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Fuel imports: 404m afs payable by 2 firms in taxes

Fuel imports: 404m afs payable by 2 firms in taxes

May 21, 2017 - 17:08

 KABULinfo-icon (Pajhwok): Using custom duty exemption forms, two companies importing fuel for coalition forces in Afghanistaninfo-icon have to pay the government 400 million afghanis in taxes and duty, Pajhwok Afghan News has learnt on good authority.

Nordic Camp Supply (NCS) and National Fuel Corporation (NFC) Ltd are the Danish and Afghan companies importing fuel to the country, using the customs exemption forms, sources familiar with the business reveal.

NCS supplies fuel to Kandahar airbase, the military in Kabul, German Camp in Mazar-i-Sharif, Herat Airport and many other bases across the country.

It has replaced the Supreme Company, which previously supplied logistics to international forces. Dogged by allegations of corruption, the Supreme Company fled Afghanistan, leaving behind a legacy of corruption.

The NCS Company, refusing to pay 330 million afghanis to the Ministry of Finance, seems to be another Supreme in the making. NCS imported more than it should have. Despite its refusal to clear the dues, the Attorney General Office has neither imposed a travel ban on nor issued arrest warrant for NCS executives.

NFC, which is an Afghan firm, supplies fuel to the Bagram airbase. According to a letter, dated Sawr 6, 1396 from the Ministry of Finance, a delegation led by the first vice-president and the deputy attorney general was appointed to determine the exact amount of fuel imported by the two firms.

Following a thorough investigation, the delegation shared its findings with the president, who ordered the Finance Ministry to take appropriate action on the issue of extra fuel imports and non-payment of taxes.  

In another letter, dated Hamal 14, 1396, based on the report from the delegation, the Finance Ministry wrote the NCS imported 11.4 million litres of extra fuel using the customs exemption form from 1387 to 1390.

The extra fuel was imported via Torkham, Spin Boldak and Sher Khan ports, but customs duty was not paid. The government says the NCS must pay a sum of 330 million afghanis to the Kabul Customs Department, including the fine resulting from the failure to pay within the specified period.

Similarly, a letter -- dated Hamal 28, 1396 from the Tax and Revenue Department of the Ministry of Finance -- directed NCS to settle its overdue payments without one week. 

Another memo, dated Hamal 14, 1396 from the Ministry of Finance, says NFC has transferred more than 2.6 million litres of extra fuel without paying the customs duty, using the exemption forms in 1389. The company has to pay 74 million afghanis as well as the fine. The letter wants NFC to make the payment in favour of the Kabul Customs Department immediately. 

By the same token, in another dispatch dated Sawr 6, 1396, the Customs Exemption Directorate said: “In compliance with instructions from the president, it has informed NCS and NFC to pay the custom duty on the extra amount of fuel imports. But no effort has been made by the two firms to settle their dues.”

In the same letter, the Customs Operational Department has been ordered to close the taxpayer identification numbers (TIN) of these companies till further orders. 

NCS, the Danish Company:

Nader Durrani, an employee of NCS, blamed the Customs Department and NATOinfo-icon forces for putting a very complicated system in place. To him, the system is hard to understand and has created issues between the Finance Ministry and NATO forces.

The fuel importers had not committed any error, he insisted, saying the imports were handed over to NATO. Durrani added NATO submits a report on the fuel received by it. 

Durrani added: "We have evidence of importing the fuel for NATO forces from 1387 to 1390 via Pakistaninfo-icon. “But the neighbouring country does not have enough fuel for us to import and sell in Afghanistan. We made the purchase from Arab countries and then imported it via Pakistan.”

According Durrani, the fuel imported for NATO has a recognizable standard. "Even your president [Ghani] cannot use this fuel; the Finance Ministry also been moving in the wrong direction by not arresting professional thieves. All it been doing is bothering companies like ours to give them bribe always.”

Durrani threatened Pajhwok Afghan News to choose between releasing the report and facing the consequences. He claimed the dispute had been settled in its entirety, but failed to give any evidence.

He warned of moving a California-based court against this news agency if it released the story.  In the same breath, however, he said NCS would hold a meeting with the Customs Department next week to solve the problem entirely. Pajhwok received contradictory statements from him. 

Following the call, Durrani contacted Pajhwok to say NCS higher-ups had no more negative or positive comments to make apart from what he had said. He added if Pajhwok needed further details, it should contact the Customs Department, NATO forces or Customs Coordination Department. 

NFC, the Afghan Company:

Azimullah, NFC representative, told Pajhwok no extra fuel had been imported by the firm. The problem lies with the Torkham customs, their processes and database because exemption forms were valid for one month at that time and the extra fuel was transferred from one exemption form to another.

He added: “Even if extra fuel is imported, we have discussed the issue with the Ministry of Finance, Customs Department and even the office granting us exemption forms. We have receipts for every single litre of the fuel imported.”

Azimullah asked how the Torkham port processed their documents and made T1 document to the company if it had no exemption. Furthermore, how the Kabul Customs Department would process documents related to company vehicles.

He continued: “If we have made a small mistake, they have committed a bigger error. If we didn’t have exemption, how our vehicles were allowed to cross the port and were not stopped in Kabul.”

Azimullah claimed the debt of 74 million afghanis was only the subject of an inquiry. No final decision had been made yet on whether or not the amount was payable by the firm.

He estimated the dues payable by the company were less than 10 million afghanis, but they have been shown at a staggering 74 million afs.

The company authorities had shared their concerns with the Ministry of Finance and Customs Department, he said. Once the amount was determined, he promised, they would clear the dues

US forces and Resolute Support:

About the extra fuel imports and nonpayment of the customs duty, technical and delay charges, Resolution Support mission spokesman Maj. (or Capt) Bill Salvin said: “Unfortunately, we have no information to share with you at right now.”

He explained taxes and duties are a matters related to the Afghan government and the relevant authorities should be contacted in this regard. They should be asked about these issues.

“Operations were led by ISAFinfo-icon from 2008 to 2011. The combat mission ended in 2014. Such an issue hasn’t arisen during our operations.”

Pajhwok tried to find more information on the latest steps taken to resolve the issue, but Ministry of Finance spokesman Ajmal Hamid Abdur Rahimzai said they needed more time to gather the required details.

Based on a Pajhwok report, the Wolesi Jirgainfo-icon Finance and Budgetary Commission says imports of more than 20 billion litres of fuel have been exempted from taxes and duties in four years (1390 – 1394).

Of the imports, only 8 billion litres were registered with the central system. This exemption has caused a reduction of $ 1.7 billion in government revenue.

Documents and remarks to the commission from ministries of finance, foreign affairs, defence and interior, as well as international forces indicate 2217 exemption forms have been issued.

As a result, 20 billion and 900,000 litres of fuel have been imported for foreign forces and defence and interior ministries.

In addition, NATO and Coalition forces are importing a massive quantity of petroleum products for their own use but neither the contractual value nor its volume is known to the public.  

Meanwhile, other sources say 2.5 million tones of tax-exempted fuel worth $ 3 billion are imported annually. Of this, only $1 billion is spent by Afghan National Defence and Security Forces (ANDSF) and the remaining supplied to the market.

The US is paying for the imports. In addition, NATO and Coalition forces are importing a massive quantity of petroleum products for their own use but neither the contractual value nor its volume is disclosed to the public.  

Most of the petroleum products are imported from Russia, Azerbaijan, Turkmenistan, Iran, Pakistan and Greece.



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