The Georgian market is glutted with fake automotive lubricants and spare auto parts, the South Caucasus countrys Union of Oil Product Importers told Lube Report.
The fake lube volume – mostly imported from Iran, Azerbaijan and Uzbekistan – account for at least 30 percent of Georgias 12,000-ton annual lubricant consumption, and it is a continuing problem for the country. Canisters of different lube brands and different sizes are filled with oils and liquids of unknown origin and standards of quality, UOPI Chairman Vano Mtvralashvili said during a telephone interview last week.
The group contends oil smuggling in Georgia is not a new phenomenon – that it has persisted for years, and UOPI only had a chance to speak out about it now. These oils and liquids have been mostly coming from Iran, with lesser volumes coming from Azerbaijan or Uzbekistan. Sold in 50-liter or 200-liter barrels as low-quality industrial oils, they legally pass all necessary border controls and duty procedures, Mtvralashvili said. Upon reaching the local market, he added, smugglers and illicit marketers wait for a day or two, then pour these products into canisters or drums labeled under popular brands such as Castrol, Shell, ExxonMobil, Aral or Total.
Georgias lubricant market is dependent on imports because no base oil or lubricant producer operates in the country.
Mtvralashvili said the counterfeiting trade thrives because of the difficult economic and social conditions in Georgia. Smugglers, who obtain Iranian oils at costs as low as $1.50 per liter, can resell at very low prices and still make a profit. End users are ignorant or have low purchase standards, so the counterfeiters low sales price becomes the dominant factor in the transaction.
UOPI suggests that if end users must have the choice to use low-priced oils, these products should be represented according to their quality and purpose, branded differently, and not counterfeited. The Georgian lubricant market faces a legislative vacuum in the petrochemical distribution area, and smugglers take advantage of it. No government body or agency regulates this matter, thus the enormous scale of the problem.
The situation with the spare auto parts market is equally bad. The largest share of the auto parts sold in Georgias retail stores and auto part shops is very low quality or is counterfeited, he noted.
According to UOPIs website, part of the Tbilisi-based groups main mission is to promote and pursue state anti-contraband and anti-counterfeit policy foster a competitive environment and support honest petrochemical products dealers.
In the first half of 2014, Georgia imported 5,300 tons of automotive lubricants, or 18 percent more than the same time last year, according to the countrys statistical department. It consumed 2,500 tons of industrial oils in 2013.
The biggest share of Georgias finished lubes comes from Turkey. In the first half of 2014, Turkish imports reached 1,300 tons and held a 24 percent share of the countrys total finished lube imports. Turkey was followed by Iran, which exported 1,000 tons of lubes to Georgia during 2014s first half, and held a 20 percent share, and by Germany, which exported 800 tons or 16 percent.
Last year 800,000 vehicles were in use on Georgias roads – 66 percent of them passenger cars and 17 percent of them sport utility vehicles. Buses accounted for 7 percent of the total vehicle population, and heavy duty vehicles for 10 percent.