By Steve Williams and Sheva Serrattan Thursday, September 13 2012

THE Ministry of Energy and Energy Affairs announced last month that it has established a Committee to “…develop a holistic system for managing, tracking and stemming the illegal sales of subsidised diesel currently taking place in Trinidad and Tobago.” The Trinidad and Tobago Bureau of Standards (TTBS) is one of the stakeholders represented on this Committee and, consequently, has a responsibility to ensure that the quality of subsidised diesel is preserved once this system is developed and implemented.

Under Act 18 of 1997, known as the Standards Act, the TTBS has a mandate to protect public or industrial health, welfare or safety; protect the environment; and ensure acceptable quality in products whether produced for home use or export.

Accordingly, TTS 569:2011, Automotive diesel fuel — Specification, is a compulsory standard, enforced by the TTBS, which specifies minimum requirements regarding performance, health, safety and the environment.

The subsidy on local automotive diesel at the end of the first 10 months of fiscal 2012 was $3.65 billion — no trifling amount.

Even as there has been a 17 percent decrease in the sale of subsidised fuel year-on-year, this was accompanied by a year-on-year increase of 11 percent in the refinery price of diesel.

In the US, as of July 2012, crude oil prices comprise 60 percent of the price of diesel at the pump.

With crude oil prices ranging between US$75 to US$110 per barrel within the past 12 months and a forecast average of US$111 per barrel for the upcoming 12 months, the price of diesel is not expected to decline significantly in the near future, meaning that the subsidy will continue to be a significant cost to the Government.

In 2011, an estimated 40 percent of diesel sold in Trinidad and Tobago was done illegally.

The volume of this illegally sold diesel, coupled with the high intrinsic price of diesel, results in significant losses in revenue to the country.

It is intended that the Committee will oversee the implementation of a “fuel marker and authentication” system to be used in tandem with other strategies to mitigate the illegal sale of diesel.

Stakeholders on the Committee include the Ministry of Transport, the Consumer Affairs Division of the Ministry of Legal Affairs, the Chemistry, Food and Drugs Division of the Ministry of Health, UNIPET, NP, Petrotrin, the Petroleum Dealers’ Association, and CARIRI.

Fuel dyes are used in many countries to deter the use of lower-taxed fuels in applications where the use of higher-taxed fuels is mandated.

Dyes are typically used to identify agricultural, marine or heating fuel or to distinguish between different grades of gasoline, as is the case in Trinidad and Tobago. There are a number of options available, including coloured dyes, colourless dyes and traces.

The suitability of any particular option depends on the purpose and cost effectiveness.

One may ask whether the addition of the dye affects the performance of the fuel.

To date, TTBS has not found any studies indicating that there is a measurable effect on the fuel’s quality.

However, TTBS is committed to maintaining a reasonable quality of diesel on the local market and, consequently, will continue to monitor the quality of fuel, whether dyed or not, to ensure that it meets the requirements of TTS 569:2011.

TTBS welcomes the efforts of the Ministry of Energy and Energy Affairs to curtail the haemorrhage that is occurring with respect to the illegal bunkering and sale of subsidised diesel fuel. TTBS also pledges to work with all parties involved to ensure that these mitigation measures do not negatively affect the quality of diesel fuel sold in Trinidad and Tobago.