Oman, with one of the GCC’s biggest budget deficits, announced on Sunday that it will begin removing water and electricity subsidies starting next year, in January until 2025, Gulf News reports.
According to the 2020 budget, Oman spends approximately $1.95 billion on subsidies for the electricity and water sectors.
Dr. Mohammed bin Hamad Al Rumhy, Chairman of the Board of Directors of Authority for Public Services Regulation (APSR), issued decisions announcing the Cost-Reflective Tariffs (CRT) Regulation and the Permitted Tariffs Regulation for connection and supply of electricity and amending some provisions of the drinking water supply tariffs.
Hit hard by the coronavirus pandemic, Oman is also suffering due to lower crude prices, forcing it to cut spending.
As part of the Fiscal Balance Plan (2020-2024), the initiative to reorient electricity and water subsidies, will lay ground to achieve financial sustainability and upgrade the efficiency of government spending and the social security system.
Utility tariffs will be raised gradually until the subsidies are completely lifted in 2025 and a national support system will be implemented to help low-income consumers.
Presently, the water and electricity subsidies are provided to all electricity consumers in Oman, irrespective of the living standard of citizens, informs Gulf News. The subsidy also covers non-residential categories (like industrial, government and electricity segments and others).
Oman’s water and electricity sectors observed noticeable growth over the past decades, generating investments in the two sectors that crossed OMR8 billion. Concerning water, this sector saw a growth of more than 187 per cent while total water supply increased by more than 180 per cent from 2010 to 2019.