Petrol smuggling on the Colombia-Venezuela border

| Nov. 10, 2014 | Cucuta, Colombia

Featured on RTÉ World Report

On the Colombian side of Venezuela’s border with Colombia, men with faded yellow jerry cans and siphoning tubes line the streets. They sell petrol that has been smuggled in illegally from Venezuela.

The trade is due to a large disparity in petrol prices across the two countries. In socialist Venezuela, drivers can fill a tank for just a few cents thanks to extremely generous government subsidies. It’s the world’s cheapest fuel. In Colombia, costs are similar to those in Ireland.

The differential is of the order of thousands of per cent and so there is large profit to be made. People fill up in Venezuela, cross a bridge into Colombia and immediately have the fuel siphoned out.

“Petrol is practically a free gift here,” engineer Jesús Arias told me as I sat with him in his car. He told me how he’d sell a cent’s worth of fuel for around eight euros.

“Imagine the percentages that we’re talking about!” the 33-year-old exclaimed. It’s not just drivers. I saw people carrying petrol in Coca-Cola bottles as they walked across the bridge.

The trade is further incentivised by the economic troubles currently plaguing Venezuela. Arias trained as an engineer. However, thanks to strict economic controls and a plummeting local currency, his wages would be less than sixty euros a month. Smuggling petrol is much more valuable.

“Doctors, lawyers, architects, engineers like me, we’re all doing it,” he told me. “Here on the border, I can earn in three or four days what I earn as a professional in a month.”

While cheap fuel may seem good for consumers in Venezuela, it actually causes huge damage to the country’s economy. The subsidy costs the government some nine billion euros a year. Authorities have attempted to clamp down on the trade though with little luck.

It’s not only petrol that is smuggled here. Many basic goods in Venezuela are price-controlled. This has led to severe shortages as importers and producers have lost the incentive to provide their services.

As I walked across the bridge, I saw countless people carrying bags filled with flour, rice, mayonnaise and other basics that could be sold a few hundred metres away for huge profits.

Guillermo Maldonado is 53 years old. I met him on the bridge, his hands straining under the weight of six carrier bags filled with basic goods.

“I have heart problems. I don’t have a salary, work, nothing,” he told me, angry with his government.

Venezuelan authorities blame shortages on smugglers like Maldonado and Arias, part of an “economic war” being waged on Venezuela by the opposition.

The more fundamental problem, though, is tight economic control, which takes away incentives. The problems are being compounded by a fall in oil prices to around 80 dollars, or 65 euros, a barrel. Venezuela relies on oil sales for ninety six per cent of its foreign currency revenue and so the fall is a major headache for the government. Many economists are calling current events here, coupled with the drop in oil price, a "perfect storm.”

I caught Maldonado, the elderly smuggler, later at a small supermarket on the Venezuelan side, buying up more price-controlled goods. “I’ll do this four or five times a day at least,” he said despondently, before wandering off across the bridge.

For World Report, this is Girish Gupta at San Antonio/Cúcuta, on the Venezuela/Colombia border.