An estimated 80,000 Omani households are currently eligible to receive monetary support under the National Subsidy System (NSS) set up by the government to help mitigate the impact of subsidy reform in the country’s electricity and water sector.
The NSS scheme, previously designed to ease the impact of rising motor fuel prices on economically vulnerable citizens, was expanded in 2021 to include households faced with steeper electricity and water bills in the wake of the government’s decision to roll back subsidy on most utilities.
Subsidy reform is a key objective of the Medium Term Fiscal Balance programme adopted by the government in 2020 to help rein in widening annual budget deficits and soaring public debt at the time.
According to the Authority for Public Services Regulation (APSR), electricity and water subsidy is envisioned to be gradually rolled back over a 10-year timeframe.
Explaining this move, the regulator stated: “The government of the Sultanate of Oman approved the Subsidy Reform programme for the electricity and water sectors. The revised tariffs were approved in line with the rest of the countries that have changed the subsidy mechanisms. The previous mechanism was provided to all groups of customers, whereas the revision focuses on targeted groups in the society. The (subsidy) is planned to be gradually lifted starting from January 2021 until 2031.”
The reform strategy, the Authority noted in its newly published 2021 Annual Report, aims to, among other things, enhance the social safety net system in the country. Other objectives are: to achieve financial sustainability, promote a culture of rational consumption and raise the efficiency of government spending, and encourage the use of other energy alternatives such as solar energy and reduce dependence on gas and mitigate pollution.
As of end-2021, as many as 79,966 economically vulnerable Omani households benefited from the subsidy for the electricity and water sectors, according to the report.