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Benin govt takes measures to regulate the informal oil industry

Tuesday, 03 October 2023 16:57
Benin govt takes measures to regulate the informal oil industry

(Ecofin Agency) - Following the tragedy that claimed the lives of more than 34 people in a smuggling oil depot in Seme-Krake on September 23, the government of Benin has announced several measures to ensure that such a thing never happens again.

As part of this plan, government spokesman Wilfried Léandre Houngbédji has indicated that the State has ordered more than 5,000 mini-stations, which will be distributed for free to those engaged in illegal oil activities. “2,000 mini-stations of the 5,000 ordered have already been purchased. They will serve at least the five major cities in the south of the country. The number of cities covered will grow with the acquisition of the remaining stations,” the spokesperson explained, adding that the measure is aimed at reducing the risks associated with the sale of adulterated petroleum products.

Chinese platform Xinhua reported that the informal oil industry directly costs the state CFA20 billion a year (equivalent to $32 million), with the informal sector alone accounting for between 75 and 80% of the volume of fuel sold on the territory.

In addition to the tax losses, the human damage is just as significant. The fire on Saturday, September 23 at a contraband fuel depot in Sèmè-Kraké left 36 people dead and 23 with severe burns, according to the latest official figures. The smuggled fuel depot in Sèmè-Kraké is the largest in the city, where the trade is widespread. The government estimates that 540,000 people are involved in this sector.

Given the weight of this industry in the economy, the government believes it is imperative to regulate it. In a recent report on the links between violent extremism and illegal activities in the country, the ISS revealed that the illegal oil trade, commonly known as "Kpayo", enables armed groups to obtain fuel for their means of transport and to derive substantial revenue from this traffic. A situation that would leave the country exposed.

Indeed, long spared by terrorist assaults, Benin has suffered a series of attacks, including two in 2020, at least 7 in 2021, more than 20 listed in 2022, and 15 already since 2023 started.

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ECOFIN AGENCY offers a selection of articles translated from AGENCE ECOFIN. Founded in 2011, Agence Ecofin is a leader in Francophone Pan-African economic news, particularly in West and Central Africa. The agency publishes daily news on nine African economic sectors: Public Management, Finance, ICT, Agribusiness, Energy, Mining, Transport & Logistics, Communication, and Training.

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