Rising Consumption, Smuggling Hinder Gasoline Export

EghtesadOnline: Exports of gasoline have been suspended since May not only due to heavy domestic consumption but also owing to the rise in fuel smuggling, a member of the Iranian Oil, Gas and Petrochemical Products Exporters' Union said.

News ID: ۷۸۷۵۸۰

08 January 2022

“The revocation of inter-city traffic and travel restrictions has spiked gasoline consumption by 50% and caused supply and demand to reach equilibrium,” ILNA also quoted Hamid Hosseini as saying.

“In other words, the National Iranian Oil Company had to halt the sale of gasoline to neighboring states, including Iraq, Afghanistan and Pakistan, as there is no excess fuel for export and whatever is produced is being burnt domestically,” he said.

“The National Iranian Oil Refining and Distribution Company, a subsidiary of NIOC, produces close to 90 million liters of gasoline per day, but massive local consumption, which has exceeded 85 ml/d, leaves no room for exports.”

According to the official, unlike oil that can be tracked and cannot be sold easily under the sanctions’ regime, gasoline and diesel can be exported with no difficulty but growing local use has deprived NIOC of its foreign currency revenues.

Referring to the second contributing factor, Hosseini said because of the unprecedented hike in foreign exchange rates, the amount of fuel smuggled out of Iran to neighboring countries has been on the rise over the past few months.

Each liter of gasoline is sold at 5 cents in Iran and the same amount of fuel fetches more than 100 cents in Afghanistan.

Cheapest Gasoline

Iran has the world's second-cheapest gasoline after Venezuela. While one liter of gasoline in Venezuela costs 2 cents, it is sold for 5 cents in Iran. The average international price for the same fuel is about $1.

Figures released by the Anti-Smuggling Organization show that close to 9 million liters of oil byproducts, including diesel and gasoline, are smuggled daily.

According to Mojtaba Mahfouzi, a lawmaker from Abadan, the huge figure (9 ml/d) indicates that the illicit and dangerous fuel trafficking is a very organized business that cannot be only undertaken by smugglers in and around borders.

“There should be a mafia-like organization behind the scene controlling the whole thing, but what we are seeing is a couple of smugglers. All related organizations and executive bodies in the country should be held accountable for the crime,” he said.

The illicit trade is carried out systemically and with the support of well-placed lobbies that know how to cheat and dodge the law-enforcement agencies.

Among neighbors, Turkey, Iraq, Pakistan and Afghanistan are common destinations where the smuggled fuel is heading.

There is no denying that border law-enforcement forces can fight the smugglers, but many of them are forced to do the illegal stuff simply because otherwise they cannot provide for their families.

Experts say that because the smuggling plague stems largely from poverty and unemployment, and authorities cannot solve the problem in the short run, they look the other way and let the smugglers continue with their trade.

In fact, all the fuel smuggled from Sistan-Baluchestan Province belongs to the deprived province because gasoline is sold only via fuel cards. Reportedly, a large amount of fuel is trucked from other areas with the help of trucks, vans and buses (by bribing border patrols and falsifying technical inspection papers).

Now that the government is not interested in ending the multibillion-dollar business, nor can it create jobs, some wonder why the state does not take measures to help the poor border dwellers do the business legally.

Some have suggested charging taxes (for example, 50 cents for transferring 20 liters of fuel). This will not only help the treasury, but also assure border dwellers of a source of income.