Oman mulls 7-8 per cent cut in electricity subsidies

March 2, 2016 1:27 pm


By Fatma Alarimi

Oman’s cabinet is considering changing electricity tariffs to save the government money which it spends on subsidies, a senior official said on Wednesday.

Qais al-Zakwani, executive director of the Authority for Electricity Regulation, told Reuters that the proposed change would affect commercial, industrial and government users of electricity consuming over 150 megawatt hours annually – between 9,000 and 9,500 consumers in total.

The change would save the government up to 7 or 8 percent of its bill for electricity price subsidies. Such subsidies totalled around 450 million rials ($1.17 billion) last year – and that figure is an understatement as the government is also selling natural gas used for power generation at a subsidised rate, Zakwani said.

End-consumers of electricity in Oman are only paying about half of the cost of generating it, he added.

“We have started talking to the targeted segments, and they are happy with the idea of adjusting operating timings from peak hours to hours with less electricity consumption, where they will pay less than the current flat rates.

“We are only waiting for the green light from the council of ministers to start changing electricity meters.”

Like other Gulf states, Oman is considering a range of reforms to state spending and revenues as low oil prices slash its export revenues.

The government posted a budget deficit of 4.07 billion rials in the first 11 months of 2015, swinging from a 233.4 million rial surplus a year earlier, finance ministry data showed this week.

(Reuters)

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