The price of diesel for bulk traders has been increased from Dh8.6 to Dh12.9 a gallon by the Abu Dhabi National Oil Company (Adnoc).
Emirates Petroleum Products Company (Eppco), Emirates National Oil Company (Enoc) and Emarat filling stations are selling the fuel at Dh13.1. The previous Adnoc price was set in 2006.
The average price of diesel in Saudi Arabia is at Dh1.8 per gallon – about a seventh of the price in the UAE.
Last week Emirates Business revealed that diesel prices in Dubai and some of the Northern Emirates had increased by 175 per cent over the past three years, putting tremendous pressure on factories and fleet operators and adding to the inflationary spiral.
A top official from Adnoc, who asked to remain anonymous, said the company increased its bulk price for diesel on Sunday due to increase in global prices.
“We have been selling a gallon of diesel for Dh8.6 since 2006 despite increases in prices internationally and locally. However, recently, we decided to increase the price for bulk traders.” He confirmed that the retail price of diesel at all Adnoc filling stations remained at Dh8.6 per gallon.
Factories and fleet operators accused oil retailers of making up for the huge increases in international petrol prices by pushing up diesel prices. They called on the government to regulate the price of diesel in the same way it controls the price of petrol, as the cost of the fuel affected their businesses and profit margins.
Cement factories in Abu Dhabi and Fujairah have said that their prices could escalate further because of the rise in diesel price.
A senior official of Star Cement in Abu Dhabi said: “We are talking about an almost 50 per cent rise in price of diesel by Adnoc.
“Enoc and Eppco had already implemented a similar rise and it was evident in the increase in the cost of transportation of raw materials from Jebel Ali. The cost of transportation has more than doubled during the past year from Dh12 to Dh28 per trip.
“The drastic increase in transport costs is reflected in the cost of cement.”
The price of cement in the UAE has risen this year from Dh16 to Dh25 per bag.
Traders have voiced similar concerns and said the prices of products were bound to increase because of a rise in transportation cost.
Sources at Ras Al Khaimah and Al Ain poultry farms said companies that reduced the price of fresh chicken would reconsider their decision following the latest price rise.
“Diesel is extensively used to run machines in sheds,” said the manager of an Al Ain farm.
“Most of the fans here that are used in order to keep the temperature down run on diesel,” he said.
Kamaran Ahmad, General Manager of the Fantasy Transport Company, which operates 200 buses in Dubai, said the diesel price increase was putting the company under considerable pressure.
“When the price of petrol increases, oil retailers pass the burden on to diesel customers. This is increasing our operational costs by at least 70 per cent,” he said.
“We obviously have to increase our prices to cope with the increase. This in the end increases costs for our customers.
Officials must look into these issues and regulate the price increase the same way they regulate petrol price increases as prices have been going up at least once a month.
“Some consider an increase of 20 fils to 30 fils not a massive increase, but for us it is. When filling an 18-gallon tank, if prices increase by 30 fils per gallon then it is equal to a Dh5.4 additional cost. And if we have five increases in a year then it is Dh25 extra for each bus every time we fill the tank. About 90 per cent of our fleet run on diesel and the increase in prices puts us under increased pressure.”
A top official from Eppco denied the claims by factories and fleet operators that they were passing on the burden of petrol price increases by increasing the cost of diesel. “We lose an average of Dh6 million every day on sales of petrol as we are selling it at much lower prices then we buy it for and the money we generate from diesel sales does not cover these losses at all,” he said.
“The price at which we are currently selling diesel is the cost price, which means we are not making any profit out of diesel.”
He said the price of diesel was not regulated by the government that is oil retailers met and agreed on the price based on the international rates.
“The price of a barrel of oil has reached $112 and that is why we increased the selling prices, to cope with this increase,” he said
He added that the price of diesel in other GCC countries was supported by their governments and this was the main reason the fuel being sold there was at a cheaper rate than here.