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UAE edges closer to utility subsidy reforms

Following the deregulation of fuel in the country, UAE is now considering a removal of subsidies on both electricity and on gas sold to power generating companies, said UAE Energy Minister Suhail Al Mazroui

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Suhail Al Mazroui, UAE minister for energy
Suhail Al Mazroui, UAE minister for energy

 Following the deregulation of fuel in the country, UAE is now considering a removal of subsidies on both electricity and on gas sold to power generating companies, said UAE Energy Minister Suhail Al Mazroui.

“Consumers need to pay the real price. They already do so for petrol and diesel, and electricity is still to come, and we will look at the subsidised sale of gas to power providers,” he said at the Al Arabiya debate on economic reform in the Arab world at the World Economic Forum in Davos.

He said that the impact on removing subsidies on domestic electricity would not be that great to the consumer as it only really applies at the higher levels of use at present, reported Gulf News.

He referred to a benchmark price in the US of between 12 to 15 cents per kilowatt hour.

Al Mazroui also added that once subsidies were removed and the prices were at standard world levels, the source of the fuel would cease to matter and providers could use UAE gas or import it.

He pointed out that this process of subsidy reduction is part of a much wider strategy to make the government budget independent of oil revenues.

“Since its inception the UAE has sought diversification from oil, and even though oil revenues will always be there, we need a vibrant economy independent of oil,” he said.

Reinvesting the subsidy into areas like building a world class infrastructure, modern schools and up to date hospitals is an opportunity for the government, but it is not the whole story said Al Mazroui.

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