'Smuggling of Iranian petrol, diesel cannot be stopped'

Customs officials in Quetta have admitted that smuggling of Iranian petrol and diesel through border cannot be stopped due to extreme pressure of influential mafias and powerful gangs in Balochistan for which policy measures such as a legalisation on import of diesel/petrol from Iran and joint check posts of all law enforcement agencies along the coastal belt of Balochistan and Pak-Iran border land routes are needed.
Sources told Business Recorder here on Saturday that the Federal Board of Revenue (FBR) has received a comprehensive report on smuggling of Iranian petrol/diesel from Model Customs Collectorate (MCC) Quetta which has exposed all those involved in smuggling including influential and powerful mafias of Balochistan who pressurised the customs in the province not to hinder non-stop smuggling of POL products through Pak-Iran border. The inside story of POL products' smuggling and modus operandi used by the powerful groups in the province has been disclosed in the report of the Collector of Customs MCC Quetta.
One astonishing part of the story is that smugglers are using transport with fake names and monograms of leading oil marketing companies during smuggling of POL products--up to Karachi. This is the first of its kind of report of MCC Quetta covering entire aspects of smuggling of POL products in Balochistan with policy measures to check smuggling through policy changes in the taxation regime of POL products to encourage legalised imports from Iran. In recent development, the enforcement and strict action by Quetta based Customs authorities has resulted in shortage of smuggled Iran POL product due to anti-smuggling measures.
The only way to stop smuggling of POL products from Iran is to regularise import of Iranian diesel by private firms/persons, subject to levy of duty/taxes/surcharges. The second option is to allow restricted import of diesel/petrol to the extent of consumption in Balochistan. In case legal imports of diesel/petrol are allowed from Iran, customs authorities are confident that the quantum of smuggling would be reduced by at least 70-80 percent, MCC Quetta report suggested.
In view of extreme pressure of mafias and organised influential gangs in Balochistan, the Collector of Customs MCC Quetta has strongly proposed setting up joint check posts of Customs, Frontier Constabulary (FC) (Balochistan), Pakistan Coast Guards, Police, Maritime Security Agency and Customs Intelligence to monitor the open sea along the coastal belt of Balochistan and land routes along Pak-Iran border. Since one agency cannot cope with the pressure, joint check posts of all agencies shall help in resisting pressure from influential quarters.
According to sources, smuggling of Iranian diesel originates from coastal lines in Pasni, Gawadar, Jewani and Pak-Iran border in Mekran area of Balochistan through unfrequented sea/land routes from where it moves partly along the Coastal Highway touching RCD Highway at Zero Point and partly through Kech, Awaran, Panjgur, Kharan, Kalat districts of Balochistan. The diesel transported through coastal highway is partly diverted towards Lasbela for consumption in upper Balochistan while part of it is transported in plastic drums/cans through Gaddani to Hub.
Similarly, diesel smuggled through the above-referred districts find its way partly to Sindh and Punjab through road links (Lasbella-Shahdadkot-Shikarpur/Sukkur, etc) and partly to Afghanistan. Another point of origination is Taftan and passing through Noshki touches Kashmore in Sindh for onward transportation to Punjab and down to Sukkur and Karachi.
In Hub, diesel is stocked in secret depots, from where it is supplied for local consumption as well as transported to Karachi or upcountry through Super Highway. The report further said that at present, diesel is transported in drums through buses to Karachi and not through oil tankers. Instances have shown that transportation of smuggled diesel to upcountry and Sindh is carried out through oil tankers with fabricated colours and monograms of known oil marketing companies and, at times, covered by necessary sale invoices, apparently issued by the latter.
The report further stated that a new phenomenon has surfaced due to huge demand in Afghanistan. Most of diesel is now diverted to Afghanistan through Chaman, Noshki, etc. Besides, diesel of Pakistani origin, meant for Isaf/Nato forces in Afghanistan is also reportedly sold in the open market and replaced with smuggled Iranian diesel to Afghanistan through connivance of supply contractors and OMCs to reap illegal benefits out of zero rated exports and the price differential in locally refined and Iranian diesel. Reportedly, the whole movement of oil tankers takes place through active assistance by the locals of the area ie "Goths" and local Police/Administration including invariably all the law enforcing agencies (LEA) present on roads for one reasons or the other.
It is pertinent to mention that the discouraging attitude of local administration and other LEA especially Police towards Customs during any operation against the smugglers has been exploited by the oil mafia by blocking the RDC Highway off and on.
Transporters Association has also been found exploiting such situation out of their inherent grudge against the customs staff for seizure of smuggled good transported from Quetta to Karachi through passenger buses. It is evident from the fact that in the past an unruly mob of hundreds of people fully armed with stick and rods besieged the Custom House, Gaddani, crashed the main gate, trespassed the main building and forcibly took away a passenger coach loaded with around 10,000 litres of smuggled Iranian diesel detained by the Customs Staff of Gadani. They also threatened to set Custom House at Gaddani on fire.
The local Police, F.C as well as Coast Guards were called for assistance but they did not respond. FIR No 22/II dated 10.06.2011 was lodged with the local Police. Another incident of 2011 showed that an oil tanker with 25,000 litres Iranian diesel was seized jointly by Customs Gaddani and staff of Coast Guards, Uthal. The oil tankers association, Trucks Association and some locals blocked the main RCD Highway and agitated for many days. They also blocked the main Gaddani Road and besieged the Custom House, by bringing their tankers/trucks on the road. Some of their supporters/leaders entered the office to pressurised the staff to release the vehicle without fulfilment of legal formalities.
Sources said that the Customs staff in Gawadar/Gaddani has been working in close co-ordination with Pakistan Coast Guards being the most effective anti-smuggling agency in the area with special reference to placement of their check posts all along the Coastal Highway and RCD Highway between Gawadar- Zero Point-Uthal and Hub. However, this co-ordination has not yielded the desired results as the Coast Guards authorities demand before hand initiation for a joint operation and contends that a 'knee jerk' response to Customs is not possible as they have to seek permission from there senior command at Karachi. Similarly, Frontier Corps in the area has been avoiding indulging in such operation against the diesel mafia for peculiar security concerns associated with the region.
However, it may be appreciated that despite the above quoted inhospitable environment, Customs staff in association with Pakistan Coast Guards has succeeded in institution of 20 seizure cases of smuggled POL products, (250,000 litres of diesel) during the period July, 2010 to date.
Currently, the local passenger buses of Makran area are still engaged in illegal transportation of smuggled diesel in plastic cans and pose a constant nuisance for the Customs in case any preventive action is taken against them. The attitude of local administration and Police has been persistently discouraging and pressurising the office to refrain from anti-smuggling operations in apprehension of an entailing law & order situation in the area, the Collector MCC Quetta said. The report further highlighted that in the light of afore stated position the menace of smuggling of Iranian diesel may be viewed in the backdrop of peculiar socio-political situation of Balochistan in general and Mekran belt in particular.
Reportedly, there are heavy financial stakes of prominent figures in diesel business of Balochistan who have been pressurising the staff for restraining from any action against the mafia and recommend posting of staff to the stations/posts notorious for diesel smuggling, weaknesses of the Customs staff in terms of manpower, logistics, and training coupled with monetary indulgence of all the above named agencies also warrants a realistic, dedicated and cohesive approach by all the law enforcement agencies of the area especially Police, Coast Guards, Frontier Corps, Maritime Security Agency and Customs.
Keeping in view the foretasted position it is admitted that customs alone cannot contain smuggling of diesel single-handedly. Collector of Customs MCC Quetta has submitted proposals for consideration and policy decision by the Board: Currently, import of petrol/diesel under PCT Heads 2710.1110-2710.1949 are importable only by approved oil marketing companies under Sr.No 2 of Part-II of Appendix-B of Import Policy Order.
Considerable difference in prices of Iranian diesel on Pak-Iran border and that of imported/locally refined diesel has been one of the main attractions for the mafia who can reap profits by transporting and selling smuggled Iranian diesel in any corner of the country even after gratifying personnel of the law enforcement agencies en route. Besides, close proximity of Mekran Division in Balochistan to Iran, easy availability of Iranian diesel across the border, non-existence of filling stations of OMCs, and unemployment/lack of alternative economic activity in the area is another source of inevitable indulgence of the people including the LEAs in otherwise lucrative oil business. As per practice the smuggled diesel confiscated by Customs is sold to CSD or FC/Coast Guards @ Rs 63 per litre which is consumed as such without further processing, sources said.
Keeping the aforestated position in view it is proposed that the import of diesel and petrol may be de-regulated. Ministry of Petroleum and Natural Resources and Ministry of Commerce may be consulted for permission of regular import of Iranian diesel by private firms/persons, subject to levy of duty/taxes/surcharges after necessary amendment in the above quoted provision of Import Policy Order. In case complete de-regulation is not possible, restricted import of diesel/petrol to the extent of consumption in Balochistan may be allowed, the report of the MCC Quetta stated.
It may also be mentioned here that the import of some petroleum products, like bitumen, paraffin wax, LPG, etc, is legally allowed and these products are imported from Iran on payment of duty and taxes. There is no issue of smuggling of bitumen etc as legal channels are available to the traders. On the same pattern, if legal imports of diesel/petrol are allowed, hopefully it shall reduce the quantum of smuggling, by at least 70-80 percent besides generation of considerable revenue to the state.
Currently, the incidence of duty/taxes per litre on imported HSD is around Rs 2 1.75. MCC Quetta is of the view that in the face of above quoted ground realities, quality of Iranian HSD, transportation as well as cost of smuggling, the trade of Iranian HSD can be legalised through a margin of 10-15 percent in duty/taxes or as deemed appropriate.
Till the long term strategy referred to above is in place, it is proposed that the Ministry of Interior, Pakistan Navy and provincial government of Balochistan be approached for joint operations by Customs, FC (Balochistan), Pakistan Coast Guards, Police, Maritime Security Agency and Customs Intelligence in the open sea along the coastal belt of Balochistan and land routes along Pak-Iran border.
The following choke points are recommended for this purpose: Naka Khari on RCD Highway (Balochistan); Rakhni (Balochistan); Zhob (Balochistan); Surab (Kalat Division -Balochistan); Shahdadkot (Sindh) and Kashmore (Sindh).
The report further said that other points mutually identified by MCC Quetta/Gawadar/Hyerabad/Preventive Karachi/Customs Intelligence may also be considered. As an immediate step, joint check post may immediately be set up across Hub River towards Karachi to be manned by staff of MCC Gawadar, MCC Preventive, Karachi and Customs Intelligence, Karachi.