Abu Dhabi: The handover process of 74 petrol stations by Emarat to Adnoc Distribution in the Northern Emirates has begun, a highly-placed oil industry source familiar with the developments told Gulf News yesterday.

“The takeover process by Adnoc Distribution has begun. As per plan, over the next few months, Adnoc Distribution and Emarat will jointly operate the pumps and from January 2013, Adnoc Distribution will take over full management control of the petrol stations,” said the source.

Adnoc Distribution is a unit of the Abu Dhabi National Oil Company (Adnoc). Last month, Adnoc and Emarat announced the signing of a memorandum of understanding (MoU) through which Adnoc’s unit will take over the running of 74 petrol stations operated by Emarat in Sharjah, Ras Al Khaimah, Ajman, Umm Al Quwain and Fujairah.

Another oil industry source previously told Gulf News that Emarat will continue to honour its ongoing contracts with contractors and suppliers of gasoline, most of which will end by end-2012. By January, Emarat will be out and Adnoc will take full control of supply and distribution at the pumps, said the source, adding in this deal no financial transaction is involved and that the Emarat retail section employees at the pumps will be absorbed by the Adnoc unit under its expansion plan.

He said the takeover by the Adnoc unit will enable Emarat to cut losses incurred due to high petrol subsidies.

“Emarat is losing Dh80 million in the Northern Emirates section of its gasoline sales business every month due to petrol subsidies. This deal means Emarat will save at least Dh900 million every year,” the oil industry source added.

He said that the Abu Dhabi government is subsidising gasoline sales of Emarat. “This deal will enable Adnoc have a greater control over Emarat’s subsidies and its operating costs. For the Abu Dhabi government, the cost of gasoline subsidies will come down,” the source added.

Last year, billions of dirhams were pumped into Emarat, its capital increased by 50 per cent to Dh9 billion. This allowed the 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. Emarat had debts of around Dh1.9 billion, the Federal National Council (FNC) said in January 2011. The four UAE oil retailers — Adnoc Distribution, Enoc, Eppco and Emarat — are paid by the government to cover the cost of subsidies.

Adnoc Distribution’s subsidies are directly borne by the Abu Dhabi National Oil Company, while Emarat’s operating budget is approved by the Ministry of Finance with additional subsidies borne by the Abu Dhabi government. The cost of Enoc and Eppco’s subsidies is borne by the Dubai Government, the owner of Enoc Group of Companies.

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.