ABU DHABI // A decision to link gas and diesel prices to global oil markets has been described by industry leaders as an important reform initiative for the country.
Suhail Al Mazroui, the Minister of Energy, announced on Wednesday that fuel prices will be deregulated from August 1 as part of the government’s plan “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”.
Oil and gas industry chiefs, finance ministers and energy leaders applauded the move.
Abdullah Salem Al Dhaheri, chief executive of Abu Dhabi National Oil Company, said the move would “help cut fuel consumption, protect the environment and preserve natural resources for future generations”.
He said Adnoc took pride in its “contribution to boosting economic growth in the UAE for a better future and achieving sustainable development”.
At present, state fuel regulations keep petrol and diesel prices in the Arab world’s second-biggest economy at some of the lowest globally.
Removing support will make individuals more responsible and careful in their fuel consumption patterns and contribute to preserving natural resources, said Younis Khouri, the undersecretary of the Ministry of Finance.
The decision will boost the free market economy and restrict the state’s direct intervention in economic activities, he said.
Saif Humaid Al Falasi, chief executive of Emirates National Oil Company, also welcomed the move.
“We are committed to everything that can contribute to achieving sustainable development in the UAE and boosting economic growth,” he said.
“The decision will help achieve the UAE vision of ensuring the continuity of sustainable development by cutting fuel consumption and therefore preserving natural resources and protecting the environment.”
Mohammed Ahmed Al Shehi, the undersecretary of the Ministry of Economy for Economic Affairs, said that the decision did not aim to increase prices, but rather to change the fuel pricing structure to create a balance between the domestic and world markets.
According to a study by the Department of Energy, fuel prices are expected to decrease from the current prices after the decision takes effect, he said.
Mr Al Shehi said this would have a positive effect on the markets because lower fuel prices help to reduce production costs in many sectors, such as transportation and construction.
The decision was part of efforts to protect oil wealth and use it efficiently, he said.
“We believe that the decision will have a positive impact on our national economy and will enhance the competitiveness of the UAE as an economic power in the region and the world,” he said.
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(via The National)