Abu Dhabi
Prices of cooking gas may be deregulated for citizens if an agreement is reached with private gas business and after approval of the Cabinet, a minister told the Federal National Council on Tuesday.
“As recommended by the House, the Ministry of Energy will discuss with private gas business to a system to deregulate prices of cooking gas. Our recommendations will be submitted to the Cabinet for approval,” Suhail Mohammad Faraj Al Mazroui, Minister of Energy, said.
Al Mazroui was answering a question put by Hamad Al Rahoumi, a member from Dubai, concerning LPG subsidies. “According to a monthly quota set by Adnoc Distribution, Emirati families living in Abu Dhabi are permitted to buy Dh150 worth of subsidised LPG cylinders, while families living in the Northern Emirates are allocated a monthly quota of Dh70 worth of subsidised cooking gas,” Al Mazroui said.
Al Rahoumi said the different quotas encouraged the illegal practice of transporting LPG cylinders between emirates to benefit from the lower prices.
The minister said subsidies to LPG cannot be increased, because a major share of it is imported from international markets at high prices.
The UAE will extend its economic diversification strategy by removing further subsidies on energy, Al Mazroui told the World Economic Forum in Davos in January.
Al Mazroui said he was planning to scrap subsidies on electricity and on gas sold to power generators.
“We need to think about major reforms to make the budget less dependent on the oil price, and to build an economy that is vibrant but also taking advantage of the lower oil prices,” he said.
Answering another question put by Salem Al Shehi, a member from Ras Al Khaimah, about high electricity connection fees for a citizen’s second house, the Energy Minister said it was a way get people to pay the right price for energy.
“Electricity connections are subsidised by more than 50 per cent, while the consumption tariff is subsidised by about 80 per cent,” Al Mazroui said.
He added energy subsidies can only be provided to houses of citizens or their family members, but not for houses used for recreational or commercial purposes.
The minister compared this move to what was done with petrol and diesel, but agreed to look into allowing certain low-income citizens to pay the fees in instalments, on a case-by-case basis.
Al Mazroui said the challenging thing is to get more efficiency. “We are redirecting the subsidy as an opportunity to invest in other parts of the economy, for the well-being of the citizens.”
