Saudi to increase electricity, fuel prices in Q1

The Saudi government has announced plans to increase prices of electricity, car and aviation fuel and diesel in the first quarter of next year.

The announcement coincides with the first payments under a citizen’s account programme announced in December last year that is designed to help low and medium-income households cope with austerity measures including price increases and a new 5 per cent value added tax rate.

Read: Saudi Arabia to exempt medicines and medical equipment from VAT

The Saudi Electricity and Cogeneration Regulatory Authority said tariffs would gradually increase from January 1 for residential, commercial, agricultural, healthcare, private education and charitable customers but not government or industrial users.

Read: Saudi to increase electricity prices

Other rates for car fuel, jet fuel and diesel will be decided in the first quarter of 2018, the Ministry of Energy, Industry and Industrial Resources said.

Funds saved through the lifting of the subsidies will fund the citizens account programme, which will make its first payment to households on December 21, and to provide private sector stimulus packages.

The reform programme is intended to “enhance economic efficiency” and rationalise the consumption and sustainability of natural resources, according to the announcement.

Payments made under the citizen’s account programme will be made based on household income, the number of dependents and their age. The amount will be reviewed on a quarterly basis based on costs.

Read: Saudi to announce launch of household allowance system – source

Beneficiaries have to be citizens of Saudi Arabia, or the son, daughter or spouse of a citizen permanently residing in the country.

Registration for the programme began in February and around 80 per cent of Saudi families had applied by the end of April.

Read: 80% of Saudi families register for social assistance scheme

It and the price increases fall under a domestic reform programme designed to boost government revenues.

Other austerity measures introduced this year include an excise tax on soft drinks and tobacco products and a dependents fee on the family members of foreign workers.

Read: Saudi labour ministry denies reports of increase to dependents fee

Saudi last raised car fuel prices in December 2015 when the price of 95 octane increased from SAR0.60 to SAR0.90 ($0.24) per litre.