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Venezuela clamps down on gas smuggled from Colombia
Venezuela clamps down on gas smuggled from Colombia
Business, Financials
August 12, 2014

Venezuela clamps down on gas smuggled from Colombia

SAN ANTONIO DEL TACHIRA, Venezuela

VENEZUELA closed its border with Colombia Monday night to fight the smuggling of cut-rate gasoline and other products that has caused huge losses for the government and exacerbated severe shortages.

Oil-rich Venezuela has the world’s cheapest gas, as well as price controls that keep goods like rice and toilet paper up to 10 times cheaper than in Colombia.

But Venezuela has also been hit by crippling shortages of basic supplies and rampant inflation, even as the outward flood of local products has become a defining feature of the regional economy.

To combat the problem, the Venezuelan government has deployed 17,000 troops to seal the 2,200-kilometre (1,400-mile) border off every night from 10:00 pm to 5:00 am.

Venezuela, which announced the closures Saturday, says it is doing so under a joint accord with Colombia.

The illicit trade is a problem for the Colombian government, too, since smugglers sell goods at prices impossible for local businesses to match.

Officials said they would enforce the measure for a 30-day trial period, then evaluate the results.

As the first night of closures got under way, 20 paratroops moved to close off the Simon Bolivar bridge between San Antonio on the Venezuelan side and Cucuta in Colombia.

“You have six minutes. If you want to return to Colombia, you have to do it now,” a rifle-toting soldier told a woman making her way home.

Some commuters voiced exasperation.

“What good is this nonsense?” asked Susana, who works in a store on the Colombian side and just managed to get back into Venezuela.

The lure for smugglers is acute: Gasoline is so cheap in Venezuela it costs less to fill up your tank than it does to buy a bottle of water.

Gas sells for US$0.02 a litre (US$0.08 a gallon) there, more than 60 times cheaper than in Colombia.

A kilo of rice costs US$0.10, a tenth of the price in Colombia.

Even Venezuelan President Nicolas Maduro — the political heir to late socialist leader Hugo Chavez — admitted a few months ago that selling a litre of milk at the border brings in more money than selling cocaine.

The flood of contraband across the border has become easily visible, in broad daylight as well as at night.

The Venezuelan government estimates that 40 per cent of the country’s basic commodities are smuggled into Colombia, plus 100,000 barrels of oil, equivalent to annual losses of US$3.7 billion.

The general in charge of the operation, Vladimiro Padrino Lopez, said that so far this year some 40 million litres of gasoline and 21,000 tons of food have been seized while being smuggled across the border.

The first victims of the new measures are truck drivers, for whom the restrictions are even more severe — they are blocked from crossing the border after 6:00 pm.

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