Fuel pumps to restart or Enoc, Eppco ordered to close in Sharjah

Emirate's rulers announce ultimatum to Enoc after Sheikh Mohammed bin Zayed directs Adnoc to address the month-long shortage.

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SHARJAH // The Enoc Group of filling stations has been told to start selling petrol again tomorrow or it will be ordered to shut down its operations in Sharjah.

Video:Drivers react to petrol shortages in Dubai

Last Updated: June 08, 2011 UAE

Emarat and Eppco petrol stations in RAK, Sharjah and Dubai have all reportedly been suffering from shortages recenty. Drivers at an Emarat station in Dubai react after being told by staff that the station's supply has run dry.

The emirate's Executive Council issued the ultimatum as Sheikh Mohammed bin Zayed, Crown Prince of Abu Dhabi, directed the Abu Dhabi National Oil Company to solve the fuel shortage that has crippled the Northern Emirates for nearly a month.

The council set the deadline on Tuesday at its regular weekly meeting, led by Sheikh Abdullah bin Salim Al Qassimi, Deputy Ruler of Sharjah.

"The Executive Council directed the Sharjah Economic Development Department to close down all stations and facilities owned by Enoc Group after 72 hours from Tuesday, June 21, if the group fails to resume operations at all its petrol stations in Sharjah," it said.

"These directives come in line with the keenness of the Council to cater to the needs of Emiratis and residents of Sharjah. Fuel stands out as one of the necessities of daily life."

The company, which operates Enoc and Eppco stations, has been told of the decision. Its spokesman was not available for comment. More than two weeks ago the Executive Council gave the petrol company 48 hours to explain why its facilities in Sharjah were dry.

There was no public response from either side, but the council acknowledged yesterday it had spoken to Enoc Group about the first ultimatum, without providing details of the discussions.

Dr Abdullah Abdul Aziz Al Najjar, a member of the Sharjah Consultative Council, said members were grateful Sheikh Mohammed had stepped forward to offer a solution.

"This makes us feel like one family, and Sheikh Mohammed bin Zayed has always made us one and happy," he said. "I think this will make all Enoc and Eppco stations be Adnocs."

No details of Adnoc's plan to address the shortage are available, but Adnoc Distribution said earlier it was increasing its supply of fuel by up to 40 per cent in its 59 stations in Sharjah and the four northern emirates.

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Enoc and Eppco petrol stations in Sharjah have been dry for about a month. The company blames technical upgrades, but none of its stations in Sharjah has shown any signs of such work.

Enoc and Eppco are forced to sell petrol at a loss because the federally regulated retail price is lower than the wholesale price at which they buy it on global markets.

“The fact that we see Adnoc stepping in pretty much proves the widespread suspicions that this was a way for Dubai to stop subsidising demand in the Northern Emirates,” said Samuel Ciszuk, the senior Middle East and North Africa energy analyst at IHS Global Insight, a consultancy in the UK.

“The best thing that could have happened was that Adnoc could have supplied Enoc with a certain amount of crude at domestic pricing to its Jebel Ali refinery, to compensate for the subsidies that they have to carry in the Northern Emirates. That doesn’t appear to be on the cards now.

“If Enoc is no longer involved in the Northern Emirates, it will be able to concentrate on turning itself into a purely commercial entity. Adnoc will then effectively carry the subsidies for the rest of the country.”

Thaddeus Malesa, an independent energy analyst based in Dubai, said: “The Sharjah stand-off is a culmination of a multi-year debate on fuel subsidies, which are financed across the Emirates by operating companies.

“The ultimatum provided to Enoc will result in a change of emphasis for the company, as it will now retreat from its heavy exposure in the Northern Emirates and make way for Adnoc.”

Dr Dalton Garis, the associate professor of Economics at the Petroleum Institute, Abu Dhabi, said the issue may not be so black and white.

“To say it’s a changing of the guard would be putting it too strongly,” he said. “The Northern Emirates asked for help and Adnoc obliged. Certainly if they want more petrol stations, Adnoc is happy to supply them. It increases their presence in an important retail market.”


* With additional reporting by Martin Croucher