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News Article

Fuel Theft Remains Despite Government Efforts

By Peter Appleby | Wed, 09/30/2020 - 18:10

Fuel theft from pipelines and trucks continues to be a problem in Mexico, costing the government millions of pesos annually, while helping build criminal organizations like Guanajuato cartel Santa Rosa de Lima.

Today, an investigation by El Universal underlined the persistence of fuel theft, known locally as huachicol, and the lack of arrests of those committing these crimes. Despite efforts from PEMEX and the federal government to reduce fuel theft, the number of pipeline thefts reported between 2019 and this year not a great deal lower. Between January and August this year, 6,539 fuel thefts were reported in comparison to the 7,655 reported between January and August 2019.

Hidalgo has long been the state where most pipelines thefts take place and once again remains the top destination for huachicoleros. A reason for this is that Hidalgo acts as a pipeline hub, with four major pipelines meeting in the state. The Salamanca-Guadalajara, Salamanca-Leon, Salamanca-Morelia and Tula-Salamanca pipelines all connect here, in the city where one of PEMEX’s six refineries is located. The tragic Tlahuelilpan pipeline explosion that killed 73 people occurred on a stretch of the Tula-Salamanca pipeline.

Fuel theft is not new in Mexico and it is a profitable business for those involved.

An investigation by Bloomberg last year focused around a man that sold illegal fuel from an auto-repair store in Hidalgo. “He sells huachicol, as the stolen fuel is known, for about MX$13 (US$0.68) a liter, compared with the more than MX$20 (US$0.91) price at gas stations. A profit margin above 30 percent has helped him buy homes in several states and treatment for his diabetes,” the report stated. Parallel to criminal revenue generation, massive losses for PEMEX and the federal government have also been seen. Mexico Oil and Gas Review 2019 noted that huachicol has resulted in the loss of MX$147 billion (US$6.6 billion) between 2016 and 2019.

This profitability has fostered criminal gangs that have built up reputations as first-rate fuel theft outfits. But gangs like the Santa Rosa de Lima cartel of Guanajuato do not stay in fuel theft for long. The gang’s leader “El Marro” was arrested by Mexico’s special forces in August after murders in Guanajuato rocketed at the start of the year, as Santa Rosa de Lima fought rivals, the Jalisco New Generation Cartel. “El Marro” had made direct threats against the life of President Andrés Manuel López Obrador after his mother was arrested in June.

As El Universal’s report makes clear, few people are ever imprisoned for fuel theft. According to the report, federal, state and municipal police, as well as PEMEX’s own security apprehended 46 people in the first eight months of 2020. Nevertheless, only 13 of them have been imprisoned. “The number of people presented (in criminal court) between 2016 and August of this year totals 473, but only 98 are in prison, that is, only two out of 10 detainees,” said El Universal.

At the start of last year, just months after taking office, President López Obrador closed essential transport pipelines in the north of the country in an attempt to drive down thefts and thus save lost revenue. This ploy was successful but unsustainable. During the time, fuel shortages were reported throughout the north of the country.

The PEMEX Business Plan (2019-2023) also specified fuel theft as a primary target within the timeline and described how PEMEX must make sure it “ensures the physical integrity of facilities and information systems.” In 2018 alone, 12,581 thefts were reported from PEMEX and third-party pipelines with Puebla, Hidalgo and Guanajuato seeing the majority of those thefts. 

Peter Appleby Peter Appleby Journalist and Industry Analyst