HomeNewsBriefEcuador-Peru Contraband Gasoline Trade Worth More Than $40M Per Year
BRIEF

Ecuador-Peru Contraband Gasoline Trade Worth More Than $40M Per Year

CONTRABAND / 22 JUL 2013 BY MIRIAM WELLS EN

At least $50,000 worth of contraband gasoline is crossing from Ecuador into Peru each day, according to police, as subsidized fuel makes smuggling big business in different parts of the region.

Around 15 criminal groups use seven different routes to transport gasoline from Machala, an Ecuadorean town five hours from the border, to the Peruvian cities of Tumbes, Piura and Chiclayo, reported newspaper El Comercio.

The regional police estimate around 50,000 gallons of gasoline is crossing the border each day -- worth around $55,000 in Ecuador, but around $225,000 in Peru. Gasoline is subsidized in Ecuador and is sold for around $1.10 a gallon. In Peru it costs around $4.50, said a Peruvian prosecutor who specializes in customs violations and contraband.

The smugglers receive around $180 dollars for a 55 gallon barrel of fuel, one told El Comercio, meaning they are making a profit  of around $2.20 a gallon. If police estimates about the amount of fuel being smuggled daily are correct, profits of more than $40 million are being made each year.

Jorge Juarez, head of tax and customs police in Tumbes, told El Comercio that corrupt police were part of the contraband chain. "We know that we need to get rid of at least 100 agents in Tumbes," he said.

InSight Crime Analysis

Subsidized gasoline mean huge price differentials across various Latin American borders, making the contraband a highly profitable business -- most notably for those bringing it into Colombia from Venezuela, where the price of fuel is less than six cents a gallons, cheaper than water. The Venezuelan government said earlier this year around 120,000 gallons of illegal gasoline a day (around 35 million a month) was crossing into Colombia, where it can be sold from anything $1.50 to $6 a gallon. The same phenomenon occurs in Bolivia, where subsidized fuel is smuggled to Argentina and Paraguay.

With such huge profits available the trade has inevitably seen the involvement of criminal groups. While much smuggling is carried out by small groups, those individuals must pay bribes to major criminal gangs in order to make their journeys. The Colombian organization Los Rastrojos is believed to control part of the Colombia--Venezuela border region.

  Map showing gasoline routes from Ecuador to Peru

Peru - Petrol Smuggling

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