Boomtime for fuel smugglers in Nepal

A severe fuel shortage has crippled Nepal, causing added hardship for millions of people already trying to recover from a devastating earthquake. But not everybody is suffering – a flourishing black market is enriching both smugglers and police.

Nepal is struggling to rebuild after a magnitude 7.8 earthquake in April 2015, which killed almost 9,000 people and destroyed about half a million homes. But unrest along the border has blocked imports from India, including medicines, food, and fuel. The lack of fuel has impeded efforts to bring relief supplies to remote areas and cut off transportation to healthcare facilities.

Last month, nine international aid agencies, including several United Nations bodies and major donors from Britain, South Korea and Germany, issued a joint statement warning: “The health and humanitarian implications of the present scenario are grave.” They urged “all sides to address restrictions on imports”, although they did not name the parties involved.

Protests against a revamped constitution dividing Nepal into seven new provinces have been ongoing on the Indian border since August. Members of the ethnic minority Madhesi and Tharu communities who live in the frontier region oppose the size and borders of the new provinces, claiming those and other measures mean they will be under-represented in parliament. The protesters, with tacit support from Delhi, have enacted an unofficial blockade on imports, and Nepal’s government has been unable or unwilling to negotiate a settlement.

SEE: Will a political dispute become a humanitarian disaster in Nepal?

The crisis has created a thriving trade in fuel smuggled into the country from India, which is sold openly by dealers who pay the police to look the other way. At one market in an empty plot of land in the capital, Kathmandu, petrol flowed down from large plastic drums into the customers’ jerry cans. The dealer, who declined to provide his name, was overwhelmed by phone calls from customers.

“I don’t care who gave you my number,” he told one caller. “I don’t sell on credit. If you want fuel, come with the money and take it. Come soon, it’s going to be sold in half an hour.”

In half a day he sold some 3,000 litres of petrol. His profit from the transaction was 210,000 rupees ($1,900).

The black market price for petrol is about 230 rupees ($2) per litre, which is 130 percent more than the official price fixed by the government. But the fuel stations authorised by the government are mostly empty. Metal plates hang from the pumps that read: “THERE IS NO PETROL”.

The dealer argued that he is providing a vital service. “My price is very reasonable,” he told IRIN. “I am a businessman, not a thief.”

Bishal Rai, a taxi driver, agreed. “I blame the government,” he said. “What need is there to arrest people who are supplying fuel when it cannot? At least they are giving us what we need.”

Smugglers dues

The government denies claims it is letting the black market flourish and says it has arrested more than 140 illegal traders over the past two months.

“These are all rumours, that the government is encouraging black marketers,” said Yadav Prasad Koirala, joint secretary at the Ministry of Home Affairs. “The government has and will continue to arrest and punish those involved in black marketing of fuel.”

He denied that police were taking bribes. Yet, several fuel dealers who spoke on condition of anonymity told IRIN that they regularly pay off the police.

An officer said the police were intentionally letting the black market thrive. “The current fuel scarcity has created a difficult situation,” said the officer. “Yes, it is true that we have had to turn a blind eye to the black marketing of fuel.”

Dealers told IRIN that some fuel is smuggled across the border into Nepal on motorbikes, which can carry as many as 150 litres per trip. The fuel is then sent on to Kathmandu, with small-time dealers bringing it on buses. Larger operators drive pick-up trucks crammed with 250-litre drums.

Prices soar

The border blockade has caused commodity prices to rise dramatically, according to the World Food Programme. Cooking gas has shot up in price by as much as 630 percent since the blockade began five months ago, while the cost of rice has doubled and commodities like lentils, a staple, have risen sharply as well.

Last month, WFP said the fuel shortage had caused “severe delays” in its ability to get food to more than 224,000 people. The organisation’s Seetashma Thapa told IRIN that the government has since set aside fuel for its deliveries.

“Although we have been able to continue transporting aid to earthquake victims, the fuel shortage has resulted in the price of essentials like cooking oil almost doubling,” she said.

The government says it is attempting to ease the crisis by re-routing fuel shipments away from the main border crossing in the city of Birgunj, which is at the centre of the protests. Indian officials are reticent to allow goods to cross there, and protestors in the city have burnt fuel they confiscated from smugglers.

Shiva Tirpathee, under secretary at the Ministry of Commerce and Supplies, told IRIN that the government is trying to move as much fuel as it can through smaller crossings. “Fuel supply will improve in another 10 to 12 days,” he said. “But it can’t return to normal until the Birgunj border crossing reopens.”

The border crossing is unlikely to reopen until the government and the protestors resolve their political differences. Meanwhile, Nepal’s economy is running on fumes.