Peru's illegal mining is worth an estimated $3 billion a year

Authorities in Peru are implementing new fuel restrictions in an effort to hinder illegal mining operations, but such a measure may have the unintended effect of increasing fuel smuggling from neighboring Bolivia.

The regulations, which will be applied in the Madre de Dios region, require gas stations, transportation companies, and direct buyers of fuel to register with Peru's customs and tax agency, SUNAT, reported El Comercio.

Gas stations will only be allowed to pump fuel directly into vehicles and sell up to 110 gallons of diesel in containers to registered buyers. Customers will be required to present their national identification card, and their ID number and vehicle license plate information will be written on their receipt.

Under the new regulations, consumers will still be allowed to buy up to 10 gallons of diesel and 5 liters of gasoline without registering.

According to El Comercio, more than 60 gas stations had already signed up with Sunat as of June 3.

InSight Crime Analysis

Peru is home to a lucrative illegal gold mining industry worth an estimated $3 billion a year -- twice as much as the country's cocaine trade. In addition to passing a law banning all illegal mining in April 2014, the Peruvian government has tried a number of measures to clamp down on this illicit activity. Security forces have conducted raids on mining areas, destroying millions of dollars worth of equipment, and demolished illegal gold refineries on the coast.

As one of the principal areas for illegal gold mining, Madre de Dios makes sense as a testing ground for the government's new fuel restrictions. Of the more than 180,000 gallons of fuel that reportedly enter the Madre de Dios region on a daily basis, an estimated 85 percent is used for illegal mining. Gas guzzling mining machinery requires 70 to 80 gallons of fuel per day, making fuel demand in Madre de Dios a hundred times greater than in Lima, the nation's capital and largest city.

SEE ALSO: Peru News and Profiles

The region is situated on the border with Bolivia and Brazil, a geographical location that facilitates sex trafficking and cocaine smuggling, in addition to the movement of other contraband. Although restricting fuel consumption is a good idea in theory, large quantities of gasoline are smuggled into Peru from Bolivia, where the government subsidizes this product. With signficant criminal networks already in place in this region, restrictions on gasoline could easily lead to an increase in fuel smuggling from Bolivia.

Investigations

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