Fuel Smuggling in Ecuador: Government Cracks Down on Subsidized Fuel
Government estimates losses of millions due to fuel smuggling schemes.
The Ecuadorian government has identified two fuel smuggling schemes that are costing the state hundreds of millions of dollars. The primary scheme involves fuel wholesalers delivering subsidized fuel to unauthorized gas stations. These stations then sell the subsidized fuel to consumers. In some cases, individuals have been found filling up their cars with over 123,000 gallons of fuel, despite their vehicles only having a 1,400 cubic centimeter engine.
Smuggling also occurs in the industrial sector.
Diesel, which is subsidized for certain industries like tuna fishing and artisanal fishing, is being illegally diverted. Some marketing companies are selling subsidized diesel to gas stations, which then sell it to industries at a higher price below the international market rate. This creates a “juicy” profit margin for the gas stations.
Government takes action to combat smuggling.
The government has implemented quotas on diesel sales for the automotive sector and adjusted subsidies for low-octane gasoline. They have also filed a formal complaint with the Attorney General’s Office.
Industry responds to the crackdown.
The National Chamber of Distributors of Petroleum Derivatives of Ecuador (Camddepe) acknowledges that the price difference between subsidized and unsubsidized fuel encourages smuggling, but argues that private gas stations in border areas were expropriated by the state in 2013.
Government considering further measures.
The government is considering reviewing the diesel subsidy and implementing further measures to prevent fuel smuggling.