Fuel smuggling from Syria could hit revenues

A picture taken from the Lebanese border in the area of Wadi Khaled shows a Syrian Army camp on the Lebanese-Syrian border northern Lebanon on February 25, 2012. AFP PHOTO/JOSEPH EID

BEIRUT: Up to a million liters of smuggled low-quality gasoline has been pouring into Lebanon from Syria on a daily basis since mid-March, industry sources said, warning that the trade was endangering vital state revenues.

“Low-grade gasoline is being smuggled in staggering quantities into Lebanon from Syria every single day. Smuggling is thriving and is run by powerful mafias,” said Sami Brax, head of the Gas Station Owners’ Association.

Bahije Abou Hamze, head of the Oil Importers Association, told The Daily Star that despite the general shortage of fuel in Syria, the high margins of profit, given Syrian subsidies and high Lebanese taxes, are making the illegal trade very lucrative.

Abou Hamze, who shares Brax’s estimates regarding the quantities of smuggled fuel, said the trade’s major impact would be on treasury revenues. He added that the smuggled gasoline was often mixed with chemicals that posed a risk to health and vehicles.

At the current tax rates, Lebanon would be losing up to $256,000 a day in both gasoline tariffs and value added tax if Brax and Abou Hamze’s estimates are accurate.

Abou Hamze said most quantities were being sold in border areas in the Bekaa Valley.

Lebanon saw imports of hydrocarbons plummet by 42.6 percent in the first two months of the year, recent customs data compiled by Bank Audi show.

As a result, Lebanon’s trade deficit reported a double-digit contraction, easing by 23.7 percent year-on-year to a total of $2.7 billion, the bank added in its weekly newsletter.

This decline could suggest that Lebanon’s controversial re-exports to Syria are diminishing, particularly since it coincides with more than a dozen shipments of gasoil reaching government-controlled ports in February and March

The shipments, Reuters reported, ended months of isolation and were a further sign yet that oil dealers’ reluctance to supply the war-ravaged country was fading after Syria started allowing private sector companies to import fuel in January.

While it is legal to supply Syria with refined products such as gasoil, selling the fuel to the state’s oil trading and distribution firms has been prohibited by both U.S. and EU sanctions.

However, Abou Hamze denied any substantial decrease in private sector imports of fuel, adding that the decline could be explained by fewer Electricite du Liban and Energy Ministry imports in the first two months of the year.

A version of this article appeared in the print edition of The Daily Star on April 04, 2013, on page 5.




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