S06 ORME 7 2016 Analysis 03_Layout 1 26/10/2016 10:54 Page 31

Analysis ďƒ§

Energy subsidy reform in the GCC ALL OF THE GCC countries have increased energy prices since the oil price slump in mid-2014, although the depth and breadth of the reforms vary significantly from country to country. Bahrain: The authorities raised the gas price to industrial users by around 10 per cent from April 2015 with phased annual increases of US$0.25 per Mn Btu until the price reaches US$4.0/Mn Btu by April 2021. In January 2016, retail price of gasoline was raised by almost 60 per cent, while price hikes for diesel, kerosene, liquefied propane gas and electricity and water tariffs are being phased in gradually by 2019. Kuwait: The price of diesel was doubled in January 2015. Kuwait also approved an increase in gasoline prices of around 70 per cent, on average, effective September 2016. A government committee will revise the new gasoline prices quarterly depending on global crude prices. Recently, the Parliament passed a law to reform water and electricity

subsidies. The new tariffs will become effective from May 2017. Oman: In January 2016, Oman raised the price of low-grade gasoline by a third and diesel by 10 per cent, aimed at cutting subsidies for petroleum products, electricity and other goods by over 60 per cent. In January 2015, the industrial price for natural gas was doubled. Water tariffs were increased in March 2016 for government, commercial and industrial users. There is also a proposal to raise electricity tariffs for these users. Qatar: In October 2015, water and electricity prices were raised and tiered according to consumption. In January 2016, gasoline prices rose by 30 per cent – with a further increase of four per cent last August. Saudi Arabia: In December 2015, the authorities announced an increase in fuel prices (ranging from 10 to 134 per cent

across most major energy and water products for businesses or households. The largest price increases are for ethane (133 per cent); transport diesel (79 per cent); and 67 per cent each for natural gas and lowgrade gasoline. Prices of electricity and water were also raised by 60 per cent for higher tiers of residential consumption and by varying amounts for commercial and industrial users. The UAE: In August 2015, the UAE reformed its fuel pricing policy by adopting a mechanism to adjust monthly gasoline and diesel prices against international prices. Abu Dhabi is developing a comprehensive electricity and water consumption strategy, which resulted in higher tariffs in January 2015 (up 170 and 40 per cent, respectively, for water and electricity). Water and electricity tariffs were increased again by 14-17 per cent in January 2016. The authorities intend to slowly phase out the remaining subsidies on public utilities, whilst protecting lower-tier customers.

Issue 7 2016

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