Oil Report

Brunei raises fuel prices for foreigners

BANDAR SERI BEGAWAN, June 17 (Reuters) - Oil-rich Brunei will substantially raise petrol and diesel prices for foreigners from June 19 to rein in mounting fuel subsidies, the government said.

Like other Asian countries, the tiny but wealthy sultanate on Borneo island is grappling with soaring subsidies in order to keep its pump prices the lowest in Southeast Asia.

Brunei’s Energy Ministry said late on Monday that foreign motorists would have to pay B$1.18 ($0.86) for premium petrol, more than double the 53 Brunei cents for Brunei-registered vehicles.

The change takes the enhanced Brunei fuel price to the same level as in neighbouring Malaysia. Since Malaysia raised petrol and diesel prices on June 5, many Malaysians in east Malaysia have made a beeline for Brunei to seek relatively cheaper fuel.

“We get hundreds of Malaysians taking their cars across the border daily just to buy fuel,” said one Brunei resident.

Brunei said diesel prices would be raised to B$1.13 a litre from the 31 Brunei cents it charges to Bruneians.

The government said sales of diesel to foreign vehicles rose by 66 percent on June 5-6 compared with June 1-4 while sales of premium petrol rose by 36 percent during the same period.

Brunei spent B$202 million on fuel subsidies in 2007, up sharply from B$50 million in 2004, government data showed.

Oil and natural gas are the mainstay of Brunei’s economy. The government has told the people to conserve energy, saying petroleum resources would not last forever.

“Some of us seem to have forgotten or have neglected the need to be prudent when using these commodities,” Energy Minister Yahya Bakar said last month. (Writing by Jalil Hamid, Editing by Valerie Lee)