UAE transporters welcome diesel price cut

Abu Dhabi: Transportation companies in the UAE welcomed Saturday’s diesel price cut by two Dubai-based oil retailers saying the move would help cut their operating costs and improve margins amid high competition in the market.

“Our business will get a boost because the cost of doing business is going to come down,” Raza Ur Rahman, owner of Dubai-based Al Zamil Transport told Gulf News.

Mohammad Sadiq Abdullah, manager at freight forwarding company Al Aweer General Land Transport, said his company would pass on some of their operating cost benefit to customers in the form of lower freight charges on longer routes.

Manjit Singh, owner of Mangal Manjeet Transport, however, said his company will wait for another price cut before thinking of lowering freight costs for customers.

“Our margins vary from 20 per cent to 25 per cent. When the diesel prices rise, we don’t increase the freight charges because of the high competition in the market. This time, we’ll keep our freight charges intact. However, if there’s another diesel price cut and other transporters lower freight charges because of it, we’ll adjust our prices according to the market,” Singh added.

Oil retailers Emirates National Oil Company (Enoc) and Emirates Petroleum Products Company (Eppco) lowered diesel prices by 20 fils a litre, or 5.41 per cent, across all their service stations effective on Saturday. Enoc said at the time this was in line with the international price trends for crude and refined products.

The new diesel price from June 1 is Dh3.50 per litre, down from 3.70 a litre.

The price revision is expected to benefit the manufacturing sector and other supply companies with large fleets that use diesel, Enoc said.

The Dubai oil retailers buy diesel at international prices and then adjust the local prices, based on the landed cost of the oil product. Diesel is widely used in the UAE as a transportation fuel and its prices have a direct bearing on inflation. Unlike petrol, whose prices are state-set, diesel prices are deregulated for Dubai oil marketing companies, which means the product’s prices can move up or down, based on the global price trends.

Enoc and Eppco have a network of more than 100 service stations across Dubai and the Northern Emirates.