Fuel mismanagement

Furious MPs set to investigate gross irregularities of fuel reservesQuestions on alleged gross mismanagement of public strategic fuel reserves have returned to the limelight, this time round with Members of Parliament, themselves deciding to intervene. By last evening, the Chamber of Deputies’ Standing Committee on Economic Affairs had sponsored a motion before the Lower House plenary session for the immediate establishment of a parliamentary ad hoc commission of inquiry into the case, which was among the highlights of this week’s Auditor General’s report. Presenting her 2006 report to a joint session of both chambers of Parliament earlier this week, AG Evelyn Kamagaju decried high levels of irregularities threatening to ruin public fuel stocks, making an earnest appeal for an immediate remedial action. MPs were left appalled when Kamagaju revealed that the line ministry of Commerce, Industry, Tourism, Investment Cooperation and Cooperatives (Minicom) does not maintain any fuel stocks records, thus lacks supervisory powers over public fuel management. She cited cases where officials loaned out huge amounts of state fuel to private dealers, but neither made efforts to claim repayment nor ensured that the debtor settles the payment within the agreed timeframe. Technically, dealers were unduly given interest free business loans for long periods. I further noted that there was no provision for guarantee in the agreements with dealers which Government could revert to in the event of failure to refund the fuel loaned, she said in her report, adding that the same problem transpired again last year. The AG gave examples of credit transactions in which businessmen and petrol stations took fuel, promising to pay within a specific period of time, but never repaid, or issued bad cheques. This had not been discovered by government officials until she began her audit. She cited a case of a Japanese fuel grant to the Government– which was supposed to be sold and proceeds injected into development projects– which was never recorded in books of accounts by either Minicom or the Ministry of Finance and Economic Planning (Minecofin). Consequently, no bank reconciliations are prepaid and it is not possible for Minicom to know whether all banked cheques are paid, Kamagaju said. One such irresponsible case involved businessman Alex Rubayiza, who took fuel on loan amounting to Frw18,293,143, and issued a cheque which bounced on November 9, 2005, but no official got wind of it until the AG’s office brought it to Minicom’s attention during its audit in August, 2007. Japanese grant According to Minicom, as of now this dealer cannot be traced. We find it imperative that measures to look for him be taken as a matter of urgency, Kamagaju said to the bemusement of the parliamentarians. ‘As of December 31, 2006, the bank account for the Japanese fuel grant titled ‘The Non Project Grant Aid Assistance’ maintained in BNR (National Bank of Rwanda) had a balance of Frw1, 438,436,435 but this balance is not included in the Minicom financial statements. Consequently, it was not picked in the state consolidated financial statements,’ AG report notes. In the report, Kamagaju also talks of a case involving 214,412 litres of PMS (petrol) borrowed by KOBIL on February 2, 2007, that was refunded on August 18, 2008, one-hundred an eighty-three days after the expiry of the stipulated refund date. The AG also listed some of the companies that had taken long to repay public fuel or are yet to pay years later. She gave an example of CIMERWA which took 701,006 litres of fuel oil on July 2, 2004 and refunded it in cash around October 2007. Another local company, Sakirwa, got 146,436 litres of petrol and diesel on August 29, 2005 and December 16, 2005, but had not paid back by January 16, 2008. Other cases involve CITIEX which borrowed 49,645 litres of petrol from strategic reserves on January 6, 2005, only to reimburse it on July 10, 2007. Source Oil also received petrol on loan on January 6, 2006 and paid back on February 3, 2007. The revelation of mismanagement of public fuel reserves comes at a critical period. Rwandans have lately seen prices for fuel skyrocket by the day, effectively pushing the prices of other essential products and transport fares upwards. Currently, the price of fuel at pump stations is for Frw746 both petrol and diesel, up from Frw607 and Frw595 respectively in January 2007. The AG’s disclosures that Minicom had managed the reserves poorly will raise many questions in the minds of many Rwandans. Speaking on condition of anonymity for fear of being accused of pre-empting the establishment of the parliamentary probe commission, an MP told The New Times yesterday that it was incomprehensible for authorities to give out taxpayers’ fuel recklessly to businessmen without making any follow-up. ‘Heavy subsidies’ The Government already bears the burden of heavy subsidies on the importation of fuel. Why should anybody wake up and decide to walk to a (public) fuel depot, have his tanks filled with free fuel without providing any repayment guarantee, and then goes ahead and issues cheques that will bounce?, an MP, who was among those lobbying for the creation of the probe team wondered. When contacted Thursday, Commerce minister Protais Mitali, declined to give a precise comment on any of the allegations saying he was yet to read the report. I haven’t received the report which I think I need to first read and verify before talking to you (the media), he said by telephone. Speaking in general terms however, Mitali suggested that sometimes dealers delay to repay the fuel because of delays in receiving their own supplies. Because most of the time, they give us back fuel instead of money, they sometimes go beyond the deadline because they have not received their (fuel) supplies in time. He could not comment on the case of Rubayiza, who sources told The New Times yesterday, that he runs a petrol station in Rwamagana District, Eastern Province. Last year, the Prosecutor General Martin Ngoga asked Kamagaju’s office to launch an audit into the management of strategic fuel reserves after it emerged that two senior Cabinet ministers –Mitali and James Musoni (Finance) – had initiated and presided over the process of procuring 10 million litres of fuel from Kenya to curtail an early 2006 fuel crisis in the country. Ngoga told The New Times last year that while both ministers had been absolved of any wrongdoing in the process to buy the said fuel– which was later scaled down to four million litres after the government received the Japanese fuel grant– concerns had emerged about the general management of the country’s fuel stocks. The AG’s revelations about the irregularities surrounding strategic fuel reserves is just one of the many abnormalities in state offices highlighted in her report. The report indicates that state agencies failed to account for more than Frw5.3 billion during the fiscal year 2006, while officials sanctioned public tenders worth Frw3.8 billion without the approval of the National Tender Board (NTB). It further shows that tenders valued at over Frw7.8 billion were awarded without evidence of internal tender committees’ backing. For the first time, Kamagaju also presented consolidated financial statements, which cover transactions involving government investments, public debt and transfers to central government, local government and development projects. She also presented a separate performance audit of a particular public sector, and in her 2006 audit, she decided to cover the health sector looking at the effectiveness of maternal healthcare delivery. She informed Parliament that it was these two extra unprecedented reports that made her present report eight months late. Ends