Palestine Pulse

Rapid spread of gas stations fuels controversy in Gaza

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Article Summary
Gas stations are increasingly being invested in under the degenerating economic and humanitarian situation in the Gaza Strip, pointing at conflicting interests between Gaza’s Ministry of Finance and Planning and the Ministry of Local Government.

GAZA CITY, Gaza Strip — Many gas stations have recently opened in the Gaza Strip with local investors increasingly interested in this business, amid the worsening industrial, trade and development sectors that have resulted from the ongoing Israeli blockade and recurring wars.

Mahmoud al-Shawa, the chairman of Gaza's Petroleum and Gas Station Owners Association, told Al-Monitor there are 40 gas stations in Gaza City, out of a total of 300 throughout Gaza. There were 19 in Gaza City prior to May 2014.

Until recently, the majority of Gaza’s gas stations were very primitive, featuring old gas pumps and providing no services other than fueling vehicles.

Now, with local investors increasingly investing in this business, sophisticated gas stations are being built that feature modern design, electronic gas pumps and multiple services such as car washes and oil-change facilities.

Jihad Najjar, a businessman from Gaza City, decided two months ago to withdraw his investments from the ice cream business — as power cuts had resulted in cumulative losses — and invest in gas stations instead.

Najjar, who is building a new gas station near the coast in western Gaza City, told Al-Monitor, “The fuel business is one of the best fields to invest in at this time, since fuel is a basic commodity that everyone needs. Widespread poverty and unemployment are preventing residents from purchasing non-essential goods.”

He added, “The crises disrupting daily life in Gaza such as power cuts cannot damage fuel products" that have a long shelf life.

Abdullah Moheisen, a venture capitalist from Gaza City, has recently invested in the gas station business after withdrawing his investments from the construction and real estate sector.

He told Al-Monitor, “The real estate investment industry is no longer highly profitable. Buyers who are able to pay up front can rarely be found. Some pay in installments over a longer period, which means [we have to] freeze our funds until the payments are in and a yearslong wait.”

He said, “Things are different when it comes to fuel commodities with [customers] immediately paying for the service they obtain, which does not require us to freeze our money in the market.”

Moheisen added, “Although profits will decline with the growing number of gas stations, taking small profits regularly is better than having major profits intermittently.”

The Labeeb al-Helou and Sons Co. for Petroleum, General Trade & Contracting in Gaza City is organizing a competition whereby 12 models of the 2015 Fiat Panda can be won in a prize draw. They parked one of the cars in front of their new gas station — Al-Helou Petrol Station — that it opened three months ago in Wehda Street in the central Gaza Strip, in an effort to encourage drivers to refuel at their station and enter the drawing.

The director of Labeeb al-Helou and Sons, Mohammed Bakir, who has been working in the business since 2004 and owns three gas stations, told Al-Monitor, “The number of our customers decreased with the opening of new gas stations, prompting us to come up with this competition to attract new customers.”

He said building a new gas station is very expensive, as the acquisition of one dunam of land in central Gaza City would cost about $500,000 and the average cost to build a gas station would amount to $300,000.

Shawa condemned the ongoing opening of gas stations, saying, “It is a major mess. The number of gas stations [in Gaza] is ridiculous. Today you can find three gas stations in a single square kilometer.”

He said, “Although the number of stations is high, the local authorities [Hamas] have opened the door wide to licensing new gas stations so they can use the licensing fees to address their financial crisis, turning a blind eye to the market’s needs.” Shawa said the licensing fee amounts to nearly $30,000 and goes to Gaza’s Treasury.

Khaled Ayyash, secretary of the Construction and Urban Planning Central Committee at the Ministry of Local Government, told Al-Monitor, “Despite being the body given the power to issue licenses, we operate on the instructions of the General Authority for Petroleum that is affiliated with Gaza's Ministry of Finance.”

He added, “Half of the current gas stations should be shut down. However, Gaza’s General Authority for Petroleum does not want us to stop licensing additional stations.”

On Feb. 13, the General Directorate of Petroleum in the West Bank’s Ministry of Finance and Planning sent a letter to the General Authority for Petroleum in Gaza calling for the suspension of the granting of licenses for new gas stations in the Gaza Strip.

The General Directorate of Petroleum also requested that the General Authority for Petroleum in Gaza make an inventory of all gas stations that obtained licenses during the past six months and refrain from providing them with fuel — either directly or otherwise — until another decision is made.

Nevertheless, the General Authority for Petroleum in Gaza disregarded this request and continues to license new gas stations.

A well-informed source within the authority told Al-Monitor, “The authority refuses to stop the licensing of gas stations since many of the investors [seeking these licenses] are affiliated with Hamas and are investing Hamas funds in the local market to make money.”

The diverging positions between Gaza’s Ministry of Finance and Planning and the Ministry of Local Government on the licensing of more gas stations point at a significant conflict of interest between them. The local authorities seem to be torn between the need to reap more funds to address Hamas’ financial crisis and the commitment to preserve the city's urban planning and avoid the chaotic spread of gas stations.

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Rasha Abou Jalal is a writer and freelance journalist from Gaza specializing in political news and humanitarian and social issues linked to current events.

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