Petrol price hike: Oman to fall from ninth cheapest fuel in world to 13th

Oman Monday 11/January/2016 22:21 PM
By: Times News Service
Petrol price hike: Oman to fall from ninth cheapest fuel in world to 13th

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After at least 17 years, the price of petrol in Oman is finally set to rise, by a full third for super unleaded, pushing the Sultanate’s ranking as the ninth cheapest fuel provider in the world ... to the 13th.
Quoting Eng. Salim bin Nasser Al Oufi, Undersecretary of the Ministry of Oil and Gas, the Oman News Agency (ONA) reported that the price of super unleaded petrol will rise from 120 baisas to 160 baisas per litre; for regular it will rise from 114 baisas to 140 baisas per litre and for diesel, the rise will be from 146 baisas to 160 baisas per litre.
It is the first hike since the lifting of the regulation on fuel prices and will come into effect on January 15, and will be in place until the end of the month, according to the Ministry of Oil and Gas.
​Check here: Some easy steps to help cut your fuel cost by 30 per cent in Oman
In real terms this means that for a tank of super unleaded, the owner of a smaller sedan car with a 1.4 to 1.6 litre engine could on average expect to see his fuel bill rise from OMR4.8 to OMR6.4, say automobile engineers. For a mid-sized vehicle with a two-litre engine the fuel bill will rise from OMR7.2 for a full tank to around OMR9.6.
And for larger vehicles with an engine capacity of 5.7 litres with a previous fuel bill of OMR11.5 for a full tank of petrol is now expected to pay OMR15.3.
Despite the price increase, fuel will remain cheaper in Oman than over the border in the UAE, currently at the equivalent of 177 baisas per litre and is still less than half the price paid at the pumps in India and less than a third of the price paid at forecourts in the United Kingdom.
Data on globalpetrolprices.com shows that the Sultanate’s new petrol price pushes it out of the top 10 cheapest countries in the world to the number 13, nestled between Nigeria and Malaysia.
Among the Gulf Cooperation Council (GCC) countries, Oman stands at fifth position following Kuwait on top with oil price at the equivalent of 70 baisas per litre (based on exchange rates yesterday), Saudi Arabia second 88 baisas, Bahrain third with 96 baisas per litre and Qatar on the fourth position with oil price at 100 baisas per litre. Earliest global records available show that Oman’s petrol price has remained the same since at least 1998, though the price of diesel did rise in May 2005 from 102 baisas to 146 baisas.
Eng. Salim bin Nasser Al Oufi said in his statement yesterday: “A committee formed to fix the price will hold a meeting at the end of each month to fix the monthly prices. However, the price may not change if the global prices are close to the local price.”
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The increase had been expected since the government unveiled its austerity-driven 2016 State Budget. However, opinions varied on the impact it would have.
“An increase in the price of diesel by 14 baisas is not going to make much difference in the end price of products. There may be a slight increase, depending on factors like quantity and location of production,” Mohammed Hassan Al Ansi, a senior official-in-charge of logistics and transportation affairs at the Oman Chamber of Commerce and Industry (OCCI), told Times of Oman.
“However, government’s price control departments should keep a tab constantly to find if somebody is playing dirty games by inflating the prices,” the OCCI official added. Anvwar Al Balushi, chairman of Anvwar Asian Investment Group, said that the diesel price hike would have an impact on the Sultanate’s economy.
“The product price will go up and push the inflation,” Anvwar said while adding that individuals who are using petrol vehicles should use it wisely to cope with the situation.
“People who are using fuel guzzlers should have to dump it,” Anvwar added.
Meanwhile, N Gurumurthy, a Muscat-based financial expert, said that there will be a nominal price rise in products and the price increase may result in additional expenditure of about OMR10 to OMR20 per month.
“For normal office goers using medium-powered vehicle, the price increase may result in additional expenditure of about OMR10 to OMR20 per month, which is not very high. I would presume that though the percentage increase appears higher, the impact of price rise will be nominal for most, except for the lower segment of the society. It is possible that some of the users may shift to lower grade petrol,” Gurumurthy said.
“The diesel price increase may marginally push up the cost of products/services for most of the items except those items where the transportation may be one of the major input costs. In other words, the impact of the price increase will not be uniform across all products. Some of the companies may wish to absorb the cost to maintain their sales volume,” the expert said.
The expert also added that with regard to auto sales, when fuel prices increase, there will be a decline in demand for vehicles.
“But considering the lack of alternative modes of transport and the marginal impact of price rise, I do not foresee significant fall in auto sales. I would assume that it is a moment when everyone should join hands to help the country to tide over the challenge,” the expert added. A senior manager from Toyota said that rise in fuel prices will have its effect in any economy and Oman will also witness the same.
“33 per cent increase will definitely have an effect on auto sales initially. Then on, slowly it should settle down....But sure fuel efficiency will play a major role with all the auto brands now on and hybrid cars will have entry and will slowly make its way into people’s mind,” Jaison Mathai, senior marketing manager at Toyota in Muscat, said. “Sales of large engine vehicles may decline,” he added.
An official from Lulu said even though they will not pass the burden on customers, they may be forced to do so if the suppliers increase the price. “We can expect a slight price rise in the coming days if the suppliers increase the price,” Raison Francis, marketing and promotions in Lulu Hyper market Oman, said.