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15 July 2024

UAE urged to cut fuel subsidies gradually


The Supreme Council of Energy has submitted recommendations to the Ministry of Energy, which suggest that fuel subsidies being provided be gradually reduced over a period of time.

According to a report in ‘Al Roeya Al Iqtisadia’, “The recommendations come after a significant increase in the number of vehicles in the country and the high value of current government subsidies,” the council said.

The report also quoted Adnoc as saying that reducing the price of gasoline is currently not on the agenda.

Ahmed Butti Al Muhairbi, Secretary General of Dubai Supreme Council of Energy pointed out that the targeted reduction of fuel subsidies ranges between 10 and 20 per cent from the current rates, which  is 50 per cent.

He disclosed that the size of financial support that the UAE government provides is exceeding Dh13 billion.

He added that the cost of a litre of fuel in the world market exceeds Dh3, but is sold in the domestic market for Dh1.75.

Al Muhairbi said the trend towards lowering subsidies on fuel prices is due to the significant increase in population, which in turn is reflected in the increase in the number of registered cars.

He also said the recommendation suggests converting the financial support into investments in infrastructure and service projects.

“Also you can direct these funds to develop clean energy-use projects and support the use of electric vehicles,” he added.

Khalid Mohammed Hadi, Vice-President, Marketing and Corporate Communications Department, Adnoc, said the decision to raise or lower the price of gasoline is subject to government approvals.

He added “The gasoline is one of the petroleum products with high production cost, together with the increasing demand for gasoline in its different forms."

He stressed that the price of gasoline is subsided by the government and unified at the UAE level and to reduce the price of diesel, in line with the decline in world oil prices, is not on the agenda for companies at the moment.

He revealed that Adnoc covers 80 per cent of the gasoline market in all its forms on the domestic front, while Adnoc stations cover 65 per cent of diesel market throughout the UAE.

Hussain Kathim, Senior Manager Corporate Communications at General Petroleum Corporation (Emarat) said that the prices are subjected to a comprehensive study and then are presented to the ministry, which in turn review this and then decide.