ENOC faces loss and makes plea for help
Fuel retailer breaks silence over severe burden: could stations close?
Fuel retailer ENOC has broken its silence over its debt concerns and has asked for support from “concerned authorities” with its expected $735 million loss in 2011.
Unlike rival ADNOC, ENOC has to buy fuel on international markets but still sell at subsidised prices in the UAE. For the first time it has admitted that it will need assistance to secure its long-term future.
Since first revealing that it will make the loss in May, customers at the group’s ENOC and EPPCO fuel stations have endured months of fuel shortages and station closures. Sheikh Mohammed bin Zayed, Crown Prince of Abu Dhabi, intervened in June and directed ADNOC to make up the shortfall at ENOC-owned pumps in the Northern Emirates.
The fall off in demand over the summer was hoped to ease the situation, however according to ENOC, demand is once again increasing and it is struggling to cope; raising the possibility that pumps could again close.
”The current scenario, where ENOC has to bear the burden of higher international fuel prices while at the same time distributing fuel at subsidised rates, is clearly not sustainable or viable for the company,” ENOC said in a statement. “ENOC looks forward to the support of the concerned authorities in addressing the concern.”
“The substantial rise in the price of fuel in the international markets – the highest ever recorded since 2008 – has put a severe burden on ENOC and EPPCO, which for many years have distributed and continue to distribute fuel to end-users at a highly subsidised rate.”
ENOC said that its debt had forced it to delay or cancel planned openings in its retail network.
“ENOC’s retail network across Dubai currently witnesses the heavy rush of motorists, especially during peak hours,” said the company. “The cost of providing subsidised fuel to our customers is expected to lead to a loss of AED 2.7 billion for the company this year. This also has a serious impact on our ability to expand our retail network to meet the growing demand.”