A strident effort by the Omani government to roll back subsidies as part of a wider bid to help reduce the country’s annual budget deficit is beginning to pay off.
On Saturday, the Ministry of Finance revealed that allocations towards subsidies against electricity, water, transport fuels and other utilities and services were estimated at RO 800 million in the 2021 General Budget.
This compares with disbursals totalling RO 1.031 billion in 2019 in the form of subsidy payouts and funding support towards a number of public services and economic sectors.
The biggest contribution to this reduction comes from the power and water sector following a dramatic overhaul of tariffs announced by the government recently.
With effect from January 1, 2021, subsidy on electricity will be gradually phased out over the course of 2021–2024 for citizens, while expatriates will begin paying cost-reflective rates for their consumption.
A saving of RO 215 million accrues to the government following the revamp of electricity and water tariffs during 2021, according to the Ministry. Consequently, the allocation towards electricity subsidy falls to RO 500 million for this year, as opposed to RO 610 million in 2020.
Other utilities attracting subsidy during the year are: Potable Water – RO 90 million, Wastewater — RO 86 million, and Solid Waste — RO 64 million. Subsidy on transport fuels, chiefly gasoline and diesel, remains at RO 35 million this year, similar to last year’s allocation.
Additionally, the 2021 Budget earmarks RO 25 million as subsidy on interest accruing on soft development and housing loans disbursed by state-backed lenders.
This does not include RO 100 million in housing loans that Oman Housing Bank (OHB) is committed to making available during the year.
Source Link: www.omanobserver.om