Venezuelan Service Members Rule Gasoline Black Market

Venezuelan Service Members Rule Gasoline Black Market

By Diálogo
June 29, 2020

On May 18, a commission of Venezuela’s General Military Counterintelligence Directorate (DGCIM, in Spanish) arrested eight service members belonging to units of the Bolivarian National Guard (GNB, in Spanish) and the Bolivarian Navy, stationed in Bolívar state.

According to the Infobae news agency, Military Prosecution representatives stated during the first hearing that the detainees were connected to members of the criminal gang El Ciego, which operates in the mining town of La Paragua, Bolívar state. The indictment says that the service members were paid in gold, in exchange for supplying fuel tanks to criminals, who resold them to drivers at different supply points in the state’s south.

Among the arrested service members are GNB Lieutenant Colonel Pedro José Arévalo, commander of the 620th Detachment, and Bolivarian Navy Commander Robert Casanova Mora, chief of the 52nd Riverine Marine Corps.

The investigation revealed a pattern of relationships that has been replicated in different parts of the country, where service members use their control over most phases of hydrocarbon commercialization in order to obtain profits on the black market. According to Asdrúbal Oliveros, director of Ecoanalítica, a Venezuelan economic and financial consulting firm, this situation tends to worsen the shortage of fuel.

“Now it makes perfect sense for the government to let the black market grow. This becomes a source of income for military groups and also prevents a political breakdown,” he said.

According to Oliveros, the country’s paralysis worsened after the national emergency decree was issued on March 13. Fuel consumption declined from 180,000 barrels a day to 90,000, he said. Current production, however, doesn’t even cover half of the fuel required to satisfy domestic demand.

Estimates vary regarding the percentage of gas diverted to the black market. According to Oliveros, it could be 60 percent. By contrast, Juan Fernández, representative of the Venezuelan civil association Gente del Petróleo (Oil People), thinks it’s about half.

Both experts agree that the black market for gasoline has been growing, not only in places where it already existed, such as the Andean states, but also in the country’s capital, where prices on the illegal market doubled in the second and third weeks of May, reaching up to $3 per liter.

As the fuel shortage worsened, the Ministry of Defense ordered the GNB and the other components of the Bolivarian National Armed Forces to take control of gas stations. This includes surveillance over the long lines leading up to the gas pumps. The mission is not free of conflicts. On May 14, drivers, who said to have been waiting for two days, blocked the highway connecting Caracas with Guarenas (a city in Miranda state) when service members assigned to a gas station reduced the gas quota to less than 10 liters per vehicle.

According to Mercedes de Freitas, director of the nongovernmental organization (NGO) Transparencia Venezuela, the black market’s process begins with making profits  by giving preferential places to drivers in the waiting line. De Freitas explains that the black market’s dynamics can be seen when traveling along the Caribbean Transverse Highway, which connects Zulia state with the Colombian city of Maicao.

“Near the Paraguachón border crossing [a community in Maicao], the Army is there for two illegal reasons: selling gasoline and seizing goods […]. Everything happens with the National Armed Force’s approval,” she said.

The NGO spokesperson explained that the national oil industry crisis changed the way criminal groups with military participation operate, as they no longer facilitate the passage of gasoline from Venezuela to Colombia.

“Since there’s no gasoline, it’s not possible to send it abroad, which was a huge business. But they do sell it here,” she added.

“The root problem is that Venezuela will not be able to solve this issue completely, as long as the regime continues to lead the operations of this business,” Fernández said.