Bahrain to increase fuel, electricity, water charges as part of special reform package

Manama: Bahrain’s government has announced a wide-ranging package of fiscal reforms aimed at reducing public spending, boosting revenue, and protecting key subsidies for citizens, according to the Bahrain News Agency (BNA).

The measures include increases in fuel prices, higher electricity and water tariffs for certain categories, and increased dividend contributions from state-owned enterprises.

The cabinet clarified that electricity and water tariffs for the first and second consumption bands for citizens’ primary residences — including homes housing extended families — will remain unchanged.

The reforms are aligned with Bahrain’s Economic Vision 2030, which focuses on strengthening fiscal discipline, diversifying revenue sources beyond oil, and ensuring long-term financial sustainability.

The package builds on progress under the Fiscal Balance Programme, under which non-oil revenues more than doubled between 2018 and 2024, while recurring government expenditure declined, supporting steady economic growth.

Over the past two decades, Bahrain’s gross domestic product (GDP) has increased fivefold from about $9 billion to $47 billion. During the same period, average wages for Bahraini workers more than doubled, while inflation remained relatively low compared with major advanced economies.

The cabinet also decided to defer any changes to electricity and water subsidy mechanisms for citizens’ primary residences until further studies are completed.

However, amendments to utility consumption tariffs for other categories have been approved and are set to take effect in January 2026, the BNA reported.

Additionally, a 10% corporate income tax will be imposed on companies with revenues exceeding BD1 million ($2.6 million) or annual net profits above BD200,000. The new corporate tax framework is expected to come into force in 2027, pending regulatory approvals.

Bahrain also plans to raise natural gas prices for businesses, reduce administrative government spending by 20%, and improve the utilisation of undeveloped investment land with existing infrastructure by introducing a monthly fee of 100 fils per square metre, expected to be implemented in January 2027.