Liberia: Documents Show How Eco Fuel, A Foreign Firm, Refused to Pay Millions in Taxes to Government

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MONROVIA – FrontPageAfrica has obtained records that show that Ecofuel, a foreign company that partnered with Srimex, to construct storage facilities for petroleum products at the Liberia Petroleum Refinery Company (LPRC) deprived both the Government of Liberia and SRIMEX millions in taxes and revenue, respectively.

The action of Eco Fuel, FPA gathered has left Srimex indebted to the Government of Liberia which led to current lawsuits between both companies. 

According to the records, between March 2017 to May 2018, Eco Fuel imported 19,102,833 gallons of petroleum into the terminal under the SRIMEX Import Permit. This import generated a net revenue of approximately $12,225,000, ($9,551,416.50 representing storage fees $0.50 and $2,674,396 representing the Government of Liberia’s approved profit margin of $0.14 for every gallon of petroleum imported). Of the storage amount collected, $4,775,708 ($0.25/gallon) should have been paid to the government as road fund, as per the Road Fund Act. During this period, Eco Fuel operated the terminal and collected all the revenue generated without making any payment to Srimex or the Government of Liberia. 

However, as the petroleum was imported under the Srimex Import Permit and Eco Fuel is not a Liberian registered company, Eco Fuel could not be held liable by GoL for this money and, as such, GoL has required that Srimex pay this money back. 

As per the terminal construction contract signed by Ecofuel as their Equity in the partnership, Ecofuel agreed to pay €14m (today’s equivalent of $15.5m). Srimex, on the other hand, has provided over $5m in tax payment, construction of road linking the Terminal to the main road, and all other local expenditures including transportation and accommodation for expatriate staff during the Construction. 

In 2015, after several successful petroleum trade transactions, SRIMEX and Eco Fuel agreed to undertake a joint venture project for the construction of a storage terminal. Both entities agreed to have 50/50 partnership in a company to be created and named SRIMEX Eco Fuel FZE (FZE) and registered and incorporated as a holding company in the United Arab Emirates (UAE). FZE would have three subsidiaries registered in Liberia as follows: (1) SRIMEX Eco Fuel FZE, Inc. (Terminal Holding), (2) Liberia Oil Company – LOC (Petroleum Trading) and (3) Liberia Petroleum Storage Company – LPSC (Petroleum Storage).

Independent terminal construction expert assessment has determined that the cost to construct a 16,000 metric ton terminal of similar standard, which is the total capacity of the terminal, is no more than US$10 Million. Ecofuel has refused to submit to an audit of revenue generated from the terminal since June 2017. SRIMEX authorized Eco Fuel to collect and retain all revenue generated from the operation and apply its portion towards any debt owed. 

According to the records, between March 2017 to May 2018, Eco Fuel imported 19,102,833 gallons of petroleum into the terminal under the SRIMEX Import Permit. This import generated a net revenue of approximately $12,225,000, ($9,551,416.50 representing storage fees $0.50 and $2,674,396 representing the Government of Liberia’s approved profit margin of $0.14 for every gallon of petroleum imported). Of the storage amount collected, $4,775,708 ($0.25/gallon) should have been paid to the government as road fund, as per the Road Fund Act. During this period, Eco Fuel operated the terminal and collected all the revenue generated without making any payment to Srimex or the Government of Liberia.

The records obtained by FrontPageAfrica show that Eco Fuel has generated close to US$13 million from terminal operations and, of that amount, SRIMEX has received US$150,000. Eco Fuel has reportedly refused to turn over the funds collected and assigned as Road Fund. 

SRIMEX reportedly repeatedly informed Eco Fuel that the Government of Liberia has determined that US$0.25 of the US$0.50 collected as storage during the period July 2017 to June 2018 has been allocated as Road Fund and has demanded that SRIMEX refund this amount for all product imported into the terminal. Eco Fuel refused, up until recently as a result the Civil Court order, to submit to an audit of petroleum sales transactions.

As a result, SRIMEX and Eco Fuel are currently involved in two ongoing lawsuits. One lawsuit is to ascertain actual amounts owed to each entity by the other and the other is to establish legal ownership of a terminal. Eco Fuel filed a petition of debt in Commercial Court demanding US$22M. SRIMEX responded disputing Eco Fuel’s $22M claim and filed a counter-claim of US$8M. The Commercial Court has ordered an audit of the accounts to determine actual amounts owed, the very action that SRIMEX tried to get Eco Fuel to agree to the outside of court. 

SRIMEX filed petitions for Injunction and Declaratory Judgment in Civil Court based on Eco Fuel’s repeated refusal to regularize the agreed-upon terms of the partnership. The Civil Court, based on evidence submitted by both parties, granted the Injunction, enjoining Eco Fuel from entering or operating the terminal until the matter of Declaratory Judgment is fully decided by the Court. SRIMEX and Eco Fuel have always jointly operated the terminal, contrary to their assertions. Neither Eco Fuel nor LPSC has any license to operate the terminal. The license to operate the terminal is, and has always been, solely in the name of SRIMEX. All product imported into the terminal was done so under SRIMEX import license. Eco Fuel, as a foreign entity not registered in Liberia, does not have any legal right to operate in Liberia. LPSC, a company that was set up as a division of FZE and registered in Liberia by SRIMEX, is a company that should have been jointly owned by SRIMEX and Eco Fuel.

Eco Fuel’s claims that SRIMEX personnel operating the terminal are not qualified and present safety concerns is incorrect. All personnel are fully ISPS trained and certified, which is the requirement under Liberian regulations. Copies of ISPS certificates have been presented to the Court for all personnel.  

But according to SRIMEX, GoL authorities visited and inspected the

operations by SRIMEX and there were no safety concerns.

Eco Fuel FZE has also accused Srimex of hijacking its Petroleum Storage Terminal at the Freeport of Monrovia.

In December 2018, Eco Fuel alleged that Srimex Oil and Gas with the full support of LPRC, the government storage company and authorizing body for the petroleum industry, took over and were operating the storage facility, despite a court order declaring that the site is not to be operated and both LPRC and Srimex.

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