‘Fiscal Huachicol’ and the million-dollar losses
The illegal importation of fuels – colloquially known as fiscal huachicol – had already been detected since the opening of the import market –in 2016, after the energy reform a few years earlier–, but the drop in the international price of fuels, for some months of the pandemic, made the activity more attractive, which has grown and decreased for periods in recent years.
Reports from the Tax Administration Service (SAT) say that 66.7 million barrels of fuel were illegally entered the country last year –the most recent data–, about 14% of the total demand for gasoline and diesel, which is also covered by the state-owned Pemex and the importing companies.
The agency has omitted to disclose information on what it calls “fuel smuggling” since the end of 2022. In any case, the numbers published by the supervisory body speak of a substantial increase in activity since the beginning of the six-year term: in 2018 the The illegal importation of fuels was estimated at 45.8 million barrels and by 2021 it had more than doubled to reach 102 million barrels and represent around 21% of the total fuels consumed in the country.
The way in which the SAT estimates this number is simple: the amount of gasoline and diesel produced by the state-owned Pemex, added to the amount brought into the country by importing companies, does not result in total national consumption and therefore its conclusion is that the rest comes into the country illegally.
In 2021, the year in which illegal imports registered their highest level, the SAT stopped receiving around 58,000 million pesos from IEPS collection related to oil market products. The maximum volume of that year is explained by the imposition of taxes on fuel imports: the low prices that gasoline was registering at the time –following the trend that began during the first months of the pandemic– caused the federal government to impose all of the taxes on imports and fuels in general.
The correlation of the figures is clear: when the federal administration applies a gasoline subsidy and then less taxes are paid, the amount of illegal imports decreases because it becomes a less attractive business for the groups that operate it. On the contrary, when the taxes are applied in full or in a high percentage, this amount of imports increases. And this explains the drop registered during 2022.
The unexpected effect of a war
The Russian invasion of Ukraine brought with it a considerable rise in the price of fuels and then the federal government applied up to a 100% subsidy to the IEPS for gasoline and diesel for a few weeks and also applied a complementary stimulus to fuel distributors .
From one moment to the next, illegal importation became less attractive because it did not make sense to import gasoline at a price similar to that sold in the regulated market. Suddenly, gasoline in Mexico –with all the stimuli applied– was cheaper than what was quoted in the import market and then importing it illegally made no sense.
“Illegal fuel sales effectively stopped after Mexico began subsidizing retail fuel prices in the wake of the Russian invasion of Ukraine in early 2022,” says an analysis by Dow Jones price benchmark OPIS. Company. “Illegal fuel volumes in the country began to rise after international prices returned to pre-invasion levels and the government resumed fuel taxes.”
As part of this dynamic, along with the growth in the illegal entry of gasoline, another segment tends to grow in imports: automotive lubricants, without any support for this rise.
Gasoline that enters as automotive lubricant
Lubricants are not subject to IEPS payment and are therefore used as an evasion method to introduce hydrocarbons, mainly through land customs. As an example, in 2021 the estimated national demand for lubricants was around 5.5 million barrels, but around 26 million barrels of products entered the country under this tariff fraction.
Industry sources identify some other ways of illegally importing fuel into the country: through the replica of invoices and legal documents necessary for the importation of hydrocarbons and through the declaration of a lower level than what is actually being imported. to the country. In both ways they manage to evade full payment of taxes and then offer a lower price to fuel traders and service station operators. Entrepreneurs interviewed ensure that the price of gasoline or diesel purchased in this alternative market can be between 5 and 2 pesos less than what is offered legally.
The sources also report that the main buyers of this type of fuel They are those that operate a self-consumption station, that is, transport companies or that operate a large number of vehicles. For them, buying this type of fuel represents high savings for their daily operation.