RIYADH/JEDDAH, 2 May 2006 — Citizens and expatriates across Saudi Arabia wholeheartedly welcomed the Kingdom’s decision to cut the price of petrol by 30 percent.
Custodian of the Two Holy Mosques King Abdullah issued a royal decree on Sunday reducing the price of petrol from 90 halalas to 60 halalas until Dec. 31, 2006. He has also cut diesel prices from 37 to 25 halalas per liter. Price of 91-octane petrol for consumers is to be brought down to 60 halalas from 82 halalas per liter while price of 95-octane petrol slashed from SR1.02 to 75 halalas, effective from Jan. 1, 2007.
Gas stations across the Kingdom put into effect the new prices yesterday. Reacting to the royal decision to cut petrol and diesel prices, several market experts viewed the move as the harbinger of an economic boom in the country particularly in the light of rising crude price in the international market.
Ali Hassan Nagoor, chairman of the ground transportation committee at the Jeddah Chamber of Commerce and Industry said: “The government decision to scale down the petrol price will undoubtedly give a strong upward push to the Kingdom’s economy as it will reflect on the competitiveness of the country’s exports. It will also bring down the prices of commodities and services in the domestic market benefiting all the people.”
Nagoor added that the move would energize the Saudi market as the transportation and distribution cost of commodities would be brought down by about 30 percent, particularly goods that are transported long distances. Several goods are transported in trucks from one coast to another for distribution in local markets. He expected that the fall in the fuel prices would also lower the cost of passenger and tourist services. “It will also put the Kingdom’s tour operators in a better position than their counterparts in neighboring Arab countries,” he said. However, goods coming from outside the Kingdom will not benefit much from the new prices.
Nagoor did not think that Haj and Umrah would benefit from the new order as the packages are organized by pilgrim agencies outside the country and they would be governed by the cost in those countries.
Aslam Al-Rahaili, who runs a large chain of filling stations, said: “The reduction will undoubtedly benefit all citizens and expats as they will be able to save one-third of their fuel expense from now on and it will not be a small amount. This could be more profitable for those families who own several cars and traveling long distances every day.”
An Egyptian cab driver said that he would be able to save money as he hoped that the limousine companies would now demand a lesser amount from the drivers as the fuel cost has come down considerably. “Now I’m paying the company SR130 every day,” he said.
Asrar Abdul Kalam, an Indian expatriate, said: “The drop in oil price is a rare move in the world. In fact, the Kingdom has set an example for the rest of the countries all over the world to lower the prices of their mass production in the interest of common man. “I’m very happy that I’ll now save more money by paying less for petrol. This also shows how the Kingdom’ leadership takes care of the people living in the Kingdom.”
Abdullah Khaled, a Saudi youth, said the king’s decree was expected, as he had taken a number of measures, especially in the field of business and economy. “It’s welcome, especially in the contest of the Kingdom’s oil revenue mounting,” he said.
He said that Saudi youth would benefit a lot from the reduction. At the same time, he suggested that with this reduction transportation costs should also be reduced as a result of the decree.
Fareed, an IT maintenance engineer, felt that since his movements were limited and his car a four-cylinder vehicle, such reductions would not make any difference to him. “Maybe American cars will benefit from the decree at the expense of Japanese cars,” he remarked. “King Abdullah has been taking people-friendly measures one after another,” said Muhammad Alghamdi, member of the Jeddah Chamber of Commerce and Industry. This was echoed by many other citizens and expatriates. “We all welcome King Abdullah’s move,” said Sultan Mazharuddin, account manager at Mediaedge in Jeddah. “All of his moves so far have been for the benefit of citizens and expatriates. The move to downward revise petrol prices and providing housing to the poor are among the king’s welfare measures. At a time when petrol prices worldwide have been going up due to rising oil prices, the Kingdom has set an example to the rest of the world by announcing people-friendly measures,” he said. Transport operators of petrol and diesel-driven vehicles in general and the owners of four-wheel-drive and big vehicles in particular expressed their happiness over the Kingdom’s move.
“The reduction in prices would definitely help the transporters, but I don”t see it being passed on to the consumers in real terms,” said Prakash Mani, general manager of Jeddah-based Zahid-Heanor. “If you recollect, when prices increased three-fold, it was the transporters who absorbed the impact. The consumers even then were not affected. The reduction in price would also help families. Asked if he sees any cascading effect in finished products he said: “I can’t see it happening, but in some cases it may happen,” he said.
