Dubai: The UAE government spends 5.6 per cent of its GDP subsidising oil, gas and electricity, according to figures compiled by the International Energy Agency.
That’s an average of $2,378 (Dh8,374) for every resident, every year — but don’t imagine the end of road fuel subsidies will cost you that much, because they constitute only part of the total energy subsidy.
Nevertheless, the road fuel subsidy was estimated to cost the state-owned oil companies Dh16.5 million a day in 2011, when Brent Crude was above $110 a barrel.
The sharp fall in world oil prices saw Federal National Council (FNC) member Hamad Ahmad Al Rahoumi in February call for a reduction in the price of road fuel.
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Despite the subsidy, petrol prices in the UAE are the third highest in the Middle East, behind Tunisia and Syria, according to a report by an ad hoc FNC committee chaired by Mohammad Butti Al Qubaisi.
Until recently, the UAE was forced to import diesel and petrol because of a lack of refining capability. However, the ongoing expansion of Adnoc’s Ruwais refinery in Abu Dhabi, to more than double its earlier 415,000 barrels per day, is expected to make the UAE self-sufficient in fuel.
Although the Ruwais refinery reached between 80 and 90 per cent of capacity in spring, run rates were cut in May for further testing.