Weather New York, NY +86°F

Regions

Gasoline smuggling dents export revenues for Venezuela

Close
(Credit: George CASTELLANO/AFP/Getty Images) Venezuelan troops patrol the border with Colombia, in San Cristobal, on August 20, 2014. Venezuela closed its border with Colombia Monday night to fight the smuggling of cut-rate gasoline and other products that has caused huge losses for the government and exacerbated severe shortages. Oil-rich Venezuela has the world's cheapest gas, as well as price controls that keep goods like rice and toilet paper up to 10 times cheaper than in Colombia. But Venezuela has also been hit by crippling shortages of basic supplies and rampant inflation, even as the outward flood of local products has become a defining feature of the regional economy. To combat the problem, the Venezuelan government has deployed 17,000 troops to seal the 2,200-km border off every night from 10:00 pm to 5:00 am. VENEZUELA-COLOMBIA-BORDER-SMUGGLING-SECURITY
January 30
12:03 AM 2016

Feeling the heat of cheaper gasoline smuggling to neighboring nations, Venezuela has intensified constant vigil on its borders. The smuggling of gasoline crossing the borders is impacting the Venezuelan economy in a more negative way. The smuggling of gasoline is eroding precious exports earnings in US dollars for Venezuela, which has recently opened its border with Colombia allowing only students to attend schools in the neighboring country.

Gasoline costs pennies to fill a car tank in Venezuela as gasoline is heavily subsidized by the government. The English-speaking South American nation Venezuelan has deployed soldiers in large number to prevent gasoline smuggling. Venezuela is flanked by Colombia country and Guyana on east and west sides. 

The Venezuela's border with Colombo has been closed since 19 August 2015 following the order by President Maduro to check the smuggling activity. Nicolas Maduro, President of Venezuela, and Colombia's President Juan Manuel Santos held discussions over border issues. The peace and border issues form major points of discussion in the bilateral agenda. It's been agreed that bordering are reopened for time being to allow Venezuelan students attending schools in the neighboring country, according to El Universal.

Guyana imported 4.9 million barrels of fuel in 2014, but no data is officially available on smuggled gasoline volume. Venezuela is spending $15 billion on gasoline subsidies every year. The smuggling activity is also eroding the part of oil exports of Venezuela reducing foreign exchange in US dollars to the tune of smuggled volume, according to Bloomberg.

Suffering from economic crisis, Venezuela is facing turbulent situation in the wake of smuggling of gasoline as well as illicit domestic trading. The socialist Venezuelan government is spending huge money on subsidies. The currency of Venezuela is also becoming weaker. 

Voice of America reports that a 40,000-liter tank truck is filled for $10 at the black market rate and it's sold in Colombia at about $20,000 giving a whopping profit margin of 200,000 percent. The triple-digit inflation in a crisis-hit economy, this is the survival practice for many in the country. 

Youngsters are engaged in smuggling of gasoline from Venezuela. They transport gasoline from Venezuela to Mabaruma riverbank using boats. Everyday, on an average each boat is used to transport dozens of plastic barrels loaded with gasoline are smuggled out of Venezuela.

Not only poor people or unemployed youth, but also soldiers, teachers, engineers, doctors are engaged in selling gasoline. The reason is that salaries are not enough to take care of their families. It's observed that there's lack of patrolling on borders from western village of Boca del Grita to the eastern part of Guiria. The situation on borders with Brazil and Guyana is also place for unchecked smuggling activity, according to a report by Reuters

Consuming smuggled gasoline is illegal in Guyana. However, authorities are for over years not taking any stringent action. The rugged Essequibo region is hub of country's mining and timber activity. Here, a liter of gasoline costs one dollar at pumps, but smuggled gasoline is available half the price. 

Nicolas Maduro, President of Venezuela, is keen on different borders keeping a check to illegal cross-border transportation of gasoline. Troops have been deployed on the border of Guyana's western frontier, which is on eastern border of Venezuela. Towns in this part of Guyana consume the smuggled gasoline from Venezuela. Majority of shops are keeping the illegal goods for years, 

© 2019 VCPOST, All rights reserved. Do not reproduce without permission.
Tags
Share

Comments

Join the Conversation

Subscribe to VCpost newsletter

Sign up for our Deals of the Day newsletter.
We will not spam you!

Real Time Analytics