Petroleum price hike gets the thumbs-up

Abu Dhabi - "We support the decision liberalising the prices as it will help rationalise fuel consumption, conserving the environment and protecting natural resources for generations yet to come."

Abu Dhabi's oil marketing and distribution company Adnoc Distribution has welcomed the deregulation of oil prices.
"We support the decision liberalising the prices as it will help rationalise fuel consumption, conserving the environment and protecting natural resources for generations yet to come," said Abdullah Salem Al Dhahiri, chief executive officer (CEO) of Abu Dhabi National Oil Company or Adnoc.
"The decision to deregulate the prices of fuel in the country with effect from August 1, and endorse pricing mechanism as per the international prices of gasoline and diesel will give us an opportunity to upgrade the standard of our services," he said. "It will also help us continue our policy which is based on investment and expansion in building full-fledged service stations," Al Dhahiri said.
He said the decision will also help oil companies adopt best international practices.
Saif Humaid Al Falasi, CEO of Emirates National Oil Company or Enoc, emphasised the company's commitment to contribute to achieve sustainable development for the country as well as support economic progress and growth.
He said the decision to deregulate petrol prices will support the vision of the UAE government to ensure the perpetuity of sustainable development as it helps rationalise fuel consumption, protect natural resources and conserve the environment.
"We at Enoc will back up our expansive projects by setting up more modern petrol stations and continue in upgrading our services," he said.
Welcoming the move, Khalid Al Awadhi, a consultant at Dubai-based Hawk Energy, called it a "timely" action. The consultant said the move will help oil marketing and distribution companies to overcome financial deficits they have been burdened with since 2008 when oil prices started to climb.
The losses of oil marketing companies run into billions of dirham. They try to recover it from other sources such as running convenience stores and providing different services, Al Awadhi said.
The "bold" move, Al Awadhi said, comes after a lengthy 10-year debate in the country to reform the oil marketing sector by removing subsidies and linking prices with those in international markets.
The price of oil at pump, he estimated, should be around Dh2.5 a litre after the subsidy is withdrawn against the Dh1.61 a litre at present.
The move would encourage the use of public transport. The transport sector was responsible for 22 per cent of total greenhouse emissions in the UAE in 2013, amounting to 44.6 million tonnes of carbon dioxide, said Suhail Al Mazroui, Minister of Energy, in a statement.
With the rise in economic growth, oil consumption is also climbing in tandem. In 2012, daily consumption was 0.74 million barrels. This grew to 0.79 million barrels a day in 2013 and 0.83 million barrels a day in 2014. The country is forecast to consume 0.87 million barrels of oil a day in 2015, which will further rise to 0.90 million barrels a day in 2016.
Al Mazroui said the deregulation would help cut fuel consumption and preserve natural resources for future generations. It will also encourage individuals to adopt fuel-efficient vehicles, the minister said.
The minister added that increasing the use of public transport and reducing dependence on individual vehicle usage will have a positive impact in lowering carbon emissions.
The Minister of Energy pointed out that the UAE has an advanced public transport system with options that are environmentally friendly such as taxis that work on natural gas.
With the removal of subsidies, Al Awadhi said there is need for an efficient and economical inter-emirate public transport system for faster connectivity. There is need to extend Dubai Metro service to Ras Al Khaimah and Abu Dhabi, he said.
- haseeb@khaleejtimes.com