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EDITOR IN CHIEF- ABDULLAH BIN SALIM AL SHUEILI

Consultant’s report on wheat subsidy under review

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Oman’s Ministry of Finance is currently studying the findings of an expert commissioned by the government to review the rationale behind the practice of subsidising wheat imports as well as the sale of flour in the local market.


This was revealed by a top official of majority government-owned Oman Flour Mills which, along with its counterpart in Dhofar Governorate — Salalah Mills, have raised claims running into several millions of Omani riyals in outstanding subsidy payouts.


Shaikh Salah Hilal al Maawali, Chairman of the Board of Directors of Oman Flour Mills, said the 51 per cent state-owned firm is owed a total of RO 5.3 million in wheat-related subsidy since July 2013, when payouts by the governments were halted. The subsidy issue, he stated, is the subject of a study conducted by an external consultant appointed by the Ministry of Finance (MoF).


“Currently, the MoF is in the process of reviewing the (consultant’s) report and they will communicate to (Oman Flour Mills) the outcome once it is completed. The company is confident that the outcome of the (review) will not materially impact the amount of the wheat subsidy receivable, as the amount has been determined based on a method of calculation prescribed by the Ministry of Commerce and Industry,” the Chairman stated in the Directors’ Report of Oman Flour Mills’ financial performance for the fiscal year ended June 30, 2017.


Following an unprecedented spike in global wheat prices in 2008, the Omani government introduced a subsidy on wheat imports designed to help the nation’s two principal mills — Oman Flour Mills and Salalah Mills — partially offset the steep hike in their import costs.


The grant, decreed by His Majesty the Sultan, was aimed at stabilising the prices of bread, flour and other wheat-based products distributed by the two mills.


International prices of wheat have largely stabilised over the ensuing years prompting the Ministry of Commerce and Industry to set up a panel in December 2013 to determine if the subsidy system did achieve its stated goals.


Likewise, Salalah Mills claims it is owed around RO 3.6 million in unpaid subsidy against wheat imports and flour sales over the 2013-15 timeframe.


Ahmed Abdullah Saeed al Rawas, Chairman, said in the company’s 2016 Annual Report that Salalah Mills’ claims have been referred to the Subsidy Audit Office for review.


Subsidy claims for fiscal 2015 were not raised by either company because wheat procurement prices were below the subsidy base price for the year. Subsidy on animal feed produced by the two firms, among other producers in the Sultanate, continues to be paid by the government.


However, as raw materials for feed were below the base price in fiscal 2016, beneficiaries are not eligible for feed subsidy for the year.


Conrad Prabhu


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