Govt moves to probe alleged oil firms’ fraud

…as companies are accused of claiming fraudulent storage fees for fuel never offloaded in Maseru

Mohloai Mpesi

THE government is moving to investigate suspected fraud by oil companies operating in Lesotho, amid allegations that they have been claiming storage and handling fees for fuel never offloaded at the Maseru depot in line with the Petroleum Policy.

According to the Petroleum Policy, oil companies are mandated to keep at least 1.5 million litres of fuel at the Maseru depot for national security. However, this has not been the case according to fuel transporters.

The allegations, raised by local fuel transporters, suggest that government could be paying for the offloading, storage and handling of petroleum products that bypass the Maseru depot altogether.

Transporters further accuse the companies of collecting full transport reimbursements under the regulated fuel pricing system before forcing local operators to accept rates below the official slate prices, leaving them struggling to cover operating costs.

Energy and Mining Minister, Lejone Mpotjoane, has pledged an audit, with the Office of the Auditor-General expected to establish whether the companies received public money for services they never rendered.

Lesotho imports all its petroleum products from South Africa. The Petroleum Fund, established in 1955 to safeguard the country’s fuel security, regulates fuel prices and reviews them monthly.

The market is dominated by a handful of South African-based oil companies, including Puma Energy and Engen.

Transporters allege that some companies deliver fuel directly from South Africa to customers in the districts without first offloading it at the Maseru depot. Despite bypassing the depot, they claim the companies continue to charge government for storage and handling services as though the fuel had been unloaded and reloaded for onward delivery.

If substantiated, the allegations would raise serious questions about the use of public funds, regulatory oversight and whether government is receiving value for money from reimbursements built into the fuel pricing system.

How the alleged scheme works

According to the transporters, the slate prices set under the Petroleum Fund’s pricing system provide for the cost of transporting fuel, including the secondary leg from Maseru to districts such as Mohale’s Hoek, Qacha’s Nek and Mokhotlong.

However, they allege that some oil companies bypass the Maseru depot and move fuel directly from South Africa to the final destination, sometimes through border posts such as Butha-Buthe.

“The companies are not delivering fuel to Maseru. Instead, they are moving it directly from South Africa to the end customer, sometimes through border posts such as Butha-Buthe, and skipping depot offloading altogether.

“The companies are said to keep claiming storage and handling fees from government as though the fuel had been stored and handled in Maseru. In effect, the fuel never reaches the depot and is never unloaded and reloaded for the secondary leg,” the transporters said.

They also complain that their trucks have effectively become mobile storage facilities, remaining parked for extended periods while they shoulder operational costs, insurance liabilities and security risks without adequate compensation.

The transporters further allege that after receiving the full slate reimbursement, oil companies demand that local operators quote below the regulated rates, allowing the companies to retain the difference.

They say the resulting margins are insufficient to cover basic operating expenses, including tyres and vehicle maintenance, let alone driver training, fatigue management and emergency preparedness.

The transporters have described the alleged practice as an abuse of the system that could amount to the misappropriation of public funds if the claims for services not rendered are proven.

M2 million loss for local transporter

The concerns were formally raised by Basotho Plant Hire, an association representing contractors in the plant hire and transport sectors, in a letter to the Ministry of Energy and Mining in January.

Signed by the association’s president, Senoko Kolosoa, the letter warns that practices in the petroleum transportation industry are undermining regulation, compromising safety and exposing government to financial and operational risks.

“We write to formally place on record serious concerns regarding recent material developments within the petroleum transportation sector, particularly operational practices, which we believe undermine regulatory intent, compromise safety, and expose government to undue operational and financial risk,” the letter reads.

The association says the Petroleum Fund informed it that the Fund’s regulatory mandate extends to pump prices.

“The Petroleum Fund, as the governing body of the fuel industry, provides regulated slate prices intended to ensure fair competition, sustainability, cost recovery and, critically, the safe transportation of petroleum products.

“These slate prices are meant to prevent destructive competition and ensure that transporters are able to meet regulatory, operational and safety obligations,” the letter adds.

The association cites Hippo Transport as an example of the alleged impact of the practices, saying the company recorded losses of approximately M2 million between January 2025 and January 2026, while its sales fell by 85 percent.

“The company has retained its fleet and its workforce of 86 direct and indirect employees and says it has complied with every safety and regulatory requirement. Its work has nonetheless been cut back through what it describes as ‘uneven allocation’ and imposed rate competition,” the letter reads.

Minister draws a line

Mr Mpotjoane told the Sunday Express on Friday that the government would not intervene in disputes over the rates oil companies pay transporters, arguing that such matters are contractual.

He said transporters unhappy with their rates should renegotiate their agreements with the companies rather than expect government to dictate commercial terms.

“I tried following up on these issues and I was made aware that there are some misunderstandings in the way the letter is written.

“The letter indicates that they are being paid lower than the actual prices. That is a contractual obligation between two parties, and you cannot ask government to intervene because this person is paying me little when he is getting much from government.

“If they believe they are supposed to be getting more than that, they have to renegotiate their contracts with their bosses,” he said.

The minister maintained that the law does not empower the government to determine the rates oil companies negotiate with transporters.

“Their main concern is that they want money, and the approach that government should intervene might not be possible because it is not there in the law. If it was enshrined in the law, they could have sued.

“The slate price is where government intervenes on issues relating to fuel price increases. There is nowhere government determines the rates when the fuel companies make deals with those who transport fuel for them. It is not stipulated anywhere in the law,” he said.

Mr Mpotjoane warned that government risked compromising its position as an industry regulator if it intervened in private contractual disputes without a legal basis.

However, he drew a distinction between disagreements over transport rates and allegations that companies were claiming money for services they never provided, saying the latter warranted regulatory action.

Auditor-General to examine payments

Mr Mpotjoane said complaints about fuel being transported without being offloaded at the Maseru depot should be reported to the relevant authorities for investigation.

“Where there are complaints that fuel was supposed to have been offloaded, but bypassed that process and went elsewhere, that is a regulatory issue handled by the Director of Energy.

“When that violation happens, it has to be reported immediately because it is a regulatory matter which has to be approached differently. That issue should be reported,” he said.

He said the government would use the Office of the Auditor-General, headed by Mathabo Makenete, to examine whether oil companies had received payments for work actually performed.

“We are going to audit whether these people (oil companies) received money for the work that they have done.

“But that non-compliance should be reported when seen happening, because these people who transport fuel see these things. They happen under their watch, and they have to report to the government that there is non-compliance with the law.

“When we do the audit through the Office of the Auditor-General, we will see how best we can address the matter,” he said.

The proposed audit could establish whether the disputed payments were legitimate and whether further regulatory or other action is warranted.

Basotho-only policy under consideration

Mr Mpotjoane also revealed that the government was reviewing the energy policy, with proposals to reserve parts of the sector for Basotho-owned businesses and introduce regulation of fuel transportation prices.

“We are currently reviewing the energy policy. In our proposals, we have recommended that there should be a part reserved only for Basotho. It is one of the mistakes that we have to correct.

“These negotiations between oil companies and transporters are causing problems, and we are going to include the regulation of transportation prices.

“We are also going to look at the portion of the fuel industry that we can reserve for Basotho only. The issue of South African companies transporting fuel is one of those we are reviewing, with the intention of making it a policy that it should be reserved only for Basotho.

“This includes the filling stations. There is no reason that they are still in the hands of foreigners,” he said.

Petroleum Fund yet to see complaint

Contacted for comment, Petroleum Fund spokesperson, Rorisang Mahlo, said he had not seen the letter sent to the ministry and would consult his superiors on the allegations.

“The letter was not addressed to the Petroleum Fund but to the Minister of Energy and Mining.

“I have not seen the letter. I am only privy to that information. I have not even had a chance to ask my bosses about the matter. I do not even have a copy of the letter.

“It has not been official information which I can say, as PRO of the Petroleum Fund, yes, here is a letter and we have a copy,” he said.