Private Iraqi companies could import as much as 500,000 tonnes of fuel this year after the government introduced incentives for importers, the head of the Trade Bank of Iraq said on Wednesday.
Importers were bringing in gasoline, gas oil and liquefied petroleum gas (LPG), mostly to Iraq’s northern Kurdish region, bank president Hussein Al-Uzri told Reuters on the sidelines of a conference. The bank supports importers with letters of credit, he said.
The private sector has already imported around 200,000 tonnes this year, mostly from central Asia, but also from Iran and the Gulf, Uzri said.
“We are slowly introducing this,” he said. “This business should be in the private sector. The private sector is more efficient, offers better prices and distribution and less corruption.”
Iraq offered a two-year tax exemption from taxes on imported oil products earlier this year as it looked to relieve fuel shortages.
Iraq has the world’s third largest proven oil reserves but its refineries have suffered from a decade of sanctions and four years of violence since the U.S.-led invasion in 2003, hampering investment.
As a result, the country is short of fuel and needs imports. It paid heavy subsidies of $6 billion in 2005 and $2.5 billion last year to keep prices low.
Iraq is committed to phasing out subsidies under a $715 million economic programme agreed with the Washington-based IMF.
The aim is to limit a thriving Iraqi black market in fuel, which is believed to channel funds to anti-US insurgents, and encourage the money currently used by the government for subsidies to be better spent.
Fuel shortages meant private importers were able to sell at market prices, Uzri said.
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