The price cuts announced on Monday are the fifth straight downward revisions after the deregulation policy introduced on July 28.
Dubai - Petrol price down by 6%, diesel price to go down 12% starting January.
Published: Mon 28 Dec 2015, 12:28 PM
Last updated: Tue 29 Dec 2015, 11:13 AM
Fuel consumers in the UAE will continue to enjoy the benefits of fuel deregulation as the Ministry of Energy dropped the petrol prices by six per cent and diesel by 12 per cent for January. It is the fifth consecutive decline in fuel prices since the deregulation policy announced in July this year.
Also read: Petroleum prices for December down by up to 2.2%
The fifth consecutive downward revision after the deregulation policy introduced on July 28 will benefit the domestic economy with the price of diesel falling below subsidised levels.
Fuel consumed by commercial transport and heavy machinery will be 44.48 per cent cheaper in January compared to its July price of Dh2.90 a litre.
Gasoline Octane-95 will be available at Dh1.58 a litre from its pre-deregulation price of Dh2.14, about 26.17 per cent down; Gasoline Octane-98 will be 24.89 per cent cheaper from Dh2.25 a litre to Dh1.69; and Gasoline E-Plus will be available at Dh1.51 a litre, 6.21 per cent less expensive compared to Dh2.07 five months ago.
On a month-on-month comparison, diesel is cheaper by 12.02 per cent at Dh1.61 a litre.
Gasoline Octane-95 has dropped 5.95 per cent to Dh1.58 from Dh1.68 in December; Gasoline Octane-98 is down 5.59 per cent to Dh1.69; and environment-friendly Gasoline E-Plus 91 will cost Dh1.51, about 6.21 per cent less.
The massive reductions in fuel prices have happened because the the Opec’s basket price fell to $32.14 a barrel from $39.59 a barrel a month ago.
Vijayan Nair, a marketing executive at a local trading firm, said the new petroleum prices mean he will save Dh100 a month on his average Dh500-Dh600 spend on fuel.
But a wholesaler of commodities in Dubai said: “Though the local transporters have revised freight charges, consumers should not expect any relief from it, since the decline is very small.”
“The freight of a 40-foot container from the Jebel Ali Port to Dubai Investment Park has been reduced to Dh600 from Dh650 previously. So, the differential is too little to be passed on to the consumers,” said Mian Sajjad, managing director of Dubai-based Batala General Trading. The fall in the price of diesel seems big in terms of percentage, but is insignificant when compared to the value of the consignment, he said.
Also read: CNG-powered buses to soon ply on Dubai roads
An official at a transport company in Dubai said that the fuel cost in the transport business is around 40 per cent. And out of that the impact of lower diesel prices should be 28.44 per cent, according to January prices. “My company is already giving discounts to big and regular clients according to the new fuel prices,” he said.
The construction projects, where heavy machinery and equipment are extensively used, is also benefiting from a continuous fall in diesel prices, said Syed Abrar Ali, general manager of Trans Middle East in Abu Dhabi.
“New tenders being submitted for the construction projects are based on lower diesel prices,” he said. “The cost of construction is down eight to 10 per cent as a consequence of a 29 per cent reduction in diesel prices.”
Alp Eke, senior economist at National Bank of Abu Dhabi, said the UAE’s real economic growth is expected to grow by 3.2 per cent year-on-year. “In 2015, the UAE’s nominal GDP is expected to shrink from $400 billion [in 2014] to $370 billion,” he said.
The oil sector’s contribution was around 39 per cent of GDP in 2014, but with the decline in oil prices, the oil and gas sector is expected to contribute 25 per cent of GDP in 2015, he added.
“The oil sector used to generate 65 per cent of government revenues in 2014, but with the decline in oil prices the sector is expected to generate only 50 per cent of the government revenues in 2015.”
As for the UAE consumer price index, it will increase by four per cent year-on-year in 2015.
“The contribution of the transportation and rent component is declining. In 2016, the CPI average will increase by three per cent year-on-year,” Eke said. - haseeb@khaleejtimes.com
Also read: Lower petrol prices drop inflation in Abu Dhabi
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