Venezuela takes step to block multi-billion oil smuggling business

Oil prices in Venezuela are set to rise to international levels. However, Venezuelans who register their vehicles in the vehicle census that is being carried out by his government will continue to receive subsidized fuel prices.

Through a televised address, Venezuelan President Nicolas Maduro has let it be known that domestic gasoline prices are set to rise to international levels. The move is partly largely aimed at fuel smugglers who cause multi-billion losses to the country’s economy every year.

“Gasoline must be sold at an international price to stop smuggling to Colombia and the Caribbean,” said Maduro in a televised address.

Like most oil producing countries, Venezuela has been subsidizing fuel to domestic consumers since decades. As a result fuel prices have remained flat for years since decades despite a hyperinflation which the International Monetary Fund has projected to touch 1,000,000 this year.

For Venezuelans, this means that the for the price of a cup of coffee, a driver can now fill the tank of a small SUV nearly 9,000 times. The average price of a coffee in Venezuela was 2.2 million in recent years. This is equivalent to around 50 cents.

Smugglers do brisk business reselling fuel in neighboring countries.

However, Maduro stated, the government will continue to provide “direct subsidies” to citizens through the “fatherland card” – a state-issued identification card that the government uses to provide bonuses and track use of social services.

The subsidy will be available only to Venezuelans who have registered their vehicles in the vehicle census being carried out by his government.

Categories: Creativity, Economy & Finance, Entrepreneurship, HR & Organization, Regulations & Legal, Strategy

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