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The United Arab Emirates will end transport fuel subsidies in August to ease pressure on the country’s budget following the crash of oil prices, and to reduce carbon emissions by encouraging the use of public transport.
Gasoline and diesel prices will be deregulated and will be linked to global market prices, the Ministry of Energy said in a statement on Wednesday. Under a new pricing policy, the prices of fuel will be announced on the 28th day of each month, it added.
The International Monetary Fund has urged the oil-dependent Gulf states to reduce fuel subsidies. Oil subsidies in the UAE alone mount to $7 billion a year, as part of a total $29 billion energy package, which includes natural gas and electricity, according to the IMF. In Saudi Arabia, fuel subsidies reached $106.6 billion.
Suhail Al Mazroui, UAE’s minister of energy, said the move would encourage people to use public transport and help reduce carbon emissions. The transport sector was responsible for 22 percent of total greenhouse emissions in the UAE in 2013, amounting to 44.6 million tons of carbon dioxide, he added.
Removing the subsidies won’t have a huge impact on the general cost of living, he added. In fact, he expected diesel prices to actually go down initially, in line with international prices of oil and petroleum derivatives.
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