Saudi Arabia pays SAR225bn to subsidise fuel

July 30, 2015 6:49 pm

Saudi Arabia, the world’s largest oil exporter, pays a whopping SAR225 billion every year to subsidise fuel, which requires the kingdom to follow the path of other fellow Arab states and look into revisiting petrol prices, pundits say.

Local fuel consumption in Saudi Arabia amounts to 4.2 million barrels a day, equal to two million barrels of crude oil (almost 25 per cent of the kingdom’s daily output), a number of experts told Al-Madina Arabic daily.

Encouraged by the United Arab Emirates’ decision to deregulate petrol prices, Saudi economic experts say the kingdom should follow suit and gradually lift government subsidies as oil prices continue to decline.

Economic adviser, Fadhil al-Bou-Aineen, calls for a gradual deregulation of fuel prices and says additional efforts are required to boost the use of public transport and lessen dependence on small vehicles.

He highlights the measures the kingdom has already taken in this context, such as the introduction of the energy efficiency program and the automobile fuel economy label that requires auto traders to show buyers the mileage of new vehicles.

Al-Bou-Aineen calls on member states of the Gulf Cooperation Council to narrow the price difference of fuel because this move, according to him, will help in stopping the smuggling of fuel from one country to another.

Prominent economist and former member of the Saudi Shura council, Ihsan Bou-Halika , believes the real means to slash fuel consumption without raising prices is rationalisation by raising the efficiency of electric devices and using fuel-economical vehicles, in addition to establishing a strong public transport network nationwide.

He notes that the major plunge in oil prices by as much as 50 per cent since last year continues to place pressure on GCC oil-dependent economies, but again, rationalising energy use and consumption is the key to addressing this challenge.

Other experts say the Saudi government is required to devise a new mechanism in which only citizens benefit from state-sponsored subsidies.

(SAR1 = AED0.9, at the time of publishing)


AMEinfo Staff
By AMEinfo Staff
AMEinfo staff members report business news and views from across the Middle East and North Africa region, and analyse global events impacting the region today.