Transporters expect Dubai retailers to lower diesel prices

Abu Dhabi: Transporters in Dubai, reeling from the impact high diesel prices in the emirate, are widely expecting oil retailers to cut its pump prices in line with the softening of the global crude prices.

The global oil prices have fallen from a lifetime high of $147.27 a barrel on July 11 to below $124 a barrel, as an economic downturn in the US, the world's biggest oil importer, has slowed consumer demand.

The three Dubai oil retailers - Emirates National Oil Company (Enoc), Emirates Petroleum Products Company (Eppco) and Emarat buy diesel at international prices and then adjust the local prices, based on the landed cost of the oil product. Diesel currently sells in Dubai at Dh19.25 a gallon.

A spokesman for Enoc and Eppco told Gulf News, "I haven't yet been notified of any change in diesel prices." A spokesman for Emarat was unavailable for comment.

Industry sources said last week a moderate cut in Dubai's diesel prices is a possibility, given the changing oil market scenario.

Diesel prices in Dubai nearly doubled in a year, forcing the transporters to pass on the fuel price hikes to customers in the form of increased tariffs.

"If diesel gets cheaper, it will help our business considerably. Lower fuel prices will be such a relief as the prices have continuously risen from around Dh12 a gallon at the beginning of the year," said Gunter Rochau, general manager for Trans1, a Dubai-based transport company with 22 vehicles in its fleet.

Mohammad Sadiq Abdullah, manager of the Dubai-based Al Aweer General Land Transport Company, said that lower diesel prices will help boost business and cut inflationary pressures.

"If the price of diesel is cut, we will certainly reduce our tariffs," said Abdullah, whose company operates a fleet of 33 vehicles.

He said their transportation charges for a truck carrying goods from the Jebel Ali port to the Sharjah port is currently Dh950.

"If the price of diesel comes down by about Dh1, we will lower our tariffs by about Dh50 for a truck plying on that route," Abdullah said. "This will help us become more competitive in the market and it will generate more business," he added.

Diesel is widely used in the UAE as a transportation fuel with trucks that carry goods, as main users. Any increase in the price of the fuel means greater inflationary pressure for the consumer as the fuel price hikes are invariably passed on across the supply chain.