Iran to Counter Smuggling with Raising Diesel Price

The Iranian government is planning to increase the heavily-subsidized price of diesel to make it more realistic and to discourage smugglers who are trafficking the fuel to the neighboring countries where the price is astronomically higher by between 58 and 95 times.

Faramrz Maddah, a member of the managing board of Iran’s department on road transportation, said on Saturday that the government is planning a hike in the price of diesel amid efforts to curb the trafficking of the fuel across the borders, adding that the planned rise would replace a scheme to ration diesel.

He added the government had originally planned to limit the amount of fuel given to truck owners through the use of smart electronic cards.

Diesel is currently pumped to trucks across Iran at two prices of 3.15 and 5.02 cents for each liter, much lower than prices charged in neighboring countries where the same unit of the fuel normally costs above $0.3.

The gap has encouraged truck owners to sell the fuel to smugglers who mostly transport it across the borders to Afghanistan or Pakistan or on the sea to Arab countries in the Persian Gulf.

Maddah said imposing restrictions on the delivery of diesel priced at $5.02, which was the government's original plan, would lead to irregularities in the pumping stations.

“The most fundamental solution to reduce smuggling is to make prices realistic,” said Maddah, adding that truck owners possessing electronic cards would still be provided with quotas of diesel at the current minimum price of $3.15.

The planned hike in the price of diesel comes as the government has yet to announce measures to regulate the use of gasoline, the main fuel used by motorists across Iran.

It was announced last month that using smart cards for gasoline delivery would become mandatory at pumping stations across Iran in a near future.

Authorities say that the domestic consumption of the fuel has exceeded 90 million liters a day while suggesting that trafficking across the borders is a main issue.

In mid-March, the Islamic Revolution Guards Corps (IRGC) Navy identified and arrested 56 members of a big gang of fuel smugglers in the Southern port city of Bandar Abbas, impounding 1 million liters of diesel, 2 bunker ships and 5 towboats.

According to an IRGC Navy official, towboats were transferring diesel to bunker ships and the fuel was then distributed to different ships and ports. IRGC is studying the case to find out the destination of smuggled fuel.

In a related front, earlier in March, the Intelligence department of the IRGC announced that it had disbanded a ring of fuel smugglers, impounding more than 10 million liters of subsidized fuel from the criminals’ hideout.