Off the wire
• Myanmar gov't, ethnic groups desire for finalization of ceasefire deal  • Israeli soldiers shoot dead Palestinian in West Bank  • China Focus: RoboCup shows industry dreaming of more than electric sheep  • Russian researchers' book documents Chinese diaspora's contributions to Vladivostok  • China unveils new energy micro-power grid guidelines  • Increasing business travel demand expected to drive up airfares in Singapore: report  • Foreign exchange rates in India  • China Hushen 300 index futures close lower Wednesday  • China plays important role in Iran nuclear talks: UN chief  • China treasury bond futures close mixed Wednesday  
You are here: 　 Home

UAE deregulates fuel prices over long-term economic concerns

Xinhua, July 22, 2015 Adjust font size:

The energy ministry of the United Arab Emirates (UAE), a major oil supplier, said on Wednesday fuel prices in the Gulf state would be linked to global market prices and will no longer be subsidized by the state from August 1 2015 onwards, state news agency WAM reported.

The decision, related to gasoline and diesel, was aimed at "supporting the national economy, lowering fuel consumption, protecting the environment and preserving national resources," said the ministry in Abu Dhabi.

Suhail Al-Mazroui, energy minister, said "The decision to deregulate fuel prices has been taken based on in-depth studies that fully demonstrate its long term economic, social and environmental impact."

The minister added the resolution was is in line with the strategic vision of the UAE government in diversifying sources of income, strengthening the economy and increasing its competitiveness in addition to building a strong economy that is "not dependent on government subsidies."

Earlier in the week, the Washington-based international monetary fund (IMF) said energy prices support is costing the UAE around 29 billion U.S. dollar per year, the UAE daily The National reported.

Whilst the UAE has cut subsidies by a third in the last two years, the Gulf state, home to seven percent of the world's known oil reserves, has remained the region's third biggest spender for subsidies behind Saudi Arabia and Egypt. The IMF has urged all Arab states to cut subsidies in order to free capital for investments into infrastructure, education and healthcare. Oil prices have declined by 50 percent year on year, weighing on fiscal budgets of Arab oil exporters.

On the impact on prices, the minister said "Considering the international prices of oil and petroleum derivatives, we expect diesel prices to go down." This would stimulate the economy as lower diesel price would mean lower operating costs for a wide number of vital sectors like industry, shipping and cargo among many others, he estimated. He did not comment on the impact on non-diesel fuel prices.

He also said the transport sector was responsible for 22 percent of the total greenhouse emissions in the UAE in 2013 amounting to 44.6 million tons of carbon dioxide. Therefore, the decision to liberalize energy prices would encourage the use of public transport.

Al-Mazroui added that the cost of gasoline represents three to four percent of an average income in the UAE, which is a reasonable ratio compared to international costs. Consequently, deregulating prices would not have a notable impact on individuals' costs of living, he said. Currently, petrol prices in the UAE are among the most affordable globally. The average price for fuel per litre in the UAE was in May and June 1.72 Dirham or 0.47 USD dollar, The National said.

The new prices effective on August 1 for gasoline and diesel will be announced on July 28. Afterwards, a committee set up by the UAE ministry of energy will announce the prices on the 28th of each month for the following month. Endit