News

In line with the Royal Law No. 36 of 2014, issued by His Majesty King Hamad bin Isa Al Khalifa of the Kingdom of Bahrain, on criminalizing and combating the smuggling of the subsidized oil by-products, National Oil and Gas Authority (NOGA) announced its full support and procedures followed in preparing drafts of necessary resolutions and regulations and submitting them to competent authorities for approval.

The law includes several articles. The first defines the crime of smuggling oil products of all kinds, mixed or unmixed, new or recycled, stating the penalty for each offence. The second article states that the presence of tankers loaded with oil products both within the customs office or any place dedicated to oil tankers without a NOGA permit is an attempt to smuggle those goods and is punishable with the same penalty. The third article gives the competent Minister authority to determining oil derivatives backed by a decision based on the approval of the Council of Ministers

This law complements the role of the regulatory and legislative branches of NOGA and provides a legislature cover to criminalize oil products smuggling. Law 36 also provides an article for the public prosecutor to apply in the crimes of smuggling of subsidized oil by-products, which is considered theft of public money that requires inflecting legal punishment.

The perpetrators of oil smuggling face imprisonment of six months up to three years, and a fine equivalent to the unsubsidized product and not more than threefold its value, or one of the two punishments, and the confiscation of such unlicensed, smuggled and exported oil products of all kinds, including adulterated and recycled by-products.

NOGA has sought to combat the phenomenon of smuggling of oil products, which has received wide support and also echoes public opinion in recent times. It has, in turn, prompted NOGA to prepare a draft law to criminalize and combat smuggling, which has several causes and factors, the most important being the desire to illegally make profit from the difference between the official selling price specified for petroleum products and the low subsidised price set by the state. Subsidised products are thus used for price rolling in the regional or global market for products including diesel, which is sold at very low price locally as compared with the diesel price in other countries in the region. The government subsidies for petroleum products in Bahrain range between 200 million dinars to 240 million dinars annually, while the quality of diesel produced locally meet international standards are is much sought after in global markets because of the high quality and the low percentage of sulphur, resulting in great demand.

The new law will undoubtedly reduce the smuggling of oil products to a great extent and allow supply of subsidized fuel in order to achieve the required balance between availability of petroleum products to the citizens at moderate prices and the elimination of attempts by some profiteering groups from taking advantage of price margins in neighbouring countries, which makes them resort to smuggling. Also, this law will improve the investment climate in the oil and gas services and achieve higher competitiveness in this sector. Therefore, NOGA urges investors who are interested in the oil sector to abide by the standard NOGA procedures to obtain the necessary licenses to trade in oil products and investment.