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Bahrain to cut power, water subsidies from March.

The new prices will be introduced gradually over the next four years, starting March 1, with electricity eventually costing 29 fils per unit and water priced at 750 fils per unit. This will save the government BD435.4 million in four years

Higher rates on water and electricity have been approved by the Cabinet, which plans to cut government subsidies in March.

Those affected will include Bahrainis with more than one household, all expatriates, large companies and the industrial sector.

The Cabinet session, chaired by His Royal Highness Prime Minister Prince Khalifa bin Salman Al Khalifa, started late as ministers waited for approval from a parliamentary committee tasked to look into the overhaul of the subsidy system.

The new prices will be introduced gradually over the next four years, starting March 1, with electricity eventually costing 29 fils per unit and water priced at 750 fils per unit.

This will save the government BD435.4 million in four years; with BD290 million being saved from electricity and BD145.4 million from water.

However, the new rates will not affect Bahraini households or small and medium businesses.

Bahrainis will continue paying three fils per unit for electricity usage up to 3,000 units (first electricity category), nine fils for 3,001 to 5,000 units (second electricity category), and 16 fils for 5,001 units or more (third electricity category).

For water usage, the rates will remain at 25 fils per unit for up to 60 cubic metres (first water category), 80 fils for 61 to 100 cubic metes (second water category), and 200 fils for 101 cubic metres and above (third water category).

The new rates were revealed by Energy Minister Dr Abdul-hussain bin Ali Mirza during a Press briefing following the Cabinet's weekly session at Gudaibiya Palace.

He said the monthly service fee will also be increased from a combined 400 fils for electricity and water to BD2.

"The government has allocated BD350 million for last year and this year to subsidise electricity and water, which we believe is improperly directed to wealthy Bahrainis, expatriates, visitors, big commercial and industrial establishments and ministries and government bodies," said Dr Mirza.

"We have excessive usage with limited resources so increasing the rates will save our conservation programmes, and bring the prices in line with other rates in the GCC.

"Bahrain is the third lowest in household rates for electricity and water among the six GCC countries, second lowest in electricity rates for the industrial sector, second lowest electricity rates for the commercial sector, and the fourth lowest in water rates for non-household.

"Even with the increase in rates our standings remain the same, which means that with the increase we are maintaining our position as providers of cheaper services."

Dr Mirza added that 367,000 accounts were registered with the Electricity and Water Authority (EWA).

"We have 115,000 Bahrainis with one household, 92,000 Bahrainis with more than one household, 55,000 non-Bahrainis and 105,000 non-household accounts, which means that those not effected will be around 31 per cent," he said.

"There have been questions from MPs about several issues and to clarify whether Bahrainis with more than one wife and living in different homes will be treated as one household.

"Bahraini divorcees, widows, single women above 21, Bahrainis living in rented accommodations, Bahraini women married to non-Bahrainis, non-Bahrainis taking care of Bahraini children below the age of 21 and inheritors will all continue paying the same rate.

"A special grievances committee has also been set-up to deal with exceptional cases, which we may face along the way and are not included as exemptions." He also added that a detailed study was being carried out on petrol prices, which will be revealed at a later date.

According to the new rates, expatriates and Bahrainis with more than one household will pay six fils this year, 13 fils next year, 21 fils in 2018 and 29 fils in 2019 in the first electricity category, while those in the second electricity category will pay 13 fils, 18 fils, 23 fils and 29 fils respectively, and for the third category it will be 19 fils, 22 fils, 25 fils and 29 fils respectively.

They will also be paying 80 fils per water unit in the first category this year followed by 200 fils next year, 450 fils in 2018 and 750 fils in 2019. While for the second category it will cost 200 fils this year, 300 fils the next, 500 fils in 2018 and 750 fils in 2019, followed by 300 fils, 400 fils, 600 fils and 750 fils respectively for the third category. Medium and small businesses will continue paying the flat 16 fils per unit for electricity, which is the regular usage from 0 to 5,000 units.

However, large corporations and factories will pay 19 fils this year, 22 fils next year, 25 fils in 2018 and 29 fils in 2019 for usages of 5,000 to 250,000 units, and 21 fils, 23 fils, 26 fils and 29 fils respectively for between 250,001 units and 500,000 units.

Those with 500,001 units and above will have to pay 29 fils per unit.

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Publication:Oil & Gas News
Date:Jan 11, 2016
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