The UAE government is making the move to support the national economy, to lower fuel consumption, and to protect the environment and preserve national resources, the Ministry of Energy said.
A fuel price committee will review prices against average international prices and use this to decide on UAE prices, which will be announced on the 28th of each month. The committee will be chaired by the undersecretary of the Ministry of Energy, and will include the undersecretary of the Finance Ministry along with the chief executives of government-owned petroleum product distribution company ADNOC Distribution and Emirates National Oil Company (ENOC).
Minister of energy Suhail Al Mazroui said that the decision was taken after research into its long-term economic, social and environmental impact.
"The resolution is in line with the strategic vision of the UAE government in diversifying sources of income, strengthening the economy and increasing its competitiveness in addition to building a strong economy that is not dependent on government subsidies. This step will put the UAE on a par with countries that follow sound economic methodologies. It is also anticipated to improve the UAE’s competitiveness while positioning the nation on international indices," he said.
The move will reduce fuel consumption and encourage the use of electric and hybrid cars, as well as public transport, Al Mazroui said.
"Considering the international prices of oil and petroleum derivatives, we expect diesel prices to go down. This will stimulate the economy as lower diesel price would mean lower operating costs for a wide number of vital sectors like industry, shipping and cargo among many others," he said.
The cost of petrol represents 3% to 4% of an average income in the UAE, Al Mazroui said, "which is a reasonable percentage compared to international costs". Deregulating prices will "not have a notable impact on individuals’ costs of living", he said.
The decision will strengthen the UAE’s status as an attractive destination for foreign investments, Al Mazroui said.