News / Middle East

Syria Doubles Diesel Prices to Cut Cost of Subsidies

A group of men smuggle diesel fuel from Syria to Turkey hoping to sell it at a higher price, across the al-Assi River in Darkush town, Idlib, May 26, 2013.
A group of men smuggle diesel fuel from Syria to Turkey hoping to sell it at a higher price, across the al-Assi River in Darkush town, Idlib, May 26, 2013.
Reuters
Syria has nearly doubled the price for diesel fuel to cut back on the cost of maintaining generous subsidies to the population after two years of war that crippled its economy.
 
The new official price of 60 pounds (33 U.S. cents) for a liter of diesel from state petrol stations is still a fraction of the commercial price for the fuel on the black market, the only way it is available in many parts of Syria.
 
Even in government-held areas, petrol stations that sell subsidized fuel at the official price often run out or experience long lines.
 
Syria's government boasts that it has managed to maintain subsidies on food, fuel and energy that give it some of the lowest official prices in the region, despite a war that has killed 93,000 people and displaced millions.
 
However, it is not clear how much of the subsidized goods actually reaches the population. The United Nations says many Syrians have little access to subsidized bread and have to pay commercial prices many times higher.
 
Businessmen and trade officials said this week's diesel price increases, which were not publicized widely, reflect growing official concern about the hard currency cost of imports needed to maintain the subsidies.
 
The price of a liter of diesel, used for transport, as heating oil and to power army tanks military vehicles, was raised to 60 pounds from 35 pounds, the biggest hike since the war's start. The price of gasoline, now 85 pounds a liter, has not yet gone up but is also expected to be raised soon.
 
Before the war diesel was sold for 20 pounds a liter under a subsidy program that then cost $8 billion a year.
 
The pound has lost about 75 percent of its value against the dollar during the conflict. Economists warn that Syria could be heading for hyperinflation with inflation running at around 60 percent since the start of the year.
 
Western sanctions do not bar companies from selling diesel to Syria, but restrictions on some financial transactions have raised the cost of imports and cut the exports that Syria uses to raise hard currency.
 
“With the increase in the value of the dollar, import costs have doubled. Our ability to export has dropped and on the other hand imports have increased in value and quantities,” Economy Minister Mohammad Zafir Muhabik said in an interview with state television.
 
A source close to a government procurement agency, who requested anonymity, said the price hike was given impetus by the increasing need to route imports over land through Lebanon rather than through Syria's own Mediterranean ports. The source said imports through Lebanon in the first four months of this year were already equal to all of 2012.
 
Imports via Lebanese ports incur lower insurance costs than through Syria's Mediterranean ports and provide better security of supply to Damascus. Syria's own ports are far from the capital over routes through areas that have seen fighting.
 
Smaller shipments from Iran have also arrived by sea to Syria's Latakia and Tartous ports in recent months. Syria sends surplus gasoline to Iran in return for Iranian diesel.
 
Rebels control most of Syria's main eastern oil-producing areas that produced around 380,000 barrels of crude oil daily,  starving the government of a major hard currency earner.
 
Syrians have been grappling with fuel supply shortages for months, with areas under rebel control worst hit. That has helped reduce the cost of the subsidies for the government, since so many Syrians have no access to subsidized goods.
 
“We are facing worse shortages in our besieged areas, where people are relying on the black market instead of risking going through road blocks to petrol stations in regime-held areas,” said Rami al-Sayyed, a resident of the southern, rebel-held Damascus neighborhood of Hajar al-Asswad.
 
The price hike follows a debate within the Syrian cabinet and government whether to reduce subsidies, which use up two thirds of the budget. The government has also argued that raising prices will reduce smuggling of oil products out of Syria to neighboring countries such as Lebanon and Turkey.
 
“A lot of our petroleum products are being smuggled to neighboring countries as a result of its low prices,' said Muhabik.
 
The price increases in petroleum products have neutralized the impact of public sector salary increases on Saturday of between 20 to 40 percent that were announced to ease the social impact of the plunge in the local currency.
 
Already, public transport costs have shot up by an a average 20 percent this week alone, residents contacted by phone said. Many bakeries rely on subsidized diesel to run their ovens.

You May Like

Obama: Alaskans Feel Signs of Climate Change

They're seeing bigger storm surges as sea ice melts, more wildfires, erosion of glaciers, shorelines More

Katrina Brought Enduring Changes to New Orleans

The city’s recovery is the result of the people and culture the city is famous for, as well as newcomers and start-up industries More

Magical Photo Slides Show Native Americans in Late 1800s

Walter McClintock spent 20 years photographing the Blackfoot Indians and their vanishing culture at the dawn of the modern age More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Colombians Flee Venezuela as Border Crisis Escalatesi
X
August 27, 2015 2:08 AM
Hundreds of Colombians have fled Venezuela since last week, amid an escalating border crisis between the two countries. Last week, Venezuelan President Nicolas Maduro ordered the closure of a key border crossing after smugglers injured three Venezuelan soldiers and a civilian. The president also ordered the deportation of Colombians who are in Venezuela illegally. Zlatica Hoke reports.
Video

Video Colombians Flee Venezuela as Border Crisis Escalates

Hundreds of Colombians have fled Venezuela since last week, amid an escalating border crisis between the two countries. Last week, Venezuelan President Nicolas Maduro ordered the closure of a key border crossing after smugglers injured three Venezuelan soldiers and a civilian. The president also ordered the deportation of Colombians who are in Venezuela illegally. Zlatica Hoke reports.
Video

Video Is China's Economic Data Accurate?

Some investors say China's wild stock market gyrations have been made worse by worries about the reliability of that nation's economic data. And some critics say the reports can mislead investors by painting an unrealistically-strong picture of the economy. A key China scholar says Beijing is not fudging ((manipulating)) the numbers, but that the economy is evolving quickly from smoke-stack industries to services, and the ways of tracking new economic activity are falling behind the change. V
Video

Video Next to Iran, Climate at Forefront of Obama Agenda

President Barack Obama this week announced new initiatives aimed at making it easier for Americans to access renewable energy sources such as solar and wind. Obama is not slowing down when it comes to pushing through climate change measures, an issue he says is the greatest threat to the country’s national security. VOA correspondent Aru Pande has more from the White House.
Video

Video Shipping Containers Provide Experimental Housing

Housing prices around the San Francisco Bay area are out of reach for many people, so some young entrepreneurs, artists and tech industry workers are creating their own houses using converted shipping containers. But as VOA's Mike O’Sullivan reports from Oakland, the effort requires ingenuity and dealing with restrictive local laws.
Video

Video Arctic Draws International Competition for Oil

A new geopolitical “Great Game” is underway in earth’s northernmost region, the Arctic, where Russia has claimed a large area for resource development and President Barack Obama recently approved Shell Oil Company’s test-drilling project in an area under U.S. control. Greg Flakus reports.
Video

Video Philippine Maritime Police: Chinese Fishermen a Threat to Country’s Security

China and the Philippines both claim maritime rights in the South China Sea.  That includes the right to fish in those waters. Jason Strother reports on how the Philippines is catching Chinese nationals it says are illegal poachers. He has the story from Palawan province.
Video

Video Technique May Eliminate Drill-and-Fill Dental Care

Many people dread visiting dentists because they're afraid of drills. Now, however, a technology developed by a British firm promises to eliminate the need for mechanical cleaning of dental cavities by speeding a natural process of tooth repair. VOA’s George Putic reports.
Video

Video China's Spratly Island Building Said to Light Up the Night 'Like A City'

Southeast Asian countries claim China has illegally seized territory in the Spratly islands. It is especially a concern for a Philippine mayor who says Beijing is occupying parts of his municipality. Jason Strother reports from the capital of Palawan province, Puerto Princesa.
Video

Video Ages-old Ice Reveals Secrets of Climate Change

Ice caps don't just exist at the world's poles. There are also tropical ice caps, and the largest sits atop the Peruvian Andes - but it is melting, quickly, and may be gone within the next 20 years. George Putic reports scientists are now rushing to take samples to get at the valuable information about climate change locked in the ice.
Video

Video French Experiment in Integrating Roma Under Threat

Plans to destroy France’s oldest slum have sparked an outcry on the part of its Roma residents. As Lisa Bryant reports from the Paris suburb of La Courneuve, rights groups argue the community is a fledgling experiment on integrating Roma who are often outcasts in many parts of Europe.
Video

Video Kenyans Turn to Agriculture for Business

Each year Kenyan universities continue to churn out graduates for the job market despite the already existing high rate of unemployment among youth in the country. Some of these young men and women have realized that agriculture can be as rewarding as any other business or job, and they are resorting to agribusiness in large numbers as a way of tackling unemployment. Rael Ombuor reports for VOA.
Video

Video First Women Graduate Elite Army Ranger School

Two women are making history for the U.S. Army by proving they are among the toughest of the tough. VOA's Carla Babb reports from Fort Benning, Georgia as 94 men and those two women rise as graduates of the difficult Ranger school.

VOA Blogs