Oman officials discuss removal of electricity subsidies

The government is expected to spend $1.42bn on electricity subsidies this year



Government officials in Oman have discussed the reduction or removal of subsidies on electricity to cut the cost to the government, according to reports.

Times of Oman said representatives from the Ministry of Oil and Gas, Authority for Electricity and Regulation and Petroleum Development Oman discussed a number of initiatives at a panel discussion on Sunday.

Currently, the sultanate provides subsidised electricity to the country’s entire population, costing an estimated OMR500m ($1.29bn) annually.

However, officials discussed plans to remove subsides for some sections of the population, increase electricity costs as a whole or name businesses that abuse the subsidies given to them.

“We could also have a name and shame strategy, where consumers would know which businesses are inefficient,” undersecretary at the Ministry of Oil and Gas, Salim Al Aufi, was quoted as saying.

“Another idea is to have subsidies removed, which is a controversial subject. Some people need to have subsidies, but that isn’t everyone. This is something that we will be working on and the results from this Majlis will go into these meetings.”

He suggested other measures could include mechanisms to encourage energy efficiency.

Authority for Electricity Regulation executive director Qais Al Zakwani said the country was expected to spend OMR550m ($1.42bn) this year on subsidies and OMR620m ($1.6bn) next year.

Oman introduced a number of austerity measures, including the reduction of fuel subsidies and higher taxes, in recent years as state revenues were hit by lower oil prices.

However, the government is now in a better fiscal position after prices surged this year.

Read: Oman budget deficit nearly halves in Jan-May as oil income surges

Saudi Arabia reduced subsidies on electricity earlier this year prompting complaints from some consumes as bills increased substantially during the hot summer months.

Read: Saudi to increase electricity, fuel prices in Q1