Illicit shipping fuel trade persistent, latest measure a step back

Illicit shipping fuel trade in Greece remains a persisting issue despite a series of measures implemented by a succession of governments since 2002 to restrict movement by vessels of smuggled fuel.

In a latest initiative, the finance ministry is preparing a rule, which, if implemented, will nullify preceding measures, subsequently permitting, once again, the use of floating refueling means of any capacity without any restriction of movement.

Adoption of this rule will effectively facilitate the avoidance of special consumption tax payments on shipping fuel purchased.

Special consumption tax on shipping diesel is 410 euros per cubic meter, roughly the current market value of the fuel, while this tax on mazut is 38 euros per ton.

Relatively recent rules, introduced in 2015 and 2016, requiring shipping companies to install certified fuel inflow-outflow monitoring systems as well as GPS technology, have not yet been fully implemented and, subsequently, proved insufficient to stop illicit shipping fuel trade.

Delayed fuel trade monitoring system no sooner than 2021

Full implementation of a fuel trade monitoring system designed to clamp down on smuggling in the sector does not appear likely any sooner than 2021 despite being ratified by the previous government last April and first presented a decade ago.

The former Syriza government’s related legislation indicates the plan’s full implementation is estimated for the end of 2021.

Judging by the long delay, the eradication of fuel smuggling does not appear to be a top priority for the Greek State, even though it is being deprived of annual tax revenues estimated at 300 million euros.

The monitoring system, designed to track fuel inflow and outflow trading data, is not yet fully operational. Various corrections and a pending ministerial decision that concerns issues such as the method and regularity of data dispatches to the General Secretariat for Information Systems (GSIS), a division of the economy and finance ministry, are still needed.

SEEPE, the Hellenic Petroleum Marketing Companies Association, has intervened and expressed a willingness to assist the Greek State. The association has proposed making a financial contribution for the system’s swifter implementation and training of inspectors.

Overall fuel sales slump by 4% in first four-month period

Overall fuel demand fell by 4 percent in the first four-month period compared to the equivalent period last year, extending the market’s recent run of lower consumption, data has shown.

Gasoline demand dropped by 4 percent in the first four months of 2019 compared to a year earlier, while diesel sales were down by 2 percent.

The overall 4 percent decline comes despite strong demand registered for heating fuel earlier this year as a result of the cold winter.

The lower diesel demand has been attributed to a slowdown in major projects, investments and building activity.

Overtaxation is seen is the main cause behind the drop in demand for gasoline, whose price levels have remained particularly high in the Greek market despite a drop in international prices.

Ongoing illicit fuel trade in Greece is affecting fuel-related tax revenues, depriving the State of roughly 300 million euros per year.


Tender launched for fuel smuggling and adulteration solutions

AADE, the Independent Authority for Public Revenue, has announced a tender for systems intended to combat fuel smuggling and adulteration in the heating and shipping fuel sectors.

The authority’s decision comes as the latest step in the Greek State’s slow-moving effort to resolve these issues.

Winning bidders will take on contracts for the introduction of fuel smuggling and adulteration detection systems. The technology in this field has advanced, AADE noted in its announcement.

Interested parties can submit their queries to by July 31 ahead of an October 1 deadline for applications. The country’s General Chemical State Laboratory is scheduled to deliver a finalized report of tracing systems submitted by March 2, 2020.



Further delays in full implementation of fuel smuggling measures

Measures designed to clamp down on illicit fuel trade will require an additional three-year period to be fully implemented, the heads of a fuel traders association were told at a meeting yesterday with Giorgos Pitsilis, the head official at AADE, the Independent Authority for Public Revenue, a finance ministry division.

The measures, intended to prevent fuel smuggling activity said to be worth as much as 250 million euros annually, were originally presented in 2009, meaning their full implementation by December 31, 2021, as traders were told, will have required 12 years to achieve, if achieved.

The plan includes a cash inflow-outflow tracking system for petrol stations and the installation of GPS systems on fuel trucks to monitor their movements.

Petrol stations installed the required technology for cash inflow-outflow monitoring between 2014 and 2016 but AADE has not fully utilized incoming data. The authority has limited its activity to random checks.

Complicating matters even more, AADE intends to commission a firm for inflow-outflow tracking system inspections in autumn, as part of a re-certification process. Any systems found to not meet required standards will need to be reinstalled, according to this plan.

This could cause additional confusion and unrest as petrol station owners and fuel companies spent over 100 million euros between 2014 and 2016 to have cash inflow-outflow monitoring systems installed.

Looser terms for oil tankers at ports would worsen fuel smuggling issue

A return to looser regulations for oil supply tankers anchored at Greek ports threatens to worsen the country’s fuel smuggling problem, depriving the Greek State of substantial tax revenues.

A legislative revision currently being worked on by government officials would, if implemented, reintroduce lax terms not requiring tax-related inspections of tankers loaded with fuel and stationed at ports – without corresponding orders – as storage facilities.

Such an arrangement had been permitted in the past as a tax relief measure for the fuel sector but was swiftly terminated by a finance and economy ministry decision in 2002, imposed to tackle illicit fuel trade.

In comments to energypress, sector officials have questioned the incentives behind the government’s latest move.

The loose observation by state authorities of an inflow-outflow monitoring system for the fuel sector, introduced in 2014 as a measure to counter fuel smuggling, combined with the possible return to lax terms for oil supply tankers at ports, is expected to intensify the country’s fuel smuggling problem.

An elevated special consumption tax (EFK) imposed on fuel, in Greece in addition to a VAT rate of 24 percent, has driven many sector players to illicit trade.

Besides depriving the Greek State of tax revenues, the easier terms being considered for oil supply tankers at ports would increase the threat of oil-spill accidents and environmental damage. Just over a year ago, an oil tanker sunk in the Saronic Gulf, just off Athens, spilling a significant amount of oil into the sea for one of the country’s worst environmental disasters.


Fuel smuggling worth €250m annually, sector authority notes

Manipulated petrol station pumps, adulterated fuel and a lack of inspections by authorities, all persisting Greek fuel market problems, are contributing to illicit fuel trade worth as much as 250 million euros, annually, local industry authorities have noted.

This development has had a major negative impact on the local market. Over the past decade, heating fuel tax has risen sharply from 21 euros to 280 euros per ton, the fuel sector’s annual aggregate revenue figure has dropped by 600 million euros, more than 3,000 petrol stations have gone out of business, and annual volume-based consumption has shrunk by 40 percent, from 11.4 tons to 6.9 million tons.

An inflow-outflow monitoring system for petrol stations, introduced in 2014 as a measure to counter fuel smuggling, has not yet been fully implemented despite costing hundreds of millions in private and public-sector money.

A plan to install GPS systems on fuel trucks as a means of monitoring their movements has remained pending. Technical details and procedures concerning this measure have yet to be established.

Fuel smugglers have been left to roam without restriction, Roberto Karahannas, head of SEEPE, the Hellenic Petroleum Marketing Companies Association, noted yesterday during a presentation of fuel market developments.

Reintroduced fuel inspection bonus pay not producing results

The reintroduction of a bonus pay system for inspectors at KEDAK, a fuel handling and storage controls authority, stopped at the beginning of 2016 and reinstated late in 2017, has done little to increase the number of checks made with the intention to clamp down on fuel smuggling and tampering activity.

A total of just 720 inspections on fuel traders were made in the first half of 2018 and a mere two offenders were reported, prompting fines totaling 126,000 euros, energy minister Giorgos Stathakis recently told parliament in response to a question by an opposition party MP.

The General Chemical State Laboratory still needs to conduct tests on seven gasoline and five diesel samples collected by KEDAK inspectors, meaning that, at best, the number of offenders in the first half of 2018 will reach 14 in total.

Head inspectors are paid 97.15 euros per in bonus money for every check conducted and their assistants receive 77.72 euros. These amounts are increased by 20 percent for inspections conducted on Sundays, after hours, and on public holidays. The bonus pay system includes a monthly limit of 300 euros per inspector.

The number of fuel inspections registered has been on a downward trajectory in recent years. A total of 4,018 inspections were made in 2014 and 1,875 in 2016. The numbers have since slid further.


LNG smugglers resorting to new tricks, state losing millions

Fuel smuggling rings are employing new types of tricks for illicit LNG trade, depriving the state of more than 15 millon euros a year in tax revenues.

According to market sources, smugglers are tampering with reregisteration data concerning LNG bottles. The approach, entailing false reregistration stamps on LNG, which saves merchants the cost of safety checks that need to be made by certified authorties, is believed to be particularly popular among smaller traders.

If not countered, this smuggling problem is expected to get worse as demand for auto LNG rises. LNG is a lower-cost fuel option for drivers compared to gasoline and diesel.

A government decision, reached in January last year, to increase a special consumption tax (EFK) imposed on LNG to 430 euros per metric ton from 330 euros per metric ton, has propagated the problem.

Illegal trafficking of industrial LNG, taxed at a lower EFK rate of 60 euros per metric ton, has increased. This gas is then smuggled to gas stations as autogas and sold with the high-level EFK rate intact. For every one liter of smuggled industrial LNG, traffickers, evading taxes and duties, gain 21 cents.

Illegal LNG bottling activity at gas stations is also on the rise. LNG bottles for household and professional use are supposed to be filled and checked by authorized gas companies.

Just 1.1% of fuel smuggling fines revenue forecast collected

Proceeds injected into the Greek State’s coffers from penalties imposed for illicit fuel trade amounted to 11.2 million euros between 2015 and 2017, representing just 1.1 percent of a one-billion sum previously pledged by the current government.

The disappointing data, which highlights the anemic effort, at best, being made by local authorities to combat a gigantic problem depriving the Greek State of billions in state revenues, was recently presented in parliament following a question raised by main opposition New Democracy party MP Hristos Staikouras.

In 2013, state revenues stemming from penalties imposed for fuel trade violations reached 15.5 million euros before sliding to 11.4 million euros in 2014, 4.4 million euros in 2015, 3.7 million euros in 2016, and 3.1 million euros in the first nine-month period of 2017.

Fuel smugglers have taken full advantage of this extended period of slackened monitoring to increase their level of illicit trading activity by discovering new market niches, including in the auto LNG market, and fine-tuning their ways.

A much-heralded cash inflow-outflow monitoring system installed at all petrol stations since 2014 and estimated to have cost 100 million euros has proven futile as its resulting data, imported into the finance ministry’s information system, is not being utilized.

Little progress is believed to have been made in implementing another monitoring system requiring fuel trucks and the country’s thirty or so tankers to be installed wth GPS systems. Legislation for this measure was ratified in 2012. It was followed by a ministerial decision, signed by several ministers last August, which set an October 31, 2017 deadline for the installation of GPS systems by all fuel trucks and vessels. The number of trucks and vessels that have complied with the measure remains unclear.

Just days ago, a joint ministerial decision signed by energy minister Giorgos Stathakis and deputy finance minister Giorgos Houliarakis, reinstated bonus payments for officials at KEDAK, a fuel handling and storage controls authority. These bonuses were scrapped in early 2016 as part of the wider bailout-related cuts. The initiative to bring them back suggests that inspections for illicit fuel trade can be expected only when authorities are offered bonus fees. Whether this bonus-fees initiave can produce results, depite the lax enforcement of all the aforementioned measures, remains to be seen.


Officials recall monitoring drive following poor fuel tax figures

Pressured by the need to boost tax revenues, government authorities have resumed taking action to counter the country’s illicit fuel trade problem following a far softer stance last year. The number of inspections conducted has risen by over 270 percent since last year, while a new effort is being made to increase monitoring by making the installation of GPS systems mandatory for fuel trucks.

Employees at the energy ministry’s fuel handling and storage controls authority (KEDAK) had stopped conducting inspections as a result of a bonus cut but disappointing tax revenue figures have prompted a new effort to clamp down on fuel smuggling activities.

According to finance ministry data, 6,443 inspections were conducted during the first four months this year, compared to just 1,702 throughout the entire first half of 2016. This represents a 278 percent increase. Also, fines worth a total of 9.5 million euros were imposed during the first four months of the current year, up from 1.97 million euros in the first half of 2016, a 382 percent increase.

These percentage increases were exacerbated by the subdued monitoring activity by authorities last year. In 2014, authorities carried out 27,365 checks. They dropped to 8,850 in 2015 and rose to 12,018 in 2016, according to energy ministry data.

Energy product special consumption tax (EFK) revenues for the first four months of the year fell short of the target figure by 102 million euros, or 6.8 percent, while fuel EFK revenues were 26 million euros, or 4.1 percent, below the target. If this rate is to be continued until the end of the year, the Greek State will be deprived of roughly 400 million euros in fuel-related tax revenues.



Fuel trade inspections plunge amid rampant smuggling trend

The number of inspections being carried out to combat illicit fuel trade has fallen drastically, latest finance ministry data has shown, highlighting the absence of state action at a time when consumers are being called upon to boost tax revenues, including through fuel tax hikes.

Data made available showed that the number of inspections carried out between 2014 and the first half of 2016 have plummeted.

A total of 27,365 inspections were carried out in the fuel trading sector in 2014, while just 1,702 were conducted in the first half of this year. A mere 60 liters of unleaded fuel were confiscated amid this drastic slowdown. Diesel confiscations amounted to 6,260 liters.

In 2015, a total of 8,850 inspections were carried out, down by 67.6 percent compared to the previous year.

Tax hikes have just been imposed on heating fuel, as of October 15, while tax increases will also be imposed on auto fuel as of January 1.

Authorities claimed the lack of monitoring is the result of inefficient implementation of control mechanisms as well as a major staff shortage.

Trading data is being relayed to the finance ministry through an “inflow-outflow” data system installed at petrol stations to track purchases and sales, but officials are not utilizing the incoming data. The tracking system has apparently been installed at 99 percent of the country’s petrol stations but is not functional, as was once again pointed out last week by Yiannis Aligizakis, president of SEEPE, the Hellenic Petroleum Marketing Companies Association, at an industry event.


Fuel smuggling remains rampant, monitoring missing

Illicit fuel trade has remained rampant seven years after legislation introducing an “inflow-outflow”data monitoring system for petrol stations, intended to enable the finance ministry to track purchases and sales in the sector.

The Syriza-led coalition, elected in January, 2015, had stressed it would wipe out fuel smuggling practices and generate increased fuel tax revenues, but this objective has utterly failed.

Since the bill’s introduction, the private and public sectors have spent over 100 million euros for the measure’s various requirements, while numerous committees and sub-committees have been assembled to address related issues, all to no avail so far.

Fuel smuggling has remained unaffected as the Greek State has ratified laws but failed to fully enforce them. The ineffectiveness of the “inflow-outflow”data, which has cost petrol station owners and the public sector close to 95 million euros to set up, is a glaring example of this failure.

It remains a mystery as to why the “inflow-outflow”data system is not yet fully functional despite having been installed at 99 percent of petrol stations, as was pointed out by Yiannis Aligizakis, president of SEEPE, the Hellenic Petroleum Marketing Companies Association, at a recent industry event. Incoming data is not being processed or utilized at the finance ministry.

Making matters worse, a study conducted by the National Technical University (NTUA) and whose results were released this week, showed that roughly fifteen percent of petrol stations are undersupplying customers at the pump, based on what they are charged, compared to four percent four years ago. These discrepancies are being picked up by the “inflow-outflow”data system but it is believed ministry officials are not processing the data.

As a result, the Greek State is being deprived of fuel tax revenues estimated at between 250 million and 300 million euros per year. Also, unfair competition is being supported as a result of the higher business costs burdening law-abiding enterprises.

Rather than clamp down on fuel smugglers, the government is instead preparing to introduce a new round of tax fuel hikes in an effort to raise roughly 492 million euros in fuel tax revenues next year.

Big questions need to be asked as to why illicit fuel trade remains evasive in Greece.






Roughly 15% of petrol stations cheating drivers, study shows

Roughly fifteen percent of petrol stations are undersupplying customers at the pump compared to four percent four years ago, according to research conducted by the National Technical University (NTUA).

The study, whose results were published today, showed that the cheating practices are primarily being performed by petrol stations offering lower prices.

The results are based on a sample of 150 petrol stations operating in the wider Athens area, which were checked between August 22 and October 3.

The study’s director, Fanis Zanikos, noted that 85.5 percent of samples passed the test while the remainder failed.

Discrepancies are being detected through an “inflow-outflow” monitoring system installed at most petrol stations but still not yet fully operational despite certain steps taken in more recent times, it was pointed out during a presentation of the survey’s results.

Yiannis Aligizakis, president of SEEPE, the Hellenic Petroleum Marketing Companies Association, noted that the “inflow-outflow” monitoring system has been installed at 99 percent of petrol stations for a total cost of 90 million euros, while adding that processing and utilization of data is not being carried out. System software had yet to be certified, the SEEPE chief also noted.

Commenting on illicit fuel trade, Aligizakis said resulting annual tax losses for the state amounted to between 250 and 300 million euros per year.

SEEPE officials called for the government to reexamine upcoming fuel tax hikes, noting that tax revenue targets will not be achieved as a result of the negative impact by the taxes on consumption levels. The association also requested more inspections at petrol stations.

IOBE report: Fuel taxes to hit growth, spark illicit trade

New fuel tax increases set to be introduced, beginning with heating fuel as of October 15, will severely undermine the Greek economy’s growth potential as well as tax revenues, according to IOBE, the Foundation for Economic and Industrial Research, in a study officially released today.

The tax revenue shortage will be caused by a further dampening of market demand as a result of the fuel tax hikes, the IOBE study notes. Besides heating fuel, tax increases on gasoline, diesel and LNG will follow as of January 1.

The government hopes this latest round of fuel tax hikes can rake in a further 400 million euros by the end of 2017.

The fuel tax hikes are made harsher by the current rebound seen in international crude oil prices, which have risen from 46 dollars to 51 dollars a barrel over the past couple of weeks, prompted by a late-September OPEC agreement for a freeze of daily output levels as of  November.

Assuming no major price fluctuations take place over the next few days in crude oil and the euro-dollar exchange rate, heating oil is expected to hit the Greek market at 92 cents per liter, up 8 percent from last year’s level of 84 to 85 cents per liter registered during the equivalent period.

This heating fuel price rise is the result of a higher special consumption tax (EFK) rate, from 23 cents to 28 cents per liter, a VAT increase on fuel from 23 percent to 24 percent, as well as refinery price increases.

Concerns over the financial standing of Deutsche Bank are applying pressure on the euro currency against the dollar.

Besides the IOBE study, Eurostat and Greek finance ministry figures also highlight the negative impact of fuel tax hikes on demand levels. Since 2009, when fuel tax hikes began rising in recession-struck Greece, fuel demand has fallen by at least 39 percent, severely affecting tax revenues.

The IOBE study also warns that illicit fuel trade will be encouraged as a result of the tax hike and inability by officials to fully enforce an “inflow-outflow” data monitoring system that would enable the Finance Ministry to track purchases and sales in the sector.

Fuel smuggling persists, aided by lack of authority checks

Besides not contributing to tax revenues as a result of fallen demand, overtaxation in the fuel market, the result of shortsighted policies pursued in previous years and at present, has also brought about a reinsurgence of illicit fuel trade.

Fuel smuggling activity has increased despite the implementation of an “inflow-outflow” monitoring system at petrol stations, supplier facilities and refineries, which, theoretically, should be significantly reducing the level of illicit fuel trade.

Esssentially, the “inflow-outflow” monitoring system is failing to produce results because inspections are not being conducted, market data is not being cross-examined, and gaps exist in the system.

Market sources noted that checks on data entered into the system by petrol stations managers each night, at closing time, are not being conducted at the Finance Ministry’s General Secretariat for Information Systems as a result of a “lack of staff”. The same applies for trading information being submitted by suppliers.

In addition to all this, the “inflow-outflow” monitoring system was incorrectly installed to start off with as it is not based on a single software system. The country’s petrol stations have been installed with a variety of software systems, based on specific standards set by the government, by a number of teams that worked on the project.

However, the biggest problem of all is the lack of a complete and detailed registry listing all existing fuel storage facilities in Greece. This is leaving gaps open for smugglers to exploit. The majority of illicit fuel trade is linked to unregistered fuel storage facilities.

In addition to the “inflow-outflow” monitoring systems installed at petrol stations, supply companies and refineries, all fuel storage facilities also need to be registered and monitored.