The main reason behind outbound diesel smuggling is the substantial gap between the fuel price in Iran and that of its neighboring nations, director of the National Iranian Oil Refining and Distribution Company said.
“Each liter of diesel can be sold 60 times higher in Iran’s neighboring states, which explains why despite the high risks, smugglers dare to engage in the illicit and dangerous fuel trafficking because they see a high and rising profit in the end,” Jalil Salari was also quoted as saying by IRNA.
For instance, a 20-liter container of diesel costs 40 cents in Iran and can be sold for $24 on the Turkish side of the joint border, he added.
Among neighbors, Turkey, Iraq, Pakistan and Afghanistan are common destinations where smugglers conduct their trade.
“Gasoline smuggling can be traced, as it is supplied with smart fuel cards. Nonetheless, there is no such system for selling diesel and it is not clear how many liters of the fuel are sold on the other side of the borders every day.”
There has never been reliable data on the volume of fuel smuggled out of Iran to neighboring countries in the past few decades, but estimates put the number in the region at 10 million liters every day.
Iran has the world's cheapest diesel (2 cents per liter). The average international price for the same fuel is about $1.2.
Domestic fuel prices are influenced by global prices, refining and distribution costs, demand, availability of resources and taxes.
Fuel prices are the highest in developed countries, meaning that their governments make the most profit by taxing diesel and gasoline at the pumps. The opposite is true in Iran and other oil-rich countries such as Saudi Arabia and Venezuela. These countries not only earn zero revenues from selling fuel, but they also spend billions on fuel subsidies.
Daily diesel consumption in Iran is around 80 million liters.
Experience of the recent past has shown that fuel cards and gasoline rationing system were effective in controlling and managing the high consumption rates.
In 2007, the government issued electronic gasoline cards for all vehicles. In December 2010, as part of the first phase of the national subsidy reform plan, the government announced monthly gasoline quotas.
However, in 2015, the government stopped allocating subsidized gasoline to passenger vehicles and regular gasoline was offered at a single price of 7 cents for car owners without restriction.
Experts are again saying that diesel prices need to be revised and that rationing system and fuel cards can help control the pattern of smuggling that has long made a mockery of border patrol, apart from inflicting financial losses on the government treasury.
