to be mechanisms in place…,” he said, before adding that the government is well aware of the Venezuela arrangement. He pointed out that in addition to the business community, home owners, hospital and regional offices also require fuel.
He said persons desirous of transporting fuel should be granted licences to do so to ensure that taxes are paid and the fuel is marked.
Allen said that the fuel coming from Venezuela will not only be cheaper but it would be much more reliable as in the past fuel coming from Georgetown would be delayed as a result of the regular breaking down of the steamer boat that was used to transport it. On the other hand, he said, the illegal fuel is always available.