By Andy Sambidge
Company CEO says it is losing money on every sale while fuel price is fixed at AED1.37 a litre.
Emirates National Oil Company (ENOC) has called for an end to controls on petrol prices, saying it has been hit financially by rising costs for crude oil.
Removing caps on fuel prices would result in increases at the pump for motorists as current prices are set far below the rate the company needs to break even on its fuel sales, UAE daily The National reported on Monday.
Saeed Khoory, the company's chief executive, told the paper that it is losing money with every sale at its 170 service stations in the UAE while the price is fixed at AED1.37 per litre.
The UAE Government should either offer direct subsidies for retailers to cover their losses or let the petrol price rise, he said.
“Freeing the price is the best solution for the UAE,” he said, adding that the government should model a new pricing mechanism after diesel, which is not subject to a cap.
ENOC is currently working on plans to introduce self service at its service stations, with attendants still being employed but at an extra cost to consumers.
If you are facing losses, seriously guys please close down, your diesel prices are insanely high. You are one of the main causes of inflation here. I don't know who is forcing these guys to stay here if they are suffering daily losses. Back in 2004, these guys threatened to close down outlets unless prices are increased, see http://www.arabnews.com/?page=4§ion=0&article=52843&d=14&m=10&y=2004 when international prices were around $54 per barrel. Last year oil prices came as low as $33 per barrel. During that time I don't remember them fighting to reduce petrol prices, nor did they reduce the "uncapped" diesel prices even AED 9 per gallon. Other GCC countries sell petrol at amout equivalent to AED 1 per litre. Here it is already high, and they want to raise it further. It wil be absolute chaos of they are given a free hand. I hope these two companies will go away from the UAE and how much I hope ADNOC will cover the UAE fully.
@ Naufel, 1. ENOC is losing money 'cause the government has set artificially low prices. ENOC has NO bearing on inflation as the price of fuel is virtually unchanged in the last 5 years. 2. At AED 1.37 per liter I can almost guarantee that ENOC is losing more than AED 1 per liter. As for those other countries that sell fuel at AED 1 per liter, they too are losing money. 3. Have you seen the prices at ADNOC recently? They aren't any different than those at Emarat / ENOC / EPPCO. Causes of inflation indeed.
ENOC was the one who came up with the same problem 6-7 years before when they raise the price of the petrol all over the UAE. Once again they are only once who are loosing money!! This does not work..why is ADNOC not complaining, or Emarat ??? Why not ENOC???
I agree, Go aheadand increase the prices. I too believe that the prices are well below the market standards in the east, west and asia.
Enoc, Eppco â€“ Thank you. But I don't think we can support your price increase. We will just have to cross border and pump with Adnoc otherwise. Or why not just let Adnoc have stations in Dubai... Aren't we in the age of federation unity?!?!
If u live in India u get cheaper rice, in Brazil u get cheaper corn, in Australia u get cheaper meat... guess what u should get cheaper in the UAE...... It's not like ENOC buys the oil from Venezuela, ship it around the world blablabla... thing I mean look at the petrol cost in Saudi Arabia and other gulf countries... seriously guys, gimme a break
eppco & enoc is own primarily by the dubai government which unfortunately doesn't have oil. emarat is own by the federal government and adnoc is own by abu dhabi, adnoc has an agreement with emarat about location and operation in dubai thats why you wont see any emarat station in abudhabi same as adnoc in dubai.
.....hearing that an oil company is losing money is just that!
The picture is more complex than one may think. ENOC retail (petrol sales) are just one revenue stream of many for the company. So really it is hard to estimate the profitability of ENOC as a whole as opposed to the profitability of just the retial business. Not comes the politics...Dubai can't afford to continue to subsedise fuel prices, while probably Abu Dhabi can. Increasing fuel prices would not be a popular move with the UAE citizen. So what are the solutions? Let Abu Dhabi acquire all retail businesses in the UAE and subsedise them all? Raise the price of fuel across the UAE and add to inflation and public dissatisfaction? Raise the price of fuel in Dubai alone and see the business disappear to Abu Dhabi? Not an easy one to solve I think.
Let's review some facts before we start spouting off about how ENOC / EPPCO are making so much money. 1. The UAE (via refineries in Abu Dhabi (2), Dubai (1), Fujairah (1) and Sharjah (1)) refines around 800,000 bbl/d, the majority of which is for export and used to power the electricity and desalination plants. Yep, you guessed it, not all the fuel that is refined goes to your car, it had many many many other uses. In fact, there is not enough refinery capacity to fuel the cars in Abu Dhabi on a daily basis, much less the entire country. Therefore, the UAE is a NET importer of refined petroleum products sold to the public. 2. Dubai is not even self sustaining in the amount of oil they pump daily. This means that while they produce some oil much of it goes outside the country and they then have to import. It is estimated that Dubai's oil reserves will run out within the next 20 years (some say much sooner). They are a NET importer. 3. Dubai is NOT a member of OPEC (most folks don't know that). In fact, only Abu Dhabi is an OPEC signator and when Mr. Al Nasseri (the UAE's rep to OPEC) makes an agreement "for the UAE" it is binding only on Abu Dhabi. Therefore, Dubai gets what it can for its oil, most of which it will export as there is more profit doing it that way. 4. The price at the pump is NOT relative to the price per barrel that you see reported on a regular basis. In fact, one has very little bearing on the other. Using your same analogy, when fuel prices were at $150 a bbl recently shouldn't our price at the pump been AED 30 or so? You want them to lower the prices when the bbl price is low but not raise it when it is high? Does that even make sense? 5. Yes, everything in this country moves by land but that doesn't mean that our subsidized prices are the inflationary pressure being put on food stuffs. The price of fuel is negligible in the UAE and is a minuscule part of any inflationary pressure. Real estate and the cost of business licensing are the two highest pressure points on inflation in our local economy. It' simple. ENOC is subsidizing you driving your car. They should stop and should charge realistic prices for fuel. Full stop...