Heavy subsidies on diesel fuel smuggling out of Qatar - Emirates24|7

Heavy subsidies on diesel fuel smuggling out of Qatar

Qatari authorities have uncovered more than 40 smuggling cases. (AFP)

Heavy subsidies on diesel have fuelled widespread smuggling of the substance out of Qatar and threats by authorities to take stern action against the culprits, the Gulf country's newspapers reported on Wednesday.

The UAE could be one of the major destinations for the smugglers following the recent sharp increase in diesel prices in Dubai, the papers said.

"We are considering taking severe measures to stop these smuggling operations," Qatari Minister of State for Energy and Industry, Mohammed Saleh Al Sadah, told the newspapers in Doha. "We are providing subsidies to diesel to offset soaring inflation rates and help all sectors and development projects in the country.

We are paying $160 for an imported barrel of diesel and selling it to local consumers for only $30…you can not find similar subsidies in other countries and they are costing us millions."

Al Sadah said authorities had uncovered more than 40 smuggling cases at fuel and services stations over the past few weeks.

"Some weak and greedy people are smuggling diesel out of Qatar to benefit from the large price difference…some others were selling it to foreign companies inside the country," the minister said.

"For this reason, we have set up a joint committee from the Ministries of Energy and Interior and from other competent departments to take all necessary measures to stop these practices and prosecute the smugglers."

According to Al Sadah, Qatar's demand for diesel is estimated at around 36,000 barrels per day while it produces nearly 25,000 bpd. He said Qatar needs to import diesel to cover the gap but added local consumption would be fully met when a new refinery in the northern industrial city of Ras Laffan is completed in 2009.

The refinery will lift Qatar's total diesel production to around 50,000 bpd, he added.

Al Sadah did not mention the source of Qatar's diesel imports nor did he reveal the smuggling destinations but Qatari newspapers quoted what they described as recent media reports in the UAE that some fuel suppliers in other Gulf states are smuggling diesel into the Emirates to benefit from the surge in prices.

Qatar currently has two refineries with a combined output capacity of just over 200,000 bpd. Saudi Arabia has the Arab world's largest refining capacity of more than two million bpd, which is expected to double when new giant refineries are completed within the next few years.