Real reason as to why smuggling takes place is the price differential. Incidentally, the price differential is also ‘Raison D’etre’ of all the trade in world. You buy the goods where these are cheaper and trade it where the same demand high prices.
Iranian fuel products have been smuggled into Pakistan via Baluchistan ever since I can remember. As Sales Development Manager of Esso in the 1970’s, this was a major headache. We also concluded that extra Customs /Security personnel did not translate into lesser smuggling but more money in the pockets of Customs & Security officials. By the way, fuel products from Pakistan are often smuggled into Afghanistan along the Baluchistan & KPK border.
During my time, most of the Iran /Pakistan & Pakistan/ Afghanistan border trade was conducted in the local currencies. Smugglers made money by selling cheaper Iranian gasoline/ diesel in Pakistan; buying Pakistani goods with the rupees thus earned and selling the same in Iran. Citing a personally known incident; once purchases of kerosene by a Reseller Agent (he bought in tank lorries and sold to the retailers in tin cans) in the Quetta area increased manifold in a short time. I travelled to Pishin to find out what magic wand this Reseller had suddenly found. Apparently the gentleman was smuggling kerosene to Afghanistan and smuggling back Korean car & truck tyres for the Pakistan market.
We stopped deliveries of excess kerosene to him but he started buying form Daud Petroleum instead. At that time Daud Petroleum was an independent company. After ZA Bhutto nationalised Daud Petroleum & Pakistan Nation Oil (PNO) and purchased Esso in 1976; all the three merged into PSO.
Looking at it dispassionately; only harm in smuggling is the lesser excise revenue for the National Exchequer. Since the quantity smuggled from Iran reduces the import requirement, this should be weighed against the FE that State Bank would need to dish out for importing the same at much higher international price. In my opinion the two balance out.
