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Last Updated: Tuesday, 12 October, 2004, 14:49 GMT 15:49 UK
UAE warned over fuel cost rises
Petrol pump
The companies say they are losing $1m per day
Petrol retailers in the United Arab Emirates say service stations may run dry of fuel because they have to sell petrol for less than they pay for it.

Dubai's government-owned retailers say unprecedented oil price rises and a UAE limit on the pump price of petrol has created the situation.

Retailers say they are buying fuel for 40 cents a litre and have to sell it on for 28 cents a litre.

They say they are losing more than $1m each day as a result.

Queues and shortages

The Eppco and Enoc companies, which have over 160 petrol stations in Dubai and in northern Emirates, say they can no longer afford to continue subsidising motorists.

"A business incurring losses of that magnitude is clearly not sustainable in the long term, unless the companies have either access to subsidised products or retail prices are increased... ," they said in a statement quoted by Reuters news agency.

They warned of queues at petrol stations, with some garages running dry and petrol sales potentially shutting down altogether.

The UAE government is understood to be aware of the retailers problems, but it is not yet clear if the situation will be resolved either by the federal government subsidising petrol prices, or by it authorising a rise in charges at the pump.

According to Opec, the UAE supplies just under 2.5m barrels of oil per day to the world's markets.

At current prices, that equates to over $125m in revenue each day.

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