Saudi Arabia to raise energy prices, compensate families

RIYADH: Saudi Arabia decided Tuesday to hike energy prices while paying compensation to Saudi families, as the world’s top oil exporter seeks new revenue sources.

The cabinet, in a session chaired by King Salman, approved plans to “reform” electricity and fuel charges, as part of measures to counter lower oil prices on the world market, the official news agency SPA reported.

In a first, the government also approved cash transfers to some 3.7 million Saudi families, covering 13 million of the country’s 20-million population, to compensate them for the hike.

Expatriates working and living in the kingdom have been excluded from the cash transfer programme which will start next week.

The electricity authority has announced minor price increases from early next year.

The energy ministry said new prices for petrol, diesel and aviation fuel will be applied in the first quarter of 2018, but without giving details on the planned increases.

The hikes are the second wave of Saudi subsidy cuts.

The kingdom, which pumps around 10 million barrels per day of oil, has embarked on a series of reforms and price hikes since oil revenues plummeted in mid-2014.

Saudi Arabia has posted huge deficits in the past three fiscal years, totalling over $200 billion, and withdrawn another $250 billion from its fiscal reserves.

It has also borrowed tens of billions of dollars from the domestic and international markets to finance the shortfall.

The kingdom plans to introduce VAT, at a rate of five percent, for the first time at the start of 2018.