Adnoc hikes prices for LPG cylinders in Abu Dhabi, Northern Emirates

(MENAFN- Khaleej Times) Price of LPG cylinders in Abu Dhabi and the Northern Emirates has increased by 116 per cent after introducing a single price for all purchases and a uniform delivery charge, Adnoc Distribution has announced.

"Effective from July 22, LPG cylinders price has been increased 75 per cent from Dh20 to Dh35 for 25-pound cylinders and from Dh30 to Dh65 for 50-pound cylinders. In addition, a delivery fee of Dh10 and Dh15 for 25-pound and 50-pound cylinders will be charged," the company revealed in Management Discussion and Analysis Report released during the second-quarter results.

This is the first change to be made in close to 20 years and brings greater parity to LPG pricing across the UAE. "Our LPG prices are still below competitors, which offers us an opportunity to potentially expand our market share in Dubai and the northern emirates," read the Adnoc Distribution report.

The change will also see the removal of purchasing quotas and a more transparent pricing structure that ensures uniform rates for all of its customers - retail and commercial, whether purchased at the station or through a distributor. "By bringing LPG prices closer in parity to the rest of the UAE, activities in the illegal grey market - where cylinders were transferred between emirates - often in an unsafe manner, are expected to be minimised. We expect the increase in LPG cylinder prices to provide an uplift of Dh70 million on an annualised basis," it added.

Expansion to Saudi and India

Adnoc's first-half net profit slipped 22.4 per cent to Dh910 million due to a decline in UAE fuel sale during the lockdown. Its revenues fell 22.6 per cent from Dh10.2 billion to Dh7.9 billion.

It is assessing potential opportunities in the Indian lubricant market and organic growth in Saudi Arabia. "We are progressing well on our international expansion strategy. We are in advanced discussions with several counterparties including landlords and retail fuel operators in Saudi Arabia to grow organically, as well as continue to explore inorganic growth opportunities. We see the Saudi Arabian fuel market as large and fragmented with underdeveloped customer offerings," the company revealed in the report.

The company intends to introduce fuel stations in Saudi Arabia to capture untapped growth. "We are also assessing potential opportunities in the Indian lubricants market to achieve disciplined growth and operational success while targeting the highest return on investment," said Adnoc Distribution, which operates 406 retail fuel stations as of June 30, including 13 fuel stations in Dubai. It opened 25 new stations across the country in the first half of 2020, with 18 stations in the second quarter.

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