Tax-exempt NATO, Afghan military fuel sold on open market

An AFP team witnessed first-hand evidence hinting at how duty-free fuel destined for NATO and local forces is being sold commercially when an Afghan energy official swooped unannounced on a Kabul oil depot last week.

By: AFP | Kabul | Published:September 5, 2016 11:48 am
(Source: Reuters photo) Only fuel bound for foreign troops as well as the defence and interior ministries – responsible for Afghan military and police – is exempted from custom duty, following a security agreement between the government and NATO. (Source: Reuters photo)

Tax-exempt military fuel imported into Afghanistan is being sold on the open market, industry officials and a new anti-corruption report reveal, causing the government huge revenue losses as Kabul struggles to wean itself off foreign aid. An AFP team witnessed first-hand evidence hinting at how duty-free fuel destined for NATO and local forces is being sold commercially when an Afghan energy official swooped unannounced on a Kabul oil depot last week.

Flanked by a gaggle of assistants and bodyguards, the official examined a sheaf of customs documents from visibly nervous fuel tanker drivers, scouring the fine print for any trace of the illicit practice that traders have long claimed is crippling the industry. Among the documents from one driver was a “maafinama” – a tax-exemption certificate for military fuel that cuts costs by around USD 200 a ton – showing fuel imported from Turkmenistan in the name of the Afghan interior ministry.

Only fuel bound for foreign troops as well as the defence and interior ministries – responsible for Afghan military and police – is exempted from custom duty, following a security agreement between the government and NATO. “What is this fuel doing in this market?” asked the official, standing near huge cylindrical reservoirs in the depot that supplies fuel to commercial traders and fuel stations.

“That’s the big question,” he continued as he snapped pictures of the document and truck, pledging a full investigation. He allowed AFP to accompany him during the inspection but requested that his name be withheld for safety reasons. No commodity is as vital to the reconstruction effort in war-ravaged Afghanistan as fuel – and none more at risk of being stolen, smuggled or wasted in a country bedevilled by corruption, observers say.

Last year, more than one million tons of internationally funded military fuel was imported into Afghanistan, the finance ministry said, with its uncharged customs duty estimated to be around USD 100 million. “The custom duty exemption mechanism… (for) international forces has led to abuse by fuel traders which allows them to illegally profit,” said a new report by the Independent Joint Anti-Corruption Monitoring and Evaluation Committee (MEC).

The report, due to be released on Tuesday, said 20 commercial companies were issued tax-exemption certificates last year.