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ADNOC refinery costs behind diesel price rise

Authorities are systematically reducing subsidies, which brings prices in Abu Dhabi and Dubai closer to parity.

The price of diesel in Abu Dhabi will tomorrow increase for the second time in three months. Abu Dhabi National Oil Company (ADNOC) will raise the price of the fuel, which is used mainly in lorries, buses and heavy equipment, by 25 fils to Dh2.35 (64 US cents) per litre, or 12 per cent, the official WAM news agency reported.

ADNOC said prices were being increased to offset losses from the high cost of producing the fuel. While most lorry drivers were expected to oppose the increase, at least one transportation manager welcomed a move that could help close the gap between diesel prices in Abu Dhabi and neighbouring Dubai. The price difference causes congestion in ADNOC stations near the border between the two emirates, with drivers queuing up to buy lower-priced fuel on the Abu Dhabi side.

"If it is only ADNOC, then it's a good thing," said Selwyn Burbridge, the general manager of Oman Transport, a large UAE haulage company. But he said the Abu Dhabi subsidy cut did not go far enough. "As of today, Dubai fuel is still much more expensive," he said. "We need uniform pricing across the UAE." Yesterday, ADNOC implemented a 14 per cent increase in petrol prices it announced last week. Motorists rushed to fill their tanks ahead of the price rise, forming queues at petrol stations in the capital on Wednesday evening that backed up on to main roads.

Car dealers and economists predicted that Federal Government plans to raise petrol prices gradually would prompt drivers in the UAE to purchase smaller, more efficient cars in place of fuel-guzzling sport utility vehicles and sports cars. Petrol and diesel prices will have been raised twice this year. The cost of petrol has increased by up to 27 per cent in total, depending on the grade, while diesel will have gone up by 24 per cent.

Until this year, ADNOC had not raised diesel prices since 2006 or petrol prices since 2005. tcarlisle@thenational.ae

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