Timor-Leste gov't also pays too much for fuel

Liga ba blog ida ne'e iha Tetum.

While Dili drivers were scrambling to find the next affordable litre of petrol, the National Statistics Directorate (DNE) of the RDTL Ministry of Finance released its 2011 Annual External Trade Statistics report (right), which raises interesting questions about fuel imports to Timor-Leste. According to this report, Customs told DNE that Timor-Leste imported $39 million worth of gasoline and diesel fuel during 2011 for all public, commercial and private use.

The 2011 Budget Execution Report (left) from the Ministry of Finance's National Treasury Directorate shows that the State alone spent $68 million for vehicle and generator fuel. Since all of this was imported, it seems odd that Timor-Leste’s government is paying much more than the declared value of what is coming into the country.

If we estimate the amount of generator and vehicle fuel used by personal and private sector consumers, the total amount paid for fuel in Timor-Leste last year may have been about $78 million, nearly double what DNE says was imported.

La'o Hamutuk asked the Director of DNE about this at the launch of the Trade Report last week, and he smiled and said he knows only about the import information the Customs Department provides to DNE. La’o Hamutuk is asking the Anti-Corruption Commissioner and the Provedor for Human Rights and Justice to explore whether corruption or maladministration has occurred.

We can imagine several explanations:

1. Fuel importers are charging the State a very high markup on the fuel they import, making a large profit.
2. A significant amount of fuel comes into Timor-Leste without passing through Customs.
3. The State is getting less fuel than it pays for.
4. The numbers published in one or both of these reports are wrong.

To better understand this confusing situation, La'o Hamutuk also looked into the first half of 2012. DNE’s Quarterly Statistical Indicators show $32 million worth of mineral fuels (including gasoline, diesel, aviation, kerosene, LPG and other fuels) was imported between January and June. During the same period, the Budget Execution Report indicates that the State spent $42 million on vehicle and generator fuel. Although the discrepancy is a little smaller than in 2011, Timor-Leste is still paying much more than the declared value of the imported fuel.

Here are the details, in thousands of U.S. dollars

Although the Hera Power plant was designed to run on heavy oil, to date it has been using diesel fuel shipped into Tibar and trucked across Dili to Hera. Deloitte's audit of EDTL (paragraph 3.3.2) found that fuel intended for generators is "often" diverted for state or private vehicle use. Therefore, we decided to total the vehicle and generator fuel figures in the execution report, and compare them with the total of diesel and gasoline figures in the trade report.

La'o Hamutuk believes that the apparent contradiction between State purchases and fuel imports demonstrates that published reports about the economy and state spending are useful and are not difficult to analyze. We appreciate that the Ministry of Finance has made this data available, and we encourage others to also use it. There's a lot to learn!

Update, 30 October:

In late October, Timor-Leste decided to award a $50.4 million contract to Esperanca Timor Oan to import and supply 47 million liters of diesel fuel for the Hera power plant. Click for more information. The Government will pay $1.07 per liter, at least 16¢ more than it should cost to buy this fuel in Singapore or Indonesia, ship it to Tibar, and pay Timor-Leste excise tax and import duty.