Abu Dhabi: The handover process of 74 petrol stations by Emarat to Adnoc Distribution in the Northern Emirates is expected to be completed by mid September 2012.
The move follows losses incurred by Emarat to the tune of Dh80 million in the Northern Emirates section of its gasoline sales business on a monthly basis due to petrol subsidies, a top ranking oil industry source told the Gulf News on Thursday.
“The acquisition is a gift on the Eid Al Fitr. Based on the deal between Emarat and Adnoc, Emarat will save up to Dh1 billion annually after Adnoc takes over the running of 74 petrol stations operated by Emarat in Sharjah, Ras Al Khaimah, Ajman, Umm Al Quwain and Fujaira,” the oil industry source said.
The source said: “The takeover process began last June as scheduled and that Adnoc Distribution, a unit of the Abu Dhabi National Oil Company (Adnoc), and Emarat will jointly operate the pumps. Initially, Emarat will assist Adnoc in running of the stations. Emarat will continue to honour its ongoing contracts with contractors and suppliers of gasoline, most of which will end by end-2012.”
“As of January 2013, Emarat will be out and Adnoc Distribution will take over full management control of the petrol stations,” he added.
On May 28, 2012, Adnoc signed a memo of understanding with Emarat “to develop and consolidate cooperation and exchange of expertise between the two companies and to provide the best quality of services for petrol station customs and road users.”
“This acquisition will help operating costs because the cost of gasoline subsidies will drop for Abu Dhabi Government,” he said.
Last year, billions of dirhams were pumped into Emarat, its capital increased by 50 per cent to Dh9 billion. This allowed banks lending to Emarat to increase their ceiling on loans to Emarat.
The UAE state oil marketing companies incur heavy daily losses on petrol sales as the difference between state-set prices and the cost of imports increases, according to a Federal National Council member.
He said: “Emarat had Dh1.9 billion debts and that Adnoc Distribution, Enoc, Eppco and Emarat are paid by the government to cover the cost of subsidies”.
Earlier, Mohammad Bin Dha’en Al Hameli, Minister of Energy said the government suffered nearly Dh8.5 billion of losses last year by supporting the four distribution companies and feared the losses would hit Dh12 billion if the world oil prices increased further.
Dr. No’man Ashour, a UAE-based chief economist, told the Gulf News that the cards issued by other companies will be accepted as there will be a kind of clearance.
“Adnoc is going to operate these gas stations and therefore it will accept the cards until further notice. There will be clearance between the two companies,” clarified Ashour.
Ashour expected that fuel prices will drop after Eid holidays and before the official announcement of completion of Adnoc’s taking over of the 74 gas stations.
“It is expected that fuel prices, the highest in the GCC, will drop after Eid in order to give momentum to investments which had been negatively affected in the country because of high fuel prices in the UAE,” explained Ashour.
The reduction of the prices is a reaction to the recent calls by some Federal National Council (FNC) members, who urged the government to bring petrol prices in line with those in the rest of the GCC nations,” Ashour said.
Ashour reiterated that UAE fuel prices are much higher than its counterparts in the Gulf region. “The highest in prices is the UAE, followed by Oman, Qatar, Bahrain, Kuwait and Saudi Arabia.”