KSA should consider power and water tariff reform

Reuters: Low prices are fuelling high levels of consumption, official says.

Power, Saudi arabia, Sec, Subsidies, Water, News

Saudi Arabia should eventually consider easing subsidies on domestic water and power prices to limit rapid growth of consumption, a deputy electricity minister said on Tuesday according to Reuters.

Demand for water and electricity in the kingdom has soared in recent years in lock step with high levels of economic and population growth.

Power and water use are growing about 8% per year, putting greater strain on government finances.

"One of the most important challenges that the water and electricity sectors face is the high consumption growth rates, which mean we as citizens have to review our consumption patterns," Saleh Al Awaji, chairman of state-owned utility Saudi Electricity Co (SEC), told reporters on the sidelines of an industry conference.

"If we look 20 years from now and if growth (in demand) remains at current levels, it won't be possible to provide services with the same reliability and at current prices," he said.

"When we talk about legislation we also talk about prices - they are one of the effective tools to control these kinds of challenges. But if prices get revised, they should take into consideration those who deserve a subsidy."

The comments followed a similar statement by central bank governor Fahad Al Mubarak, who in February called for reforms to energy and water subsidies.

Awaji confirmed that the kingdom planned to spend more than SAR 800bn ($213bn) over the next ten years on water and electricity projects.

Saudi Arabia’s total power generation capacity is now above 65,000 MW, Awaji said.


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