(MENAFN- Khaleej Times) Gulf countries grappling with fuel smuggling in an age of subsidies are planning new laws to curb illegal sales of petrol, diesel and other fuel products. UAE Energy Minister Suhail bin Mohammed Faraj Al Mazroui on Tuesday said the problem is widespread across Gulf Cooperation Council (GCC) borders but the time has come for governments to intervene and end the practice.
Criminals exploit the varied levels of subsidies and price gaps in GCC countries and discreetly smuggle cheaper fuel in one country to sell at a higher price in a neighbouring country.
"The ministry is working on a law to prevent smuggling of diesel or other products. Saudi Arabia is also working on a similar law, and some neighbouring countries also where it is subsidised," Al Mazroui told an energy forum in Abu Dhabi.
"If there's a subsidy, countries don't want those products to be sent across the border," he said.
The UAE, last week targeted illegal fuel agents in the country and, Kuwait has also moved swifly against those involved in these operations. He expressed concern about cheap, illegal fuel and said it encouraged 'excessive consumption'.
He, however, did not explain how the laws would work but said details would be released soon.
Adjusting the billions of dollars in subsidies would be a way to beat smuggling, a move which could increase the cost of fuel and pinch consumers' pockets.
In a concerted action last week in Dubai, several illegal deals in fuels were stopped with fines being slapped on the perpetrators. The Emirates Authority for Standardisation and Metrology (Esma), Dubai Civil Defence, Dubai Department of Economic Development, Dubai Municipality, Roads and Transport Authority, Dubai Police and Emirates National Oil Company (Enoc) coordinated the operations.
There has been a rise, specifically in the sales of illegal diesel, including theft, which has affected the balance sheets of oil companies, besides having a negative impact on the overall state of the economy. The Dubai Police is leading the raids while other stakeholders are conducting surprise checks on establishments.
Many violating companies have been identified and those taking advantage of the shift in oil prices and indulging in smuggling would be targeted, officials said.
"We thank all the government entities and stakeholders for their support in activating the UAE Federal Cabinet Decision No. 37 of 2013 which mandates the use of low-sulphur, eco-friendly diesel across the UAE and for their efforts to reduce illegal trade," said Saeed Khoory, Chief Executive Officer of Enoc.
He said his company was committed to curbing the illegal trading of diesel and taking prompt action against such vendors. "The UAE is the first country in the region to approve the standards of diesel and strict measures must be taken to ensure compliance to the highest levels of safety, quality and commitment to environmental standards."
The drive against the illegal trade in diesel has yielded positive results so far; smugglers are on the run, said other officials. The challenge is to keep them out of business and a GCC-wide crackdown would end the practice for good.
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