Fuel Smuggling Equals Subsidies Paid to 20m

Fuel Smuggling Equals Subsidies Paid to 20mFuel Smuggling Equals Subsidies Paid to 20m

Recent data show an estimated $200 million, which equal the cash subsidy payment of almost 20 million people, are smuggled out of the country each month.

According to the head of the Central Taskforce to Combat the Smuggling of Goods and Foreign Currency, controlling fuel smuggling could help resolve the problem of cash subsidy payments, Shana reported.

Referring to the fuel smuggling statistics of 2013 in an Oil Ministry conference, Habibollah Haqiqi added that the government would not have trouble with cash subsidies if fuel smuggling had been controlled.

Iran began slashing three-decades-old subsidies on food and energy, replacing them with cash payments under a five-year plan started in December 2010 and promoting an “economic revolution” by former president Mahmoud Ahmadinejad. The goal of the Subsidy Reform Plan was to replace the expensive subsidies on food and energy with targeted social assistance.

The official pointed to the scheme in which five to 10 million people were planned to be removed from the list of cash subsidy recipients to cut expenses.

Almost 74 million Iranians receive 450,000 rials ($15) per person in monthly cash subsidy. The government has made known in recent months that it cannot afford this amount and has asked those with reasonable income to voluntarily withdraw from the list.

Haqiqi called for an effective campaign against fuel smuggling in cooperation with the Oil Ministry and noted that this task must be carried out in a way that controls the source, route and final destination of fuel transit.

Smuggling in 2013 was estimated at $25 billion, of which $7.2 billion pertained to fuel—the main commodity smuggled out of Iran, due to the considerable difference between fuel prices in Iran and neighboring countries. It accounts for more than 90% of goods smuggled from Iran to other countries and is often smuggled from cities bordering Afghanistan and Pakistan.