(MENAFN- Khaleej Times)With the deregulation of fuel prices petrol in the UAE will be 24 per cent more expensive from August 1 while diesel will be 29 per cent cheaper a move which will benefit trade and industry as their profit margins will surge.
The much-awaited move which will go a long way in making the economy free of subsidies was announced on Tuesday afternoon by the Fuel Price Committee chaired by Dr Matar Al Nyadi Undersecretary at the Ministry of Energy. "All petrol stations in the UAE will retail diesel at Dh2.05 per litre instead of the previous Dh2.90 a 29 per cent drop" in Northern Emirates the committee said. However in Abu Dhabi the decline will be less as the prices were revised early this year to Dh2.35 a litre. Motorists will pay Dh2.14 per litre of 95 Octane petrol at the pump instead of Dh1.72 the price committee said. The new prices drew positive reaction from economists traders and experts. Robin Mills a consultant at Dubai-based Manaar Energy Consultancy said the new prices are in line with expectations. Dr Monica Malik chief economist at Abu Dhabi Commercial Bank said the positive move would add 1-1.3 percentage points to the headline inflation. Wissal Ahmed Khan a leading retailer based in Abu Dhabi expected inflation to rise 1.5 percentage points. However the analysts said the policy of a gradual price correction is a very positive move which will allow trade industry and consumers to absorb the impact. Giving details of the pricing formula Al Nyadi said the committee based the new prices on the average global prices for petrol and diesel during the month of July with the addition of transport distribution and operating costs as approved by the Cabinet for distribution companies. The Fuel Price Committee will monitor the global prices on a daily basis and will announce prices for the following month on the 28th of each month he said. Al Nyadi expected the reduction of diesel prices will serve as a catalyst for the economy. "This will enhance the competitiveness of the national economy reduce the prices of commodities and eventually reflect positively on the economy". The ministry has coordinated with all relevant entities in the country including the Ministry of Economy and the Supreme Committee for Consumer Protection to monitor the movement of prices and safeguard the rights of consumers he said. "This will ensure that people across the country benefit from lower diesel prices which would mean lower operating costs for a wide number of vital sectors such as industry shipping and cargo". He said the impact of the rise in petrol prices on individuals will be minimal as the fuel costs for cars with four cylinders will increase on average by Dh18 Dh25 for six cylinders and Dh45 for eight cylinders. Such a minimal increase would not create an additional burden on car owners with limited incomes he said. Additionally it will promote rationalised consumption and incentivise people to choose most fuel-efficient cars while curbing an increase in the number of cars on the country's roads in the future. The committee's meeting was attended by Younis Khouri Undersecretary at the Ministry of Finance; Abdullah Salem Al Dhaheri chief executive officer of Adnoc Distribution; and Saif Al Falasi chief executive officer of Emirates National Oil Company.
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