By Heath Taylor
– Governments Solution Manager Fuel Marking – SICPA
Fuel fraud in the hydrocarbons supply chain costs governments around the world, billions of dollars per year, diverting much needed tax revenue away from government coffers, funding criminal activities instead of positive government initiatives such as socio-economic development.
In addition to the loss of revenue, illicit fuel can introduce quality problems into the fuel supply chain resulting in environmental issues such as increased air pollution from toxic fuels.
Increased particles from low quality adulterated fuel can cause engine damage which has economic consequences for motorists and companies that provide transportation services such as rental companies, car sellers etc. It happened that some car manufacturers heavily impacted by poor fuel quality in some countries stop their activities in such countries and cancel their investments.
Owing to the scale of the problem, it is often a priority issue that governments need to address.
In general, within a government, finance ministries have the goal to ensure taxpayer compliance thereby increasing revenue generation through taxes and in terms of fuel, security solutions need to be put in place to allow the ministry to reliably detect illicit activity and the responsible stakeholder.
Energy ministries have the goal to ensure energy needs in the country are met in the most cost effective and environmentally friendly way, and a trusted fuel supply chain is one of the elements required to achieve this objective.
Governments needs trustable solutions that allow them to effectively detect illicit behavior in fuel supply chains and enforce compliant behavior, thereby enabling increased trust and integrity.
To be fully trusted, the solution should rely on three pillars, namely; marking, detection and data analysis.
Firstly, the fuel should be marked, with a launder resistant, invisible marker using minute and precise quantities, ideally at molecular level. If at any stage during the fuels transit through the supply chain from refinery or border to depot and finally to filling station, tampering or dilution occurs, it will be detectable in a quantitative manner as adulteration.
Once the fuel has been secured with a marker, the second pillar of the solution relies on inspection. Ideally, this should be achieved in the field, via a transportable device (e.g. mounted in a field inspection vehicle). Such inspection devices can be used to detect adulteration in an extremely accurate manner in a fuel sample taken anywhere within the supply chain, but usually at retail points.
Should an anomaly be detected, to allow successful prosecution and enforcement by authorities, it is also essential at this point to ensure that the data is not tampered with, and that all information collected is admissible in court to provide reliable supporting evidence. This can be done via several mean, including via software solutions recording video footage of the inspection, and direct, secure transmission of samples’ data to a centralized server without any form of human intervention.
During these two processes, large amounts of data are collected. It is essential for authorities to be able to access a secure reporting interface. This will provide the implementing authority with usable (and trustable) access to marking and inspection reports, allowing valuable feedback for ministries, allowing them to determine if the given strategies that have been implemented are having a positive effect. In addition to this, the inspection data can be used to optimize investigation patterns to focus on areas where the lack of compliance is the most prevalent.
- Want to read more on this topic? Read this excellent report produced by the Atlantic Council (Downstream Oil Theft)
- Fuel is also the latest in line of products for which SICPA continues to work with governments as a trusted partner in the fight against illicit trade. You can learn more about SICPA oil and gas integrity management solutions here.