Business | Oil & Gas

Fuel prices may increase further

Petrol likely to be costlier by 15% and diesel by 20% if government subsidies are lowered

  • By Abdullah Rasheed, Abu Dhabi Editor and Ahmed Namatalla, Staff Reporter
  • Published: 00:00 April 26, 2010
  • Gulf News

  • Image Credit: Gulf News Archive
  • At a petrol pump on Al Wasl road, attendants refused to comment when asked if they were already notified of the announced price adjustment.
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Abu Dhabi: The four government-owned petrol distribution companies are looking to increase their prices again next month by 15 per cent for petrol and 20 per cent for diesel, Gulf News has learnt, as efforts continue to lower government subsidies.

Sources at one of the petrol companies, speaking on condition of anonymity because the government has yet to make a formal announcement, said prices of the ‘regular' and ‘special' petrol grades are set to rise by Dh0.23 per litre to Dh1.64 and Dh1.75, respectively.

The imminent price hike is likely to include the highest grade super, by Dh0.15 per litre which was not part of the increase implemented earlier this month.

Diesel will also see a Dh0.25 increase per litre in the coming weeks, according to the company sources. Diesel is currently sold for Dh2.10 to Dh2.60 per litre.

The sources added the diesel price will be raised twice, once in May and again in June.

"Every country has its own policy with respect to subsidies," said Angad Rajpal, energy analyst at Prime Securities in Dubai. "Also the UAE does not have enough refining capacity. "Linking local prices to international oil prices gives [the government] a better way to manage end-user demand."

Highest

Petrol prices in the UAE are already the highest in the Gulf Cooperation Council countries including Oman and Bahrain, members with the lowest volumes of proven crude reserves.

The four government-owned distributors, Abu Dhabi National Oil Company, Emirates National Oil Company (Enoc), Emirates Petroleum Products Company and Emirates Petrol buy a combination of local and foreign-refined fuel, although the quantities are not released by the government.

The increase, if implemented, would put petrol prices in the UAE twice as high as their counterparts in Saudi Arabia and at more than 170 per cent of the prices in Qatar and Kuwait, according to the sources.

Earlier increase

Earlier this month, local distributors increased prices for diesel and all petrol grades with the exception of ‘super' by 11 per cent.

Consumers can expect to pay about Dh190 to fill the tank of a an average six-cylinder vehicle with the ‘special' grade, compared to about Dh150 now, according to Gulf News calculations.

"You have very high consumption because the price is subsidised," said Kate Dourian, Middle East editor for Platts, a global energy information and news provider.

"The likes of Enoc are paying international market prices. You can't carry on buying it at international prices and selling it below value."

Comments (19)

  1. Added 19:05 April 26, 2010

    Some analysts always says that there will be no impact on price rises of commodities .This price rise will disturb budget of big companies also as there is not much public transpotation alternative in abudhabi . Here cars are not luxury but need.

    biparam, Abu Dhabi, United Arab Emirates

  2. Added 16:56 April 26, 2010

    I'm gonna sell my four wheel drive...and get a small car...1.6 engine.

    Vishal, Dubai, Afghanistan

  3. Added 15:31 April 26, 2010

    Why compare with USA/UK and then say fuel is cheap? Why not look at neighbouring countries, where fuel is much cheaper? Are salaries for the workforce anywhere near US/UK Salaries?

    Mohammad, Dubai, United Arab Emirates

  4. Added 15:27 April 26, 2010

    This is the only way to reduce traffics ! and keep our environment cleaner ! I saw for the first time people do not off their engine so it keeps cool in car while they are shopping or eating in a restaurant and it is in Dubai. Therefore it is very correct to increase of petrol price.

    Batur, Dubai, United Arab Emirates

  5. Added 15:16 April 26, 2010

    this one is for AZIZ,frm saudia,he said its simple we must minimize use of cars as other mode of transportations are available. So should one live in a tent as another mode for the high rent of ur house.

    Nazeef, Ras Al Khaimah, United Arab Emirates

  6. Added 15:07 April 26, 2010

    I wonder how can this increase be justified as per barrel price in end of 2008 was $147 per barrel compared to $85 now, the price internationally has come down but the prices are more than what they were in 2008. This raise cannot be offset by using public transport because the prices of all commodities are bound to go up if the price is increased as it affects the transport companies. I feel this will have a negative effect on the economy.

    Nitin, Dubai, United Arab Emirates

  7. Added 14:54 April 26, 2010

    Meh, not like fuel is expensive in Dubai in the first place... not when compared with USA/UK anyway.

    James Bond, Dubai, United Arab Emirates

  8. Added 13:38 April 26, 2010

    Rise in visa fees, utility charges, parking fees, now petrol and diesel prices....what's next!

    Basheer Ahmed, Dubai, United Arab Emirates

  9. Added 13:14 April 26, 2010

    i don't see a big problem with 15 fils, i have problem with more than a double house rent, it simple we must minimize use of cars as other mode of transportation are available.

    Aziz, Al Jubail, Saudi Arabia

  10. Added 13:08 April 26, 2010

    This is totally unfair, salaries arent increasing, but cost of living is increasing. how we all will survive?? God help us all......

    Faizan, Dubai, Afghanistan

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