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UAE petrol prices climb up to 30 pct on subsidies cut

Xinhua, July 28, 2015 Adjust font size:

The United Arab Emirates (UAE) Ministry of Energy announced on Tuesday the new prices for August following the government's decision to cut fuel subsidies starting from August 1, 2015.

Prices for special 95 (unleaded gasoline) fuel, the most used petrol type for cars in the Gulf state, will increase by almost 25 percent, from currently one dirham and 72 fils (about 0.47 U.S. dollars) to 2.14 dirhams per liter. E plus 91 petrol will cost 2.07 dirhams per liter, up 29 percent from 1.61 dirhams.

Diesel fuel, on the other hand, will get much cheaper as car drivers will pay 2.05 dirhams (0.56 U.S. dollar) per liter, down from 2.89 dirhams per liter, which represents a 29 percent decrease.

The decision to cut fuel subsidies was made on July 22 by the government. It was aimed at "supporting the national economy, lowering fuel consumption, protecting the environment and preserving national resources," said the ministry of energy.

Suhail Al-Mazroui, the energy minister, in recent interviews with local media urged the over nine million UAE residents, of whom over 80 percent are foreigners, "not to panic" and to make more use of public transport across the country.

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 July, the IMF said energy prices support is costing the UAE around 29 billion U.S. dollars 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 so far declined by 50 percent year on year, weighing on fiscal budgets of Arab oil exporters. For 2015, the IMF expects a 2.3 percent fiscal deficit for the UAE, compared to five percent surplus last year.

Earlier in the week, the UAE government said it would cut public spending by 4.2 percent in order to cushion the effects of lower oil income. Endit