Fuel prices will be deregulated from next month and a new pricing policy linked to global prices will be adopted, the Ministry of Energy has announced.
The decision to remove current state regulations on the price of gas and diesel from August 1 is aimed at supporting the national economy, lowering fuel consumption, protecting the environment and preserving national resource, said Suhail Al Mazroui, the Minister of Energy, according to the news agency Wam
“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,” he said.
A fuel price committee has now been set up to review fuel prices against average international levels before the new policy – which has been approved by the UAE Cabinet – comes in to force on August 1. At present, a litre of petrol sells for 1.73 dirhams (47 US cents).
Chaired by the Undersecretary of the Ministry of the Energy, the committee includes the undersecretary of the Ministry of Finance, the CEO of ADNOC Distribution, and the CEO of Emirates National Oil Company (ENOC).
“The resolution 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,” said Mr Al Mazroui. “This step will put the UAE on par with countries that follow sound economic methodologies.
“It is also anticipated to improve the UAE’s competitiveness while positioning the nation on international indices.”
The move will also have environmental benefits, will preserve natural resources for future generation and encourage the use of fuel-efficient vehicles, including the use of electric and hybrid cars, said Mr Al Mazroui.
The decision will also encourage the use of public transport rather than a reliance on individual vehicle usage. This in turn will reduce carbon emissions, he said.
The transport sector was responsible for 22 per cent of the total greenhouse emissions in the UAE in 2013 amounting to 44.6 million tons of carbon dioxide.
“Considering the international prices of oil and petroleum derivatives, we expect diesel prices to go down,” said Mr Al Mazroui. “This will 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 said the cost of gasoline represents 3 per cent to 4 per cent of an average income in the UAE, which is a reasonable percentage compared to international costs.
Consequently, deregulating prices would not have a notable impact on individuals’ costs of living, he said.
Dr Matar Al Nyadi, undersecretary of the Ministry of Energy and chairman of the newly formed Gasoline and Diesel Prices Committee, said that the role of the Ministry of Energy and Ministry of Finance as the government’s representatives in the committee will focus on consumer protection and ensure that petrol prices are balanced according to international standards.
The committee, he said, will hold regular meetings and monitor global prices.
On the 28th of each month, the committee will announce the prices for the following month. It said gasoline and diesel prices would now be based on an average of global prices, but did not give details of the pricing formula or say whether prices would rise all the way to global levels.
Prices of gasoline and diesel for August will be announced on Tuesday July 28.
The Ministry of Energy has assigned a dedicated number (0565467942) and email (fuelprice@moenr.gov.ae) for public inquiries on the new deregulated fuel prices.
Source: thenational.ae