Mexico president attacks $US3b of petrol theft each year, leading to servo queues

Dave Graham
16 Jan 2019
Afr
Mexico City | President Andres Manuel Lopez Obrador says widespread fuel theft extended to oil drilling platforms and he pledged to take actions to alleviate shortages sparked by his crackdown on gasoline thieves.
Lopez Obrador said there had been “acts of sabotage at crude oil drilling platforms … We have identified the problem and we are also going to face it,” he told reporters.
In a bid to halt rampant fuel theft, Lopez Obrador has ordered the closure of important fuel pipelines, which has caused shortages at gas stations and concerns of an impact to the economy if the shortfalls were prolonged. The government was looking at purchasing an additional 500 tanker trucks to distribute gasoline and that officials were asking private companies to increase fuel imports, he said.
“Very soon things will go back to normal,” he said. “We are on the way to solving the problem in a definitive way.”
Lopez Obrador’s offensive against fuel robbers marks the leftist’s first major effort to tackle entrenched corruption since taking office on December 1. It was conceived just after Christmas as a bold plan to attack corruption, but state governments, businesses and consumers were caught out by the decision.
He said that he was deploying soldiers to guard oil installations and began cutting supply from pipelines that have been bled for years by thieves.
That, in turn, led to more than a week of severe fuel shortages, shuttered gas stations and lines of motorists queuing around city blocks waiting hours to fill their tanks.
If he succeeds in eradicating a parallel fuel distribution network, which the government says has been run largely with the connivance of corrupt employees inside state oil firm Pemex, the government stands to recoup as much as $US3 billion ($4.2 billion) lost in such theft, official statistics say.
The pipeline shutdowns blindsided Mexicans when gas stations started to run dry in some of the country’s largest cities.
Former Mexico City mayor Andres Manuel Lopez Obrador was sworn in as president of the country of 125 million people in December, having campaigned on eradicating widespread corruption. MARCO UGARTE
Officials in three affected states told Reuters they were not warned in advance about the supply cuts.
“There was zero coordination,” said Alejandro Guzman, head of economic development in the government of Jalisco, home to the country’s second-biggest city, Guadalajara. “We started to notice when the gas stations began closing.”
He estimated only a quarter of gas stations in the western half of Guadalajara – the country’s second-biggest city with a population of 5 million – had fuel during the past week. Still, once the shortages became apparent, Pemex’s new management started to work well with the state to try to address the problem, he said.
​Government officials said three senior Pemex executives in charge of pipelines were under investigation over the fuel thefts, and that more than a dozen people had had their bank accounts blocked. None of the suspects were named.
The new Mexican government says a ring of corrupt employees working for state oil monopoly PEMEX are running a parallel distribution network with the theft of $US3 billion worth of petrol each year. Susana Gonzalez
The haphazard roll-out of the plan, in which millions of litres of fuel are delivered each day by tanker truck instead of by pipeline, is a new test of investor confidence in Lopez Obrador, who rocked markets by cancelling a partly-built $US13 billion ($18.1 billion) airport five weeks before taking office.
If distribution problems persist, industry groups say manufacturing facilities like auto plants could soon idle. The central bank has warned that fuel bottlenecks could stoke inflation and crimp growth in an already slowing economy.
Already, a new black market is emerging for gasoline resold at a premium by people willing to spend the time standing in line. Usually bustling food markets in Mexico City have quietened down as shoppers and suppliers stay home to conserve fuel.
Calling it the “first real domestic crisis” of the new administration, Andres Rozental, a former deputy foreign minister, said the fuel controversy had added to previous question marks about Lopez Obrador’s style of governing.
“There’s not enough communication and not enough coherence in the strategy,” said Rozental, a longtime diplomat turned business consultant.
Given the complexity and cost of protecting thousands of kilometres of pipeline, some analysts believe Lopez Obrador will have to back down before the theft is fully under control. He says he will only reopen the pipelines when they are secured.
Polls suggest Lopez Obrador’s base, though, still has his back.
A survey of 1000 voters between January 9-11 by Consulta Mitofsky said 50 per cent backed his plan, while 40 per cent wanted fuel supply returned to normal immediately. Lopez Obrador won office with just over 53 per cent of the vote.