The government has launched a concerted effort to tackle widespread tax evasion in the petroleum sector, citing serious revenue losses amid a surge in the number of oil companies operating in the country.
The Ministry of Energy has raised concerns over under-declaration of fuel imports, smuggling, blending, adulteration, and misrepresentation practices that have not only reduced tax collection but also undermined fair trade and public safety.
These illegal activities have prompted the ministry to craft a new regulatory framework aimed at tightening controls across the sector.
Central to this intervention is the draft Fuel Marking and Monitoring Regulations, 2025, which are designed to promote transparency, protect fuel quality, and ensure accurate fuel quantity declarations.
The draft regulations were scrutinised during a recent stakeholder workshop, where industry players provided inputs and recommendations.
The move seeks to give legal effect to key provisions of the Fuel and Services Control Act of 1983, which government officials argue is no longer adequate to deal with the evolving challenges in the fuel supply chain.
“The current legal framework governing the importation of petroleum products, particularly the Fuel and Services Control Act, 1983 is inadequate in ensuring the quality and quantity of these products that enter the country,” said Habofanoe Makopela, Deputy Principal Secretary in the Ministry of Energy.
“This insufficiency raises significant concerns regarding public safety, as there is a risk of hazards related to the adulteration of petroleum products. Adulterated fuels not only threaten human life but can also have detrimental effects on vehicles and machinery, leading to broader economic repercussions,” he added.
Makopela further noted that the lack of robust monitoring mechanisms had created loopholes that prevented effective oversight of the petroleum market. With the introduction of new compliance measures, the government expects to improve revenue collection from fuel levies, while protecting consumers and legitimate businesses.
“…In a nutshell, these regulations are poised to promote greater transparency and adherence to best practices within the petroleum market,” Makopela said.
“By safeguarding consumer interests and enhancing the overall integrity of the national economy, the Fuel Marking and Monitoring Regulations, 2025 will play a pivotal role in fostering a safer and more efficient petroleum sector in the Lesotho economy.”
The Ministry plans to collaborate with Revenue Services Lesotho (RSL), Road Fund, and the Petroleum Fund to ensure effective implementation of the marking program.
Fuel marking, as defined in the draft regulations, involves adding a chemical marker to petroleum products to help detect adulteration or smuggling. The marking process will be administered by a contracted marking agency, working under the oversight of the Ministry.
Advocate Khauhelo Fanyane, Director of the Ministry’s Legal Department, reinforced the need for tighter regulations.
“There has been an influx of oil companies entering the market in recent years but no corresponding increase in the revenue collected from fuel levy by the government,” she said.
“One of the things we are intending to do right away after this workshop is to develop a detection mechanism for violation occurrences, because they are there but we currently do not have the means to detect them.”
However, while the new measures have been welcomed by authorities, industry representatives at the workshop raised concerns over the potential for delays caused by the marking process, especially at border entry points.
They also flagged possible issues with fuel integrity once the product has been unsealed for testing before reaching its final destination.
Despite these concerns, the Ministry remains resolute in its mission to plug revenue leaks, combat malpractice in the sector, and is planning to host a further stakeholder consultation as it attempts to create a more accountable and transparent petroleum supply regulatory system.
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