After UAE, other Gulf states may cut fuel subsidies

JEDDAH: The UAE’s decision to lift fuel subsidies beginning in August has raised the possibility of other Gulf states following suit. Economists suggest a wide disparity of prices of gasoline in the Gulf countries will lead to more petrol smuggling operations that will harm the interests of all. They said there are indications that the Gulf states have considered this issue internally and agreed to adjust prices based on specific and varying time periods. Economist and writer Fadl Al-Buainain said a review of petrol subsidies was discussed and has been agreed upon by all Gulf countries for some time now. However, the delay in implementation was due to various reasons, including consideration of alternatives available and mechanism to compensate those affected by the removal of subsidies. Economist Mohammed Al-Amran, said the Gulf states, as the largest petrol producing countries, subsidize petrol prices in order to reduce prices for citizens. Gulf states have the lowest petrol prices in the world. He said the current difference in prices between Gulf states created a gap which benefits Saudi citizens, which is only set to increase when the UAE lifts subsidies. A number of Gulf States are studying this issue via various means, said Al-Amran, as the UAE decision will likely prompt other states to follow suit. He said the Saudi government has been studying the issue of increasing fuel prices for years in order to reduce traffic congestion, as well as to lift the burden on the state due to subsidies. However, delays have been linked to determining means of compensating for these higher prices, either through increased salaries or providing indirect assistance to citizens and social security beneficiaries. The government does not intend to wait until the completion of public transportation projects to do so, but may gradually begin to increase prices, he said. -Arabnews