VILNIUS — Drivers in Lithuania are increasingly turning to illegally imported fuel that can be bought over the black market as petrol prices rise.

Given the hikes in excise taxes and removal of exemptions last year, fuel prices in Lithuania are too high for many drivers with the price of one liter of petrol hovering slightly above the 4 litai mark (€1.16). With purchasing power declining and inflation continuing, many drivers are looking for other options.

Trucks and smaller cars coming from Belarus and Russia bring the fuel over the border and deliver the fuel directly to [private_supervisor]customers.

The price of black market fuel is around three litai per liter, about 25 percent cheaper than fuel at petrol stations. Though the quality of the fuel is sometimes questionable, Lithuanians continue to buy the fuel.

Finding the fuel is as easy as searching the internet and finding the phone numbers. Prices and delivery conditions can be negotiated.

A senior source within Lithuania’s customs department who wished to remain anonymous admitted to Baltic Reports that the black market fuel industry has always continued since independence and that the practice is hard to crack down on because of its scale.

Most of the fuel comes into Lithuania through the southern border crossings with Belarus, the source said.

The problem is that bringing fuel over the border cannot be controlled because vehicles are allowed to bring what is in their car plus 10 liters extra without any problems. Drivers simply siphon their tanks when they reach their customers and drive back over the border for more.

Selling the fuel is illegal, however the police don’t have enough power to control the situation.

Taxes too high?

Giedrus Kadziauskas, vice president of Lithuanian Free Market Institute told Baltic Reports that the government needs to relax its taxing policy if it will stop the illegal sale of fuel.

“The Lithuanian government has two options: either strengthen criminal prosecution or minimize economic motivation for smuggling. In our view, the government should lower excise duties on gasoline in the hope that the grey market in fuel will contract and more people would be willing to buy it on the legal market,” he said.

The institute conducts surveys every half year to monitor the grey market. The most recent survey found that 27 percent of the country’s GDP this year will be run on the shadow market.

“Forty-two percent of business units whether business or private companies act at least in some way in the shadow market,” Kadziauskas said. “This shows there are many companies whose main activities are legal and transparent, but some activities, whether it be fuel, or paying some sort of salary without taxes, is in the grey. This is huge in our estimation.”

He said that the fuel situation is no surprise and expects the trade to flourish in future.

“Of course since there is a price difference there is always the tendency for consumers to buy the cheaper one. Last year excise taxes were raised and then some of them were lowered, but the price gap between the Lithuanian and Belarusian and Russian markets is very high and there is a huge motivation for people to buy cheaper gasoline.” [/private_supervisor] [private_subscription 1 month]customers.

The price of black market fuel is around three litai per liter, about 25 percent cheaper than fuel at petrol stations. Though the quality of the fuel is sometimes questionable, Lithuanians continue to buy the fuel.

Finding the fuel is as easy as searching the internet and finding the phone numbers. Prices and delivery conditions can be negotiated.

A senior source within Lithuania’s customs department who wished to remain anonymous admitted to Baltic Reports that the black market fuel industry has always continued since independence and that the practice is hard to crack down on because of its scale.

Most of the fuel comes into Lithuania through the southern border crossings with Belarus, the source said.

The problem is that bringing fuel over the border cannot be controlled because vehicles are allowed to bring what is in their car plus 10 liters extra without any problems. Drivers simply siphon their tanks when they reach their customers and drive back over the border for more.

Selling the fuel is illegal, however the police don’t have enough power to control the situation.

Taxes too high?

Giedrus Kadziauskas, vice president of Lithuanian Free Market Institute told Baltic Reports that the government needs to relax its taxing policy if it will stop the illegal sale of fuel.

“The Lithuanian government has two options: either strengthen criminal prosecution or minimize economic motivation for smuggling. In our view, the government should lower excise duties on gasoline in the hope that the grey market in fuel will contract and more people would be willing to buy it on the legal market,” he said.

The institute conducts surveys every half year to monitor the grey market. The most recent survey found that 27 percent of the country’s GDP this year will be run on the shadow market.

“Forty-two percent of business units whether business or private companies act at least in some way in the shadow market,” Kadziauskas said. “This shows there are many companies whose main activities are legal and transparent, but some activities, whether it be fuel, or paying some sort of salary without taxes, is in the grey. This is huge in our estimation.”

He said that the fuel situation is no surprise and expects the trade to flourish in future.

“Of course since there is a price difference there is always the tendency for consumers to buy the cheaper one. Last year excise taxes were raised and then some of them were lowered, but the price gap between the Lithuanian and Belarusian and Russian markets is very high and there is a huge motivation for people to buy cheaper gasoline.” [/private_subscription 1 month] [private_subscription 4 months]customers.

The price of black market fuel is around three litai per liter, about 25 percent cheaper than fuel at petrol stations. Though the quality of the fuel is sometimes questionable, Lithuanians continue to buy the fuel.

Finding the fuel is as easy as searching the internet and finding the phone numbers. Prices and delivery conditions can be negotiated.

A senior source within Lithuania’s customs department who wished to remain anonymous admitted to Baltic Reports that the black market fuel industry has always continued since independence and that the practice is hard to crack down on because of its scale.

Most of the fuel comes into Lithuania through the southern border crossings with Belarus, the source said.

The problem is that bringing fuel over the border cannot be controlled because vehicles are allowed to bring what is in their car plus 10 liters extra without any problems. Drivers simply siphon their tanks when they reach their customers and drive back over the border for more.

Selling the fuel is illegal, however the police don’t have enough power to control the situation.

Taxes too high?

Giedrus Kadziauskas, vice president of Lithuanian Free Market Institute told Baltic Reports that the government needs to relax its taxing policy if it will stop the illegal sale of fuel.

“The Lithuanian government has two options: either strengthen criminal prosecution or minimize economic motivation for smuggling. In our view, the government should lower excise duties on gasoline in the hope that the grey market in fuel will contract and more people would be willing to buy it on the legal market,” he said.

The institute conducts surveys every half year to monitor the grey market. The most recent survey found that 27 percent of the country’s GDP this year will be run on the shadow market.

“Forty-two percent of business units whether business or private companies act at least in some way in the shadow market,” Kadziauskas said. “This shows there are many companies whose main activities are legal and transparent, but some activities, whether it be fuel, or paying some sort of salary without taxes, is in the grey. This is huge in our estimation.”

He said that the fuel situation is no surprise and expects the trade to flourish in future.

“Of course since there is a price difference there is always the tendency for consumers to buy the cheaper one. Last year excise taxes were raised and then some of them were lowered, but the price gap between the Lithuanian and Belarusian and Russian markets is very high and there is a huge motivation for people to buy cheaper gasoline.” [/private_subscription 4 months] [private_subscription 1 year]customers.

The price of black market fuel is around three litai per liter, about 25 percent cheaper than fuel at petrol stations. Though the quality of the fuel is sometimes questionable, Lithuanians continue to buy the fuel.

Finding the fuel is as easy as searching the internet and finding the phone numbers. Prices and delivery conditions can be negotiated.

A senior source within Lithuania’s customs department who wished to remain anonymous admitted to Baltic Reports that the black market fuel industry has always continued since independence and that the practice is hard to crack down on because of its scale.

Most of the fuel comes into Lithuania through the southern border crossings with Belarus, the source said.

The problem is that bringing fuel over the border cannot be controlled because vehicles are allowed to bring what is in their car plus 10 liters extra without any problems. Drivers simply siphon their tanks when they reach their customers and drive back over the border for more.

Selling the fuel is illegal, however the police don’t have enough power to control the situation.

Taxes too high?

Giedrus Kadziauskas, vice president of Lithuanian Free Market Institute told Baltic Reports that the government needs to relax its taxing policy if it will stop the illegal sale of fuel.

“The Lithuanian government has two options: either strengthen criminal prosecution or minimize economic motivation for smuggling. In our view, the government should lower excise duties on gasoline in the hope that the grey market in fuel will contract and more people would be willing to buy it on the legal market,” he said.

The institute conducts surveys every half year to monitor the grey market. The most recent survey found that 27 percent of the country’s GDP this year will be run on the shadow market.

“Forty-two percent of business units whether business or private companies act at least in some way in the shadow market,” Kadziauskas said. “This shows there are many companies whose main activities are legal and transparent, but some activities, whether it be fuel, or paying some sort of salary without taxes, is in the grey. This is huge in our estimation.”

He said that the fuel situation is no surprise and expects the trade to flourish in future.

“Of course since there is a price difference there is always the tendency for consumers to buy the cheaper one. Last year excise taxes were raised and then some of them were lowered, but the price gap between the Lithuanian and Belarusian and Russian markets is very high and there is a huge motivation for people to buy cheaper gasoline.” [/private_subscription 1 year]

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