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Fuel smuggling pipelines found in Iran

Oil&Gas Materials 8 January 2013 12:12
A number of pipelines carrying smuggled fuel from Iran have been found in the Persian Gulf, the Mehr News Agency quoted Iranian deputy Oil Minister Alireza Zeighami as saying.
Fuel smuggling pipelines found in Iran

Azerbaijan, Baku, Jan. 7 / Trend F.Mehdi/

A number of pipelines carrying smuggled fuel from Iran have been found in the Persian Gulf, the Mehr News Agency quoted Iranian deputy Oil Minister Alireza Zeighami as saying.

"A special working group has been assembled to combat the smuggling of fuel and oil products," he noted.

Some profiteering persons had used the underground pipelines to send fuel in a large scale overseas, he added.

After a huge decrease in smuggled fuel from Iran in 2011 because of cutting offered subsides in this field, fuel smuggling revived again during last few months due to the fall in the national currency's value.

The Iranian government cut a part of fuel subsidy in late 2010, raising prices significantly which led to a decrease in fuel smuggling from 10 million litres in 2008 to three million litres per day in early 2011, according to official statistics.

However, after the drop in the rial's value versus the USD during the past few months by above 40 per cent when fuel prices remained unchanged, this caused a revival of smuggling.

Zeyghami said on November 25, 2012 that some six million litres of diesel is being smuggled from Iran each day. Gasoline smuggling has risen to two million litres per day during the past few months as well.

There are several reasons. First, because of difference between the fuel price in Iran and its neighbours, for instance the price of gasoline in Turkey is seven times more than Iran.

The second reason is the difference in the amount of the rial's drop in value and fuel price growth and finally the fact that Iran has thousands kilometres of common borders in the west, east and northern regions and controlling them is impossible.

Iranians paid 7000 rials (about 26 U.S. cents based on the USD rate on Iran's open market) for petrol; while they had a 60 litre monthly quota allowing them to purchase fuel at 4000 rials (14 USD cents) since last year. During this period the USD rate has risen about 40 per cent (from 17, 000 rials in late 2011 to 27,000 rials now).

The Iranian parliament rejected commencing the second stage of the Targeted Subsides Plan and the government has not been allowed to increase fuel prices. In case it is even considered such a rise, the inflation rate in Iran is about 25 per cent and could sour after rising fuel prices.

This means there are two ways to fight against fuel smuggling and attempting to keep the national currency value high means the challenges seem to be a very difficult issue.

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