SGS is the world’s leading company for control, verification, testing and certification. The programme of marking petroleum products in Serbia was introduced in February 2014, and the monitoring of fuel quality has been implemented since December 2015. We are talking to SGS Managing Director for Serbia, Croatia, Slovenia, Bosnia and Herzegovina and Montenegro, Marinko Ukropina about the effects the implementation of this programme in the Serbian market, and the impact it had on the industry, consumers and environmental protection.
It is estimated that, in the next 20 years, the demand for crude oil in the world will grow by 50%, which means that the danger of forgery and illegal trafficking will also grow. How much can fuel marking mitigate this problem?
— Fuel marking is an anti-corruption programme that produces the right effects if it applied to the very source of corruption, as it was done in Serbia. The fuel marking programme starts with the oil company registered for derivates trading (warehouse and refinery) and stops at the end of the control process (gas stations and end users). Therefore, in addition to being a good approach in fighting corruption, we also have a good allocation of responsibilities in the distribution chain, plus, the penalty system is very clear and entails huge fines, so, all in all, it is in everybody’s best interest to fulfil their roles and responsibilities. Marking is a process that ensures traceability in terms of quality, from the manufacturer to the consumer. It also enables checking up and verifying of the initial values of the marker concentration at any time. The process brings the following benefits – the state budget getting more money on the account of paid fuel tax, the legal consumption of fuel grows, as does the production and import of fuel via legal channels, consumer trust in legal origin of fuel is fortified, car engines are protected since premium fuels do not contain irregular additives, the emission of harmful gases is reduced and we are getting closer to fulfilling the requirements laid out in the EMAS regulation.
The programme of marking petroleum products in Serbia was introduced in February 2014 with the aim of suppressing illegal activities in the energy sector, as well as protecting end consumers. What are the results of using fuel labeling for the past five years?
— With this programme, the shadow economy in the oil derivatives sector has been reduced from 10% to below 1% in 2014. Parallel with that, in 2014., the sales of base oil, which is often illegally mixed with diesel, fell seven times compared to the same period in 2013. This ensured the increase in the legal trade in oil derivatives and, and hence, the higher turnover generating by the oil company registered for derivates trading (oil companies). Also, diesel sales went up by 18%, while there was a 14% increase in gas sales relative to 2013. In 2018, of the 5,284 samples taken at retail facilities, only 0.12% of the samples had an unmarked marker concentration. We have also noticed a constant growth of marked oil derivatives year-on-year, where, for example, in 2018, compared to 2017, there was a 5% increase, or 130 million litres of marked diesel and petrol more than in the previous year.
Can you elaborate on what exactly fuel marking in Serbia entails?
— The fuel marking programme begins with adding a unique marker based on nanotechnology to various types of fuel. Fuel samples are collected from petrol stations and are analyzed to identify the source of fuel, as well as to check if the appropriate marker concentration is present. The programme is managed by an integrated set of software applications designed to enable successful implementation and operation of the authentication programme. These modules enable the management of all parts of the programme – marking of fuel, taking samples, performing field and laboratory testing, and reporting on the results of the programme.
Given that SGS controls the quality of oil derivatives, can you tell us about the quality of fuel that is sold in Serbia? What does having a stable fuel quality mean for the fleet’s longevity?
— The monitoring of fuel quality is a programme that is an integral part of the marking programme, and this programme has been implemented in Serbia since December 2015. Here, we have expanded the fuel monitoring programme by adding more diesel and petrol parametres, which made it possible for us to have a broader insight into the quality of the fuel distributed in retail. Based on the number of samples tested and certain petrol and diesel parametres, we can say that the quality of fuel in Serbia is satisfactory and that it is in accordance with the relevant regulations and European norms. The results show that the percentage of tested parameters that do not meet the standard requirements fell from 3.84% in 2016 to 1.74% in 2018. The monitoring programme has significantly contributed to raising awareness about how important fuel quality is, especially with vendors, so we have noticed that more and more petrol stations now sell fuel with additives, which is an upgrade of the basic quality fuel. Stable and adequate quality is the most important feature not only when it comes to fuel for cars, but the automotive industry as a whole and environmental protection.
The fines for selling trafficked fuel, i.e. the fuel that does not have an adequate concentration of markers, range from 500,000 dinars for small businesses and agricultural estates to 2 million dinars for legal entities. Do you know how many fines were executed since the programme started and how many last year?
— Since we embarked on field controls with the representatives of RTI in August 2014, we have found over 300 samples with an unsatisfactory concentration of markers which were tested in a lab. In line with the relevant regulation, every single case or a negative sample found at a legal entity or with an individual has to be reported to relevant state authorities. Those energy companies, i.e. legal entities that sold the fuel with the inadequate concentration of markers are entitled to do their own analysis of the arbitrarily taken sample in an independent national laboratory. However, all the arbitrarily tested samples proved the results that we have obtained at the SGS laboratory.
The oil derivative marking and monitoring programme in Serbia also stems from the need to eliminate the shadow economy. How much does the state benefit from implementing this marking process?
— The programme of marking petroleum products in Serbia was introduced in February 2014. The state, oil companies and consumers all have direct and significant benefits from fuel marking and quality control. As a result of large quantities of fuel now being sold legally, more money was paid into the Serbian state budget. In the first year of the programme, the state budget received over 139 million euro more from fuel excise than in 2013. The growth trend continued in the coming years. For example, in 2017 compared to 2018, the growth was 6.1%. According to the available data, the Serbian state budget received 800 million euro more from collecting the excise in the period from the launch of the marking programme until the end of 2018.
For the purposes of fuel quality monitoring, SGS has invested close to 2.4 million euro in its laboratory and expanded the scope of accreditation for new test methods. Are you planning on investing further in fuel quality monitoring in the upcoming period?
— Investing in equipment, people and staff training are one of the keys and goals of any company’s development. SGS does not lag behind in this regard, but it is at the helm. We follow the proper requirements of quality standards and their changes. Part of the investment is always directed towards monitoring changes, and part of the investment is devoted to the development of new methods that would be interesting to customers. We follow global trends and demands and work to facilitate their fulfillment, because they are inevitable and will come to Serbia too.