Tuesday, April 03, 2012

Will PA subsidize Gaza fuel going through Kerem Shalom?

Palestine Today reports that Hamas and the PA have reached a "partial agreement" to the fuel crisis in Gaza.

According to a senior political source in Gaza, power plant fuel and will enter Gaza through the Kerem Shalom crossing.

He said that the price of liter of industrial fuel to be supplied on a daily basis to Gaza would be 3.3 shekels (or 3.71 shekels), excluding tax.

If this is true, it means that the PA will heavily subsidize the cost of fuel to Gaza to a price similar to the price of smuggled Egyptian fuel, which is itself subsidized by Egypt for the use of Egyptians.

Assuming that the heavy-duty diesel is priced roughly similar petrol used in cars, the PA is agreeing to subsidize 60% of the cost, as Israeli fuel is now about 8 shekels a liter. (That includes high Israeli taxes, though - h/t Shtrudel)

This means that Hamas' blackmail has worked, and it has managed to use the threat of suffering Gazans to avoid paying market rates on fuel - and allowing Hamas to tax the cheap fuel for its own profit. And Western powers will now be paying for Hamas to be enriched by this political blackmail through PA subsidies.

According to this poorly translated and unsourced article, unemployed Gazans are waiting for hours at gas pumps to buy fuel at 3.75 shekels a liter in order to resell it for 5.2 shekels on the black market, earning about 350 shekels a day.