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Oman to phase out water and electricity subsidies in 5 years

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Oman announced on Sunday that it will phase out water and electricity subsidies starting from January 2021 until 2025, local media reported.

The decisions come as part of an initiative to reorient electricity and water subsidy, which is one of the initiatives of the Fiscal Balance Plan (2020-2024) that seeks to lay grounds for the Sultanate’s financial sustainability and upgrade the efficiency of government spending and the social security system.

Through this plan, segments of subscribers will be categorised, endorse tariffs structure, reinforce the social security system and reorient subsidy to beneficiaries in the electricity and water sectors.

New tariffs will be applied for electricity and water services gradually over the forthcoming years till the stage of non-subsidised tariffs that tally with the economic cost of electricity supply by 2025.

The new tariffs structure includes Large Consumers Category (or all segments of subscribers, except the Residential Category) among those who consume 100 megawatts/hour and more. The CRT applies to all subscribers of this category.

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In the non-residential category, all segments of subscribers (industrial, commercial, government and tourism segments) are merged in a single tariff in which the Winter Tariff is set at 21 baisas per kilowatt and the Summer Tariff is set at 29 baisas per kilowatt. The tariff of agricultural and fisheries activities will continue to be applied as a special tariff for these two sectors, so that 12 baisas is set for consumption ranging from 0-3,000 kw/h, 16 baisas for consumption ranging from 3,001-6,000kw/h and 24 baisas for more than 6,000 kw/h consumption.

The Residential Category of consumers is divided into “Omani Residential Account Tariff” and “Non-Omani Account Tariff and Additional Residential Account Tariff”.

The Omani Account will apply to citizens (a maximum of two accounts per citizen) and it will be charged 15 baisas for consumption from zero to 2,000 k/h, 20 baisas for 2,001-4000k/h and 30 baisas for 4,000 k/h or more of consumption.

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The Non-Omani and Additional Residential Account applies to non-Omani names and additional accounts of not more than two per citizen. This will be charged 20 baisas for consumption from zero to 500 k/h, 25 baisas for501-1,500 consumption and 30 baisas for more than 1,500 k/h of consumption.

The new tariff for Non-residential Category of consumers covers all non-residential uses and these are charged 4.5 baisas per one gallon and 990 baisas per one cubic metre. The Residential Category of consumers is divided into two segments: the “Omani Account” and the “Non-Omani and Additional Accounts” segment.

The Citizen Water Account applies to Omani citizens at rate of not more than two accounts per citizen. This will be charged 2.5 baisas per gallon, 550 baisas per cubic metre. The Non-Omani and Additional Accounts will be charged 3 baisas per gallon and 660 baisas per cubic metre.

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To ensure that the subsidy will reach the beneficiaries, the government developed the National Subsidy System (NSS), which subsidises fuel, electricity and water consumption of eligible segments of citizens who are more vulnerable to financial impacts of the State’s Budget.

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