‘Wise’ freeze on fuel cost from Oman's ministers

Business Tuesday 07/February/2017 22:16 PM
By: Times News Service
‘Wise’ freeze on fuel cost from Oman's ministers

Muscat: Oman’s Council of Ministers has ordered a price freeze on the country’s most popular fuel after calls for an urgent review of escalating costs.
M91 fuel will be frozen at its current price - 186 baisas a litre - until the government can implement “mechanisms to support deserving citizens,” the Council of Ministers has announced.
Also read: Diesel climbs to highest in Oman history
The price of regular fuel has risen by 63 per cent since January 15, 2016, the day fuel subsidies were scrapped in Oman. More cars run on this fuel than on diesel and the more expensive M95 super fuel combined.
The statement from the council added: “In the context of government’s care to support society segments which have been affected by the global oil prices, the Council of Ministers has directed the committee in-charge of following up the oil prices to finalise mechanisms to support the deserving citizens as a result of rising prices of global fuel so that the M91 price adopted during this month of February 2017 be fixed until the mechanism referred to comes into effect.” The announcement was hailed as a “wise decision” by Shura members, consumers and trade unionists after a series of calls to urgently review the rising cost of fuel in the Sultanate.
Related article: Fuel stamps for poor in Oman?
A Majlis Al Shura meeting will be held today (Wednesday) to examine how best to help low-paid workers in the country.
The council will discuss “executable solutions” made by members in relation to fuel pricing for the current month and the “impact on segments of society”.
“The Council of Ministers made a wise decision to fix the regular fuel prices. It coincides with the Shura’s suggestions and discussions that were commenced recently,” said Mohammad bin Ali Al Badi, member of the Shura Council representing Buraimi.
“It will help those with low incomes and families living on social welfare. Nobody can survive with these fuel prices if their salary is OMR300. Students also would have to churn out more money if they don’t have the financial support. “Of course the decision to fix the price is made until there is clear criteria on deciding the fuel prices,” said Al Badi.
The General Federation of Oman Trade Unions, (GFOTU) yesterday urged the government to look into the issue immediately and revise increases, which they say are adversely affecting low income families. A spokesman even called for fuel stamps to be introduced.
Also read: All government vehicles in Oman to use regular petrol only
Mohammed Al Farji, a trade unionist with the General Federation of Trade Unions in Oman, said that around 60 per cent of workers earn below OMR400 per month.
Permanent system
He added: “We welcome it. The price hike was hurting the common man a lot. However, we expect that the government should come out with the proposed permanent system or mechanism as early as possible to help those people who are struggling.”
Subsidies were removed last January and since then, residents have been faced with monthly increases. For the first time in Oman’s history, diesel crossed the 200 baisas per litre mark earlier this month.
M91 rose from 176 baisas a litre to 186 baisas a litre a week ago. Last January, before fuel subsidies were removed, it cost just 114 baisas for a litre of regular fuel in Oman. Subsidy removal saw that price spike immediately to 140 baisas and in the 12 months since subsidies were stripped away the cost of regular fuel has risen by 63 per cent, as has the cost of super grade fuel. The cost of diesel has risen by 40 per cent, according to the government’s own data.
Ramanuj Venkatesh, an Assistant Manager in the accounts dept at Larsen and Toubro, said: “With a proper fuel policy in place, people will know how much money they can put towards their expenditure and savings. Given that Oman’s economy is currently reeling in a budget deficit, people’s willingness to spend is low and they are cautious before they open their wallet to buy anything. If petrol prices were not fixed, people would demand higher salaries and better living conditions, which would be challenging for the economy in the long run.”
Hassan Zia, Engineer, Global Energy United - “For Oman to use a fixed price to meet the needs of low-income expatriates and locals is good, because the price of everything else is increasing as well. The Majlis Al Shura is now saying not to increase the price of any sort of fuel - be it M91 or M95 - anywhere between 120 and 180 baisas per litre so this is a step in the right direction, even if the price of M91 at 186 baisas is slightly above the upper limit.
“Oman’s economic situation may not be the best right now, but the government has to take steps to make the lives of people easier as well and not put the economic burden on its residents.
“This is a very good step taken by the government.”
Mohammed Shafiqul Islam Bhuiyan, who manages a petrol pump in Ghala, said that their sales are terribly affected when petrol prices are raised. “Now I think people will not queue up for long hours to fill up their tanks at gas stations at the end of the month,” he said.
Fahim is a Bangladeshi citizen who works as a storekeeper in Al Hamriya. He earns OMR600 and his wife and two children live with him.
“It’s great news for not just me but for everyone else. Things are already very expensive in Oman - my children go to school and we have several other expenses including house rent, car maintenance and others.
“Although we have a small 1.4 litre car, the rising fuel prices were really affecting our budget. Earlier we used to go to Barka (60 km from Muscat) for joint family picnics, but we have stopped that completely. We have to think of the costs - it’s not easy.”
According to National Centre for Statistics and Information data, 4,211,000 barrels of regular fuel were sold in 2016 up to the end of October as sales of premium fuel dropped by 23 per cent to 14,915,000 barrel over the same period. Diesel sales declined by 7 per cent to 14,707,000 barrel.