‘Fuel subsidy cut caused marked fall in petrol demand in Oman’

Business Monday 23/January/2017 17:44 PM
By: Times News Service
‘Fuel subsidy cut caused marked fall in petrol demand in Oman’

Muscat: Removing the fuel subsidy early last year has resulted in a marked decline in demand for both petrol (gasoline) and diesel as the culture of consumption has undergone a drastic change, according to a top-level official at the Ministry of Oil and Gas.
The demand for gasoline fell by 3-4 per cent last year, which is against an average annual growth of 7-8 per cent prior to the subsidy cut. Similarly, consumption of diesel declined by 6-7 per cent, after the subsidy was cut. Oman government completely eliminated subsidy on petroleum products on January 15, 2016.
Part of reforms
“We were increasing our consumption (of petroleum products) by 7-8 per cent per annum. We probably need a refinery with a capacity of 200,000 barrels in every 5 to 6 years, which will cost $6-7 billion. So, we need to make a change, which was part of our reforms. There are other reforms, which will be announced later,” said Salim Al Aufi, undersecretary at the Ministry of Oil and Gas.
Al Aufi said the removal of subsidy has helped the government to reduce its budgetary expenditure. “But the main objective was to change the culture of (fuel) consumption.”
For the first time, he said, Omani consumers are going to car agencies and asking for fuel efficiency of vehicles, before taking a decision on buying cars.
On a monthly basis
He said Oman and the United Arab Emirates are the only two countries in the region that determine prices of petroleum products on a monthly basis, after taking into account the international crude oil price.
Al Aufi said with the Sohar refinery raising its refining capacity, the Sultanate could exports its refined petroleum products, thanks to a fall in domestic demand.