QUETTA: The price of Iranian fuel oil, which enters the province through informal channels, has increased suddenly in the region of Baluchistan, particularly along the borders and coastlines. This will have an effect on the economic resources of individuals living in these regions since they rely heavily on smuggling oil from other countries.
According to local fuel traders, the smuggling rate for Iranian petrol has increased from Rs170 to Rs180 per liter to Rs200 to Rs210 per liter in areas bordering and neighboring the coast, where the Gwadar district has experienced the most significant price surge. This increase in prices occurred abruptly, taking citizens by surprise due to the relatively low cost of Iranian fuel.
Kuntani Hor Disruption Severes Supply Lifeline
The source of the rise in the price of Iranian smuggled petrol can be directly attributed to one specific geographic pinch-point. The traders engaged in the international trade of fuels have pinpointed the disruption in the Kuntani Hor region as the main cause of the shortage.
Kuntani Hor occupies a central position in the informal trading system of Balochistan, facilitating a large portion of cross-border trade activities between Iran and Pakistan in the rugged coast region of the province. In the event that business operations at the border close down, the effect trickles down to the local supply of fuel in a very quick and powerful way, leading to an increase in the cost of Iranian petrol smuggled into the area.
The story relayed by fuel distributors and transporters operating along the routes is straightforward and damning: Disrupted fuel corridors led to a reduced flow of gasoline into the markets, creating the inevitable shortage, which invariably leads to an increase in fuel prices when demand exceeds supply.
Need for Iranian Fuel in Balochistan
It is necessary to consider the fuel economics of the Balochistan border community in order to comprehend the rise in the price of smuggled petrol from Iran. The price of fuel is highly subsidized in Iran and hence becomes cheaper than the official price of petroleum products in Pakistan despite the high costs and risks involved in smuggling fuel into the country.
The difference in cost has always been one of the reasons that made Iranian fuel the preferred cheap option for people who use it for heating, agricultural activities, fishing, and transportation purposes in the coastal areas of Balochistan and border areas. This type of fuel is a requirement rather than a choice when there are no other economic options.
Fuel Market in Pakistan Faces Further Pressures from Above
The rise in Iranian petrol due to smuggling is happening in an already tough time for the people of Pakistan, who are facing fuel costs that have gone up because of various factors. The official price of petroleum in Pakistan is facing pressure from several sources.
Increasing costs of petroleum development levy have the effect of increasing inflation levels in three areas that Pakistanis experience in their day-to-day activities – prices of fuel increase, costs associated with agriculture rise, and electricity tariffs increase with each passing month. This kind of government pressure has made the informal fuel trade through the borders all the more important – and its absence now all the more costly.
Implications for the Future from the Rise in Prices
The price trend of the illicit petrol from Iran in Balochistan rests solely on the speed with which business activities at the Kuntani Hor border crossings and elsewhere return to normalcy. In the event that this disruption continues beyond the immediate future, the communities at the borders will have to choose between paying much more for their fuel on the black market or relying on Pakistan’s regulated market at its entirety at prices that most poor families cannot afford.
To those in government who watch the vulnerability of the economy in Baluchistan Province, the increase in the cost of Iranian smuggled petrol will ring alarm bells as to how dependent this underdeveloped and biggest province of Pakistan is on its informal trade network across borders.
