Fuel smuggling crisis rising in Iran

Photo: Fuel smuggling crisis rising in Iran / Iran

Trend Iran News Service head Dalga Khatinoglu

Iran which was banned from importing gasoline by the U.S. in 2009 has not solved its fuel smuggling problem yet.

Before 2009 Iran relied on 40 per cent of its 72-million litres of gasoline consumption on imports, while the smuggled fuel amount from the country to abroad was about 10 million litres per day, including four million litres of gasoline and six million litres of gas-oil.

After the implementation of raising fuel prices based on the subsidy reforming plan in late 2010, the amount of smuggled fuel shrank to three million litres per day, but last year rose to six million and currently is equal to 10 million litres yet again.

The main reason and motivation for this huge amount of fuel smuggling is the price difference inside Iran and its neighbours. For instance, a litre of gasoline is sold at 7000 rials on Iran's open market, about 20 cents, while each auto holder gets 60 litres of gasoline per month as a quota at 4000 rials.

The gas-oil price deference is even so much cheaper than gasoline. A litre of quota gas-oil is fixed at 1500 rials and 3500 rials in open market.

After implementation of the subsidy plan, fuel prices rose partly due to the aforementioned prices decreasing the profitability of smuggling, but during last year, Iran's national currency value drooped more than 40 per cent versus the USD, while fuel prices remained unchanged

Now, each USD is sold at 34,200 rials on Iran open market.

Parliament's National Security and Foreign Policy Commission head Esmayeel Kosari told the Youth Journalists Club on March 31 that currently, only from Iran's eastern borders about 10 million litres of fuel is being smuggled.

Rising gasoline and gas-oil smuggling occurred when according to official statistics Iran's gasoline consumption during the last two weeks was 80 to 100 million litres, because the Nowruz holidays. Iranian officials say the country's gasoline consumption is about 63 to 65 million litres per day on average during the last solar year which ended on March 19.

Iran inaugurated a new unit at the Shazand refinery last month, increasing the total gasoline production by eight million litres to 61 million litres per day.

After the U.S. sanctions on Iran's gasoline imports, the country started producing gasoline at petrochemical complexes instead of refineries.

Deputy Oil Minister Abdolhossein Bayat told IRNA in February 2012 that it is expected that about five billion litres of gasoline would be produced by petrochemical complexes during this solar year (Iran's last solar year). This amount is 13.6 million litres per day, equal to 22.5 present of the country's total gasoline production.

The quality of produced gasoline at petrochemical complexes has always been criticised by experts and some MPs in the country, saying the sulphur content in gasoline is averaging from 180 to 1000 parts per million (ppm), while the quality of diesel offered at gas stations is even much worse than the gasoline, with its sulphur level from 7000 to 8000 ppm. For comparing, Euro IV fuel standard permit only 50 ppm of sulphur in gasoline and diesel.

Iran also uses some dangerous materials such as Methyl Tertiary-Butyl Ether (MTBE) and methanol to produce gasoline as well.

According to experts and unnamed officials' statements published in Iranian Alef.ir news portal last year, 70 per cent of Tehran's air pollution has been caused by non-standard fuels.

However, more gasoline being smuggled, Iran has to produce more at the petrochemical units.

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