By Andy Sambidge
Emirates National Oil Company says cost set to increase due to price of fuel on int'l markets
Emirates National Oil Company (ENOC) said on Saturday it expects to spend AED2.7bn ($735m) this year on providing fuel subsidies.
The figure represents a 44 percent rise from the AED1.5bn it spend last year on subsidising the cost of fuel for UAE motorists.
"Due to the rise in price of fuel in the international markets, the company had to internally meet the cost of providing fuel at subsidised rates in the local market, valued at AED1.5bn during 2010," the company said in a statement.
"Also based on the financial review of Q1 2011, it is expected that during full year 2011, ENOC will have to meet an additional AED2.7bn internally to cover the fuel subsidies offered locally."
It said the cost arose from the difference in the increasing price of petrol sourced from international markets and ENOC's fixed price at its stations.
UAE gasoline prices have risen 26 percent to AED1.7 ($0.46) per litre since last April, when the government introduced the first of two price hikes imposed so far, still well below market prices.
All petrol stations in the UAE must respect state-controlled prices.
Abu Dhabi and Dubai planned to spend over AED23 billion ($6.26 billion) on various subsidies in their 2010 budgets.
The UAE, the world's third largest exporter of crude oil, has long subsidised fuel prices in an effort to cut living costs for residents.
ENOC's board also said that despite the cost of subsidising fuel prices, the company had recorded "positive results and achieved most of its business objectives", without giving further details.
Earlier this month, Dubai's statistics centre said that Dubai's inflation rose by 0.74 percent on an annual basis in the first quarter of 2011, driven by a large increase in fuel costs.
The transport group of costs rose 9.72 percent as petrol prices rocketed nearly 23 percent, the centre said.