By Joanne Bladd
Fuel retailer told to ‘help solve’ ongoing shortfall after petrol stations in the emirate run dry
Abu Dhabi National Oil Company (Adnoc) has been ordered to “help solve” a month-long fuel shortage at Sharjah petrol stations owned by rival retailer Eppco.
State news agency WAM said Sheikh Mohammed bin Zayed, Crown Prince of Abu Dhabi, had directed the emirate’s fuel retailer to step in over the petrol shortfall, which has caused lengthy queues at filling stations in recent weeks.
The UAE’s third shortage in 10 months was initially blamed on maintenance at petrol stations owned by Enoc and its unit Eppco, an explanation rejected by Sharjah’s Executive Council.
The council earlier this month called for an immediate end to the fuel shortages and demanded Dubai-owned Enoc explain the “real reasons” for the shortfall.
The UAE, like other oil-rich Arab exporters such as Saudi Arabia, is a net importer of gasoline and has struggled to match refinery capacity with increasing demand.
But analysts say the problem lies in government subsidies, which look increasingly unsustainable as soaring oil prices drive up the cost of supplying fuel to customers at a cheaper, fixed price.
Enoc and rival state-owned retailer Emarat have suffered because they buy fuel at market prices and sell it at government-set rates. Enoc said in May it would have to meet an additional AED2.7bn ($735.3m) in 2011 to cover the cost of providing subsidised fuel.
Three of the UAE's four fuel retailers - ENOC, EPPCO and federally-owned Emarat - have been making losses for years.
Dubai, which is slowly recovering from a 2009 debt crisis, spent nearly AED5.4bn on various subsidies including energy, and other transfers last year, government data showed.
In contrast, Abu Dhabi planned to spend AED20.2bn on subsidies and transfers last year.
The emirate, whose fuel retailer Adnoc has faced no interruptions, has an annual budget six times larger than that of Dubai.
Sharjah residents said earlier this month that fuel shortages were adding hours to their commuting time, as they searched for filling stations with petrol.
"Between searching and getting through the traffic at the stations, sometimes it takes me two and a half hours to get fuel," said Ali, 25, who works in Dubai.
"This problem is making people waste time. I have to wake up extra early to fill gas at a petrol station before I can go to work in Dubai."For all the latest energy and oil news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
This is UNBELIEVABLE - No petrol in a Petrol producing area!!
It is a shame that ENOC & Emarat are not explaining the real problem they are facing in a transparent way to the public who are suffering. This kind of strike and lockout is really challenging the public. Is this legal to disrupt such an service to the economy?
It is also surprising why no action can be taken against them to forcestart doing their job.
Actually the UAE exports crude oil not petrol.
In the past years they have relied on importing petrol from refineries abroad (Mobil, Aramco, etc) because they didnt see the point of setting up additional refineries in the UAE, and because import costs were reasonable.
Now that global prices have increased significantly for petrol and oil the UAE is spending billions on importing and subsidising petrol.
They should focus on investing in expanding their refineries capacity and the larger petrochemical industries.
There is an "opportunity cost" involved with refining oil and selling cheap petrol locally, as compared to exporting crude oil at almost 100$ a barrel.
Its much easier to export, and it generates more money.
Abu Dhabi to the rescue once again!! I love how the rulers of the emirates are always there to help each other. They may be seven emirates, but they are surely united as ever!
Govt. subsidies the business loss of Enoc and Emarat and they gift back this operational failure as well? But, why in SHARJAH ONLY?