In a welcome change, petrol in the UAE could become cheaper by up to 60 per cent as the Federal National Council (FNC) yesterday called for prices to be brought in line with other Gulf peers, which boast of some of the cheapest petrol prices in the world.

The FNC has decided to form a temporary six-member committee to consider the implications of further subsidizing petrol prices in the country to bring it in line with its neighbours.

However, the debate to potentially reduce the prices was opposed by the UAE’s Minister of Energy, Mohamed bin Dhaen Al Hamili, who argued that the country’s retail petrol prices are already subsidized by the government to the tune of Dh1.20 per litre.

This would suggest that, without government support, retail petrol prices would escalate to Dh2.92 per litre compared with the current price of Dh1.72 per litre.

However, FNC member Ahmed Al Za’abi maintained that other Gulf countries retail petrol at much cheaper prices. A litre of petrol retails for an equivalent of 68 fils (Dh0.68) in Saudi Arabia, which is one of the cheapest nations in the world for buying petrol. Brinnging the UAE's retail petrol price at a par with Saudi Arabia's would entail a 60 per cent reduction in the price at the pump.

Click here to see the list of top 10 countries with the cheapest petrol prices

On the other hand, GCC peer Bahrain, which has much smaller oil reserves than the UAE, retails petrol at 75 fils per litre, less than half of what it is sold in the UAE. While Kuwait retails a litre of black gold for 81 fils, in Qatar a litre of petrol costs 87 fils. Even Oman, which is a bit steeper at Dh1.16 per litre, makes it into the Top 10 Nations for Cheapest Petrol Prices even as UAE does not feature in those rankings.

According to Arabic daily Emarat Al Youm, Al Za’abi stressed that “the UAE citizen has the right to obtain petroleum products at a price that Gulf citizen gets it, even in countries that have limited production of petrol.”

He added that the higher prices of petrol “reflect negatively on the rest of the prices of products and services which are detriment to economic development.”

Click here to view a graph with Top 10 nations with cheapest petrol prices

The minister, however, countered by saying that losses of the four fuel distribution companies emanating from a subsidized petrol price reached Dh8.5 billion in 2011 while the expected losses this year were Dh12 billion.

Emarat Al Youm reported this morning that Mohammed Ahmed Al Murr, the speaker of the FNC, said that any reduction in petrol prices would benefit everyone and not just the locals. “The Emiratis are a minority and that there is a majority of the population will benefit from the proposal.”

Some members of the FNC called to limit such recommendations to Emiratis only, while others called for making it public support, due to the reversal of oil prices on the prices of all products and services, and ended the discussion to agree on forming a committee to study support.