Petrol Rationing Creates Black Market in Iraqi Kurdistan

By Samah Samad

KIRKUK, Iraq, September 12, 2005 (ENS) - A petrol rationing scheme now running in some Kurdish towns is likely to be extended to the whole of Iraq in the next few months. The aim is to calm the fuel market and give drivers regular access to gasoline, but the system has so far had the reverse effect, creating a flourishing black market to meet the demand.

Kirkuk and several northern cities in the Iraqi Kurdistan region have been distributing petrol via a ration card system since April.

The Iraqi Oil Ministry this month introduced a nationwide rationing scheme for oil industry products used in the home, such as gas for cooking and kerosene for lamps, and plans to extend this to vehicle fuels later this year.

The ministry hopes that rationing will ease a fuel distribution crisis which has resulted in long lines at petrol stations and an upsurge in smuggling.

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Traffic in the Kurdistani city of Duhok. Drivers in Iraqi Kurdistan are given a limited amount of petrol per month that is supposed to be controlled by ration cards. (Photo courtesy Kurdistan Regional Government)
But the experiment in Kurdish areas is not encouraging. Many people simply sell their fuel ration onward the moment they collect it, instantly doubling their money.

Each car owner is entitled to buy 240 liters (64 gallons) of fuel a month, but has to make eight separate visits, spending one of the 30 liter (eight gallon) sections marked off on the ration card. Taxi drivers are allowed a higher monthly maximum of 320 liters (84 gallons).

The ration cards are changing hands at many times their value. Each 30 liter unit allows the owner to buy that amount of petrol for between 2,000 and 3,000 dinars, but on the streets it will be traded for 4,000 to 5,000 dinars.

Complete monthly ration cards are going for as much as 100,000 dinars.

Taxi driver Nuraddin Hasan said that is the price paid by racketeers at the al-Salam petrol station in Kirkuk, where he is a regular customer – and he is outraged. “I have complained to officials, but nothing came of it,” he said.

Rationing has transformed the black market in fuel itself into much easier transactions involving the coupons that give access to it.

“Instead of queuing for long hours to get petrol, the taxi drivers are buying and selling ration coupons, which makes profitable work,” said Ahmed Sultan, manager of the al-Salam petrol station.

Adolescent boys are involved as intermediaries. Some, like 13 year old Ali Salim, trade in petrol bought from drivers who have ration cards. Ali Salim spends 12 hours a day shifting bottles of fuel to provide for a family of 10 in which he is the principal breadwinner.

But Mohammed Abdul Qadir, 16, is part of a new breed of traders, and has just spent his summer holidays dealing in ration cards without handling the commodity itself.

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Kurdish drivers are dealing with petrol rationing although Kirkuk has substantial oil reserves. (Photo courtesy Kurdistan Regional Government)
“We buy the coupons off drivers,” he explained. “It’s easier to make a profit than from selling the petrol itself, which is banned by the police anyway.”

A more complex variant on the theme is operated by some of the petrol stations, according to a pump attendant who spoke to this reporter on condition of anonymity.

He said petrol stations quietly buy up expired or invalid ration cards from members of the public, record them as legitimate sales on the accounts they submit to the local oil ministry office, and then sell the petrol at a huge mark-up.

Fadhil Shafiq, who is director of the petroleum products division at the Iraqi Oil Ministry’s Kirkuk branch, says that rationing, flawed though it may be, is better than no system at all.

The underlying problem, Shafiq believes, is that lack of refineries to process the crude extracted from Kirkuk’s large oilfields.

“The government buys in petrol from Turkey, but it would be better to use the money to build a refinery in Kirkuk,” he said.

Other argue that people are only exploiting the system because they are so desperate to make a living. Yashar Izzet, who works at the Babagurgur petrol station in Kirkuk, said the trade in ration cards would disappear if people had proper jobs.

“The young lads have nothing else they can do, so they are willing to make money from any kind of work,” he said.