Petroleum Importers Allegedly Reneging On Remitting Levies For Liberia’s Road Fund
Monrovia – Major petroleum importers in Liberia are still reneging on paying taxes intended to fund road construction, rehabilitation and maintenance in the country, FrontPageAfrica has gathered.
Report by Lennart Dodoo, [email protected]
According to letters obtained by FPA, the Liberia Revenue Authority on November 8, 2018 communicated with three major importers, calling on them to make payments of arrears (road fund levies) to the government.
Signed by Decontee T. King-Sackie, Deputy Commissioner general for Technical Affairs of the LRA, the respective letters were addressed to Mr. Emmanuel T. Togba, CEO of the Aminata & Sons; Mr. George Kailondo, Managing Director of Kailondo Petroleum and Mr. Amadu Sheriff, General Manger/CEO of Mayoubah & Sons Inc.
FPA has also gathered that several other major importers of petroleum products are also ignoring the payment of levy intended for road construction and maintenance as required by the Act that created the National Road Fund or NRF.
In the letters sent to the three importers aforementioned, the LRA specified the respective amounts the companies owe and attached a payment plan.
According to the plan, the first payments were due to be made on November 30, 2018 and the final payment is expected in April 2019. But no money has been remitted to the NRF, FPA has reliably learned.
Conex Oil is so far the only importer that has paid levy intended for the NRF, said the LRA in a response to an inquiry by FPA.
“The LRA has been working with these companies to comply with the law. They should have made payments by now, as per their own schedules and agreement. Unfortunately, only Conax Oil has complied so far,” says D. Kaihenneh Sengbeh, head of communications and PR at the LRA.
How Much Do the Three Firms Owe?
According to the letters, Aminata & Sons owes an adjusted amount of US$2,804,030.45, which the firm is expected to pay in the Road Fund within six months – beginning 30 November 2018 and 30 April 2019.
Reads the letter: “In order to ensure your entity meets this payment obligation of the arrears within the fiscal year 2018/2019, we have developed a payment plan attached for the recovery of the remaining Road Fund arrears to the government of Liberia.”
Aminata & Sons has earlier questioned the collection of fees for the road fund, prompting a lawsuit action. Although the case was later withdrawn, there are still concerns about the company’s unwillingness to pay the levy.
For Kailondo Petroleum, the LRA communication shows that it should make a payment of US$183,647.00 to the NRF between November 2018 and April 2019.
However when contacted, Mr. Kailondo told FPA that his firm owes the government no money.
“The money I owed, I paid to other people – I paid to tank owners and I have those receipts, I just need to write the LRA. I will furnish them with the records by tomorrow,” Mr. Kailondo said Monday.
But he couldn’t name some of the third parties his firm had made the payments to through what he termed as storage fees.
At the same time, the LRA says Mayoubah & Sons Inc owes the NRF US$209,636.00. The firm has been unable to show proof that it had made previous payments to the Liberia Petroleum Refinery Company, LPRC.
Unlike the three firms, sources say other major importers are dragging their feet to make payments to the NRF.
And Sengbeh says that the LRA would begin enforcing the collection of taxes from importers in the coming days.
“The LRA will vigorously begin enforcing the law in the coming days to ensure that these companies are in full compliance with the law. While we don’t believe in bullying taxpayers, we expected them to also be law-abiding, and not provoking enforcement actions via legal means,” he said.
“All must comply with the law as we are under obligations to implement nothing else but the Liberia Revenue Code which governs taxation in Liberia.”
What Is the Road Fund?
The Road Fund Act was passed by the Legislature and allows for a levy on every gallon of petroleum, with the money set aside for the “purpose of financing road and bridge maintenance works and directly associated planning, programming and management activities.”
According to the Act, consumers carry the burden of paying US$0.25 on every gallon of petroleum with that money collected in taxes from importers and pay in a special account.
Road Fund is a development module adopted by many developing countries to maintain public infrastructure. And with complimentary funding from international partners, Liberia is expected to see periodic maintenance of roads and bridges in the coming years.
“The Road Fund Act is an important step towards the government of Liberia taking full responsibility for funding road maintenance. Knowing there is a system in place to maintain roads will give donors like the European Union the confidence to continue supporting road rehabilitation,” stated the European Union on its Facebook page in July 2017 after the Liberian government showed some progress with the initiative.
Impeding Road Projects
However, the refusal of importers to pay the levy is impeding the initiative, sparking concerns that some donors including the Millennium Challenge Compact (MCC) are becoming riled by the situation.
According to the MCC Liberia Compact, the government is obligated to providing a matching fund of US$15 million for road projects.
With two more years remaining for the US$257 million five-year-grant to elapse, each party – the Liberian government and the MCC – will have to provide US$7.5 million in each of the remaining years to support road maintenance.
Liberia already faces massive challenge with its roads. A World Bank survey shows that out of 9,182 roads in the country, just 734 are paved.
The survey also shows that Liberia needs US$2.230 billion to rehabilitate and or upgrade paved primary roads, while US$1.203 billion is needed to rehabilitate existing rural roads and or construct new ones.
Meanwhile, the hurdles in collecting the taxes to fund projects persist despite the Liberian government placing roads atop of its development priorities.
Liberia’s Public Works Minister Mobutu Vlah Nyenpan said in August 2018 that President George Weah had initiated and chaired several discussions with major importers to resolve the issues. But the hitches are still unsolved.
Liberia risks forfeiting the US$15 million MCC grant if the government does not work within the timeframe of the compact, which is scheduled to end in the year 2021.
According to the compact, the fund will remain in the United States Treasury once Liberia does not meet its end of the bargain.
Article 5.1(I) of the agreement, states that there shall be termination, suspension and expiration if “the Government (Liberia) fails to comply with its obligations under this Compact or any other agreement or arrangement entered into by the Government in connection with this Compact or the Program”.