AMMAN- Two new gas and fuel companies emerged recently in Hayat Tahrir al-Sham (HTS)-controlled areas in northwest Syria. Kaf Trading was founded in late 2019 but opened its first petrol station at the end of November, while Al-Shahba Petroleum was established and opened its first petrol station this month.
Some interpreted these developments in Idlib’s fuel market as an attempt to appease popular discontent around rising fuel prices and the monopolistic nature of the fuel market.
A fuel market under HTS control
For the past two years, Idlib’s fuel market has been monopolized by Watad Petroleum, a company closely affiliated with HTS.
Watad became known to the public in January 2018, when the HTS-affiliated Salvation Government granted the company exclusive rights over the import and sale of oil and gas from Turkey.
Before 2018, fuel was imported from regime-controlled areas and the Syrian Democratic Forces (SDF)’s territory in northeast Syria. However, a Turkish-led offensive on the Kurds in the spring of 2018 severed supply lines with northeast Syria. Over two million people in the northwest were affected by a fuel shortage in the heart of winter.
While the exact nature of the relationship between the HTS and Watad is undetermined, the latter undoubtedly represents one of HTS’s key economic arms. The armed group can also leverage its control over the fuel supply politically. In a remarkable turn of fortunes, HTS and Watad organized the sale of gas cylinders to regime-held areas in January 2019 following severe gas shortages, only one winter after Idlib’s fuel and gas crisis.
Predatory practices and growing criticism
Watad, however, is subject to growing popular criticism due to rising fuel prices. “In general, the price of fuel changes from time to time following changes in the Turkish Lira [TL] exchange rate to the dollar,” Emad Saleh (a pseudonym), an Idlib resident, told Syria Direct. But “the problem is that there is sometimes no correlation between rising prices and the evolution of the exchange rate.”
The price of quality refined diesel has increased consistently since January 2018 from 400 Syrian pounds (SYP) per liter ($0.86 according to the black market exchange rate at the time) to SYP 500 per liter ($1.07) in October 2019. This was the highest price recorded since July 2017 by REACH, a monitoring NGO, aside from a spike during the Turkish offensive on Afrin.
Although prices slumped across the board for all fuels (imported and locally refined) in March and April 2020 following the global downturn of fuel markets, they rose by 20% in May and 64% in June, according to humanitarian market monitoring. Between July 13 and October 1, Watad further raised the fuel prices seven times.
Watad further monopolized the fuel market by taking over small-scale, locally owned facilities refining crude oil imported from northeast Syria, which represents a lower-quality alternative to imported fuel. This move was met with resistance from those operating refineries. HTS even arrested one of its commanders who refused to hand over his private oil burners.
Watad has also come under fire from civil society organizations. Muhammed Abu Ahmed (a pseudonym), an employee of a civil society organization, told Syria Untold in a 2019 article that HTS approached them about supplying fuel for their humanitarian projects. “When we rejected their offer to supply the fuel, especially since there are much lower prices in the market, they stopped food shipments from the Bab al-Hawa crossing and threatened to close the office until we agreed they would supply half the quantity.”
This mounting criticism may have pushed HTS to increase the number of players on Idlib’s fuel market, if only to quell dissatisfaction with Watad. The specialized economic publication, Syria Report, suggests the three companies could also “represent competing interests within HTS as different figures seek access to the lucrative market.”
In the coming months
In either case, it is widely believed that this competition is unlikely to have a significant impact on prices, as the three fuel companies are perceived to be closely linked to HTS.
Officials from Kaf, Watad and the Salvation Government assured that the companies were unconnected competitors, but this was greeted with skepticism by local residents.
“On the first day, Kaf advertised prices that were two Turkish piasters cheaper [than its competitor]. But on the second day, the [two company’s prices] were identical,” Ammar Muhammad (a pseudonym), an Idlib resident, told Syria Direct. “What is the use of Kaf if there is no competition in the market?”
In early December, despite the new competition, Watad raised the price of imported gasoline to TL 4.76 ($ 0.61) and of imported diesel to TL 4.80 ($ 0.62).
While Al-Shahba’s first price bulletin released on December 6 initially advertised lower prices than Watad (TL 4.60 for imported gasoline and 4.70 for imported diesel), on December 8 these prices respectively increased to TL 4.79 and TL 4.74, nearly reaching Watad’s prices. On December 12, the difference between the three companies’ prices did not exceed TL 0.02.
“People took [the creation of a new company] with irony,” Saleh said, “because it is allegedly owned by the same people.” Orient News even compared the competition between Watad and Kaf to the one between Syriatel and MTN that were both owned by Rami Makhlouf.
If the rise in fuel prices remains unchecked, “there will be a strong negative impact on the population in Idlib,” according to Muhammad, listing heating, industry and transportation as affected sectors. “The thing that will be impacted the most is bread, because the bakeries depend on diesel to run the generators,” Saleh warned, so “the high prices will affect people in all seasons.”
Although many in northwest Syria have already adapted to the high cost and low availability of fuel in previous winters by resorting to almond husk, wood, or old fabric as a combustible, for some, fuel and gas remain essential.
“Fuel is linked to all the necessities of life: every increase in its price is matched by an increase in the cost of life,” Muhammad added.