Gulf States Plan Laws To Curb Fuel Smuggling

Gulf countries including the United Arab Emirates and Saudi Arabia are formulating new legislation to curb fuel smuggling, the UAE energy minister said on Tuesday.

Smuggling of fuel, including diesel, gasoline and other products, is frequent across the borders of some Gulf Arab states, where different levels of fuel subsidies create price gaps that criminals can exploit.

“The ministry is working on a law to prevent smuggling of diesel or other products. Saudi is also working on a similar law, and some neighbouring countries also where it is subsidised,” Suhail bin Mohammed al-Mazroui told an energy forum.

“If there’s a subsidy, countries don’t want those products to be sent across the border,” he said, adding that Kuwait was also moving to curb fuel smuggling, which was damaging partly because it encouraged excessive consumption.

Mazroui did not specify how the new laws would work, but said details would be released soon.

One way to eliminate smuggling would be for governments to adjust the billions of dollars of subsidies which they pay so that national fuel prices moved into line with each other. However, such changes could hurt consumers and would therefore be politically sensitive.

The recent plunge in oil prices has prompted some Gulf governments to reduce, or consider reducing, some fuel subsidies, but complete reform remains distant.