Supreme Council of Energy Urges for Cut in Fuel Subsidy

20 Feb 2015
  • Supreme Council of Energy Urges for Cut in Fuel Subsidy

The council justified the population growth and the increase in the number of motor vehicles, which may result in the hike in the subsidised bill value, to submitting the recommendation.

 

Dubai — A recommendation to review subsidising fuel prices and diminish them gradually in the upcoming years has been put forward by Dubai Supreme Council of Energy to the UAE Ministry of Energy.

 

The council justified the population growth and the increase in the number of motor vehicles, which may result in the hike in the subsidised bill value, to submitting the recommendation, according to a report in a local Arabic daily.

 

“The recommended rates to reduce the subsidised fuel range between 10 and 20 per cent, while the present rate of the product value is 50 per cent,” said Ahmad Butti Al Muhairbi, secretary general of Dubai Supreme Council of Energy.

 

The UAE government allocates Dh13 billion per annum as financial support to fuels in the country, and a litre of petrol is sold at half price of that sold in the global markets, thanks to the government subsidy. Diesel prices in local markets showed consecutive declines exceeding 15 per cent; the last was in December last year, when a litre of diesel was sold at Dh3.05.

 

In this context, Abu Dhabi National Oil Company, or Adnoc, ruled out an imminent fall in petrol prices like those of diesel and other petroleum products as a result of the drop in global oil prices.

 

Khalid Mohammed Hadi, vice president, Marketing Corporate Communication Department, Adnoc, said reducing petrol prices as was the case with diesel were not in the pipeline of the manufacturing companies at present.

 

Hadi said the decision of hiking or slashing the price of petrol is subject to government approvals and not the producing companies on the basis of the fact that it is a subsidised product and its price is unified countrywide. Hussain Kazim, Senior Manager Corporate Communications at Emirates General Petroleum Corporation, or Emarat, said the decisions on reducing or increasing the prices of fuels with all types often come after comprehensive study of the market movement in general, and the global price fluctuations of oil prices as well as the volume of term contracts which the companies deal with.

 

“Therefore, the corporation takes decisions of increasing the prices in case of prices shoot up globally,” he said, adding, in the event the global prices of oil slipped, the domestic sale price subserviently, too, are linked to the term contracts.”

 

Published in Khaleej Times | Jan 15, 2015

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