A burgeoning black market in diesel has spread to remote areas along the Abu Dhabi border, Emirates Business has learned.
Recent increases in diesel prices in Dubai have given rise to an illicit trade involving hundreds of truck drivers and racketeers benefiting from cheaper prices across the border.
The black market began after last month's decision by Dubai-based retail fuel suppliers to increase diesel prices for the eighth time in nearly a year, widening the price gap with Abu Dhabi by more than Dh10 per gallon.
Limits placed on the amount of diesel that can be sold on one visit – and often only at specific times – to avoid tailbacks and congestion at filling stations have led drivers to travel hundreds of kilometres every day. They travel to areas such as Ruwais and Traif on the outskirts of Abu Dhabi to fill their tanks with cheap diesel.
The fuel is then sold at higher prices to Abu Dhabi-based unauthorised dealers, who in turn market them in Dubai. The drivers make the daily trip of more than 200km across the desert because they are permitted to fill up their tanks in contrast to being allowed a maximum Dh200 worth of diesel a day in the capital and nearby areas.
The rationing system introduced by Adnoc last week to ease congestion at its filling stations is being strictly followed. Truck drivers, who are involved in this business, said they fill up their tanks in Ruwais for between Dh400 and Dh500, which is worth almost 50 gallons for nearly Dh8.6 per gallon. They then return to Abu Dhabi, where they sell most of the diesel to racketeers in the industrial city of Musaffah for around Dh12 to Dh14 per gallon.
"These traders in Musaffah take the diesel in tanks and barrels and sell it in Dubai for a higher price but lower than the official price in Dubai. Considering the large quantities they sell every day, they are making money," a truck driver said.
"I am not sure about the quantity they sell each day or what price they charge per gallon, but I know there is a strong demand for diesel from truck drivers in Dubai. They pay below the Dubai price and this also saves them a trip to Abu Dhabi and the tormenting queues at petrol stations in Musaffah," he said.
Thousands of trucks, trailers, buses and other large and medium vehicles have started to pour into Abu Dhabi filling stations over the past few weeks to get cheaper diesel. The diesel price in Dubai hit a record Dh19.25 per gallon, more than double the prices in Abu Dhabi.
"Some truck drivers travel to Traif or Ruwais twice and even thrice a day to buy diesel and sell in Musaffah," said a driver.
"Drivers who make one trip a day could make a profit of more than Dh300; some drivers make up to Dh1,000 from several trips."
Besides racketeering in the local market, the price surge in Dubai appears to have triggered diesel smuggling into the UAE from neighbouring Gulf states, mainly Saudi Arabia and Qatar. Diesel prices in these countries are among the lowest in the world as they are heavily subsidised.
According to Qatari Minister of State for Energy and Industry, Mohammed Saleh Al Sadah, authorities have uncovered several cases of diesel smuggling into other Gulf states and within Qatar. "We are considering taking severe measures to stop these smuggling operations. We are providing diesel subsidies to offset soaring inflation rates and help all sectors as well as development projects in the country.
"We pay $160 (Dh588) for an imported barrel of diesel and sell it to local consumers for just $30. You cannot find similar subsidies in other countries and it is costing us millions of dollars."