Fuel Smuggling on the East Timor Border

in Business Risk, Environmental Threats

Fuel smugglers in Indonesia are using motorcycles to smuggled subsidized fuel into East Timor, which does not receive government subsidies for its gasoline purchases.

According to a report in the Jakarta Globe, smugglers quickly drive up to gas stations located in the Belu district of Timor. The smugglers cut in front of the line and fill up modified tanks on their bikes that are able to hold more fuel than regular motorcycle tanks. Once filled, they drive over the border into East Timor to sell the fuel on the black market. Once the fuel is off-loaded, the smugglers return to the gas station in Belu and repeat the process. Media reports state that each time the smuggler cuts in line and fills up the bike tank, the smugglers passes along a small payment to the gas attendants.

A barrel of fuel costs around $78 (900,000 Indonesian Rupiah) in Indonesia with the fuel subsidy. In East Timor, the same barrel of fuel costs about $156 (1.8 Million Rupiah).

The smuggling of fuel has impacted Indonesia’s budget. The original budget estimate for the fuel subsidy program was set at 210 Trillion Rupiah. Due to the purchases of smugglers, the fuel subsidy program cost 285 Trillion Rupiah, or $25 Billion.

In addition to the fuel smuggling, a black market in stolen cars is also active on the border with East Timor. A person with experience in the trade told the Jakarta Globe that a stolen 2013 Toyota Avanza Veloz can be sold for $6,525 (75 Million Rupiah) on the border.

(See more black market prices here.)

Source:  Josua Grantan, “Timor Fuel Smugglers Deal in Liquid Money,” Jakarat Globe, May 21, 2014.

Previous post:

Next post: