Sars warns on fuel contamination scams that cost fiscus R3.6bn a year

The SA Revenue Service (Sars) has issued a strong warning about the growing threat of fuel adulteration and illicit trade in the country, revealing that the fiscus loses about R3.6bn a year from these illegal activities.

According to Sars, some diesel samples analysed during recent investigations were found to contain up to 68% paraffin, highlighting the severity of fuel tampering.

A joint-intelligence team comprising Sars and police officials has so far identified 23 targets across Gauteng, Mpumalanga and KwaZulu-Natal as part of a crackdown on the illicit fuel economy.

This operation led to the discovery of 953,515 litres of contaminated diesel and six fuel depots that were operating in contravention of section 37 of the Customs and Excise Act 91 of 1964 as amended.

Sars revealed that assets and contaminated fuel worth R367m were seized, leading to further investigations and possible criminal and civil liabilities.

“Two so-called fuel ‘washrooms’ were uncovered — one of which is a rare mobile washroom fitted on to a transport truck. These were used to remove paraffin markers,” Sars said.

In addition, 12 fuel-transport trucks were flagged for suspected false declarations, whereby tankers claiming to import an average of 15,000 litres of fuel were found to be carrying significantly more.

So far, 13 criminal cases have been registered with the police, supported by Sars trade investigators for customs and excise contraventions and fraud.

In the past four months, the National Joint Operational and Intelligence Structure (NATJOINTS) has conducted multiple interventions to combat the illegal trade.

Sars said the Maputo Corridor linking South Africa, Eswatini and Mozambique has over the past decade become a hotbed for fuel smuggling and adulteration driven by organised criminal networks.

“Some importers declare fuel volumes of 40,000 litres or less, whereas investigations reveal that up to 60,000 litres are actually being brought into the country,” said Sars.

The agency warned that illegal mixing of diesel with paraffin has become a national trend, often carried out by fuel storage and distribution depots.

Fuel adulteration refers to the practice of mixing petroleum products, particularly diesel, with cheaper substances such as paraffin or even water. This is done to inflate the volume of fuel sold, enabling illicit profits at the expense of quality and safety.

Adulterated fuel can severely damage engines and machinery, leading to increased maintenance costs and shorter vehicle lifespans.

This comes as South Africans were hit with steep fuel price hikes on Wednesday.

• Diesel 0.05% increased by 82c/litre
• Diesel 0.005% increased by 84c/litre
• Illuminating paraffin went up by 67c/litre.

Sars stressed that this activity is part of a broader illicit economy that poses a serious risk to the country.

“The illicit economy is a global phenomenon that threatens South Africa’s society, economy and national security. Tax evasion, smuggling, illegal transactions, illicit manufacturing and fraud undermine the rule of law, erode public trust, distort markets, deprive governments of revenue, and enable corruption and organised crime,” said Sars.

The agency called for a whole-of-government approach involving public entities, the private sector, civil society and international partners to effectively dismantle these networks.

Sars commissioner Edward Kieswetter praised the joint efforts of enforcement agencies.

“These syndicates can only underestimate our resolve to eradicate this criminality at their peril. These acts threaten the very foundation of our society. Our message is clear: we will spare no efforts to crush them,” said Kieswetter.

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