National Subsidy System to include water, electricity sectors

Muscat: Many countries around the globe have moved towards a more targeted approach to delivering support to those most in need by identifying the most vulnerable households compared to the non-targeted utility subsidies approach that is in place today. The chart below illustrates the difference between these two approaches.

To ensure that the subsidies are delivered to the targeted segments, the government developed the (National Subsidy System) which includes fuel, electricity, and water subsidy to provide protection for the citizens deemed most vulnerable as a result of the sizable burden on the state’s budget due to declining oil prices and the Covid-19 pandemic. The National Subsidy System is a platform designed to enhance the social safety net and mitigate the impact of tariff reforms on low-income households. The National Subsidy System will be overseen by The National Subsidy Committee (formerly known as the Fuel Pricing Committee).

Support for eligible categories under NSS will be reflected in the form of a 33% discount on the total bill value and up to a specific consumption ceiling (4000 kWh/month) for electricity. A similar mechanism will be applied to water during the coming phases.

Eligibility Criteria for Social Protection Net

Eligibility for social protection net is based on the outcomes of the Household Income and Expenditure Survey in 2019. Accordingly, the total household income and the number of household members are identified as the two criteria for eligibility under the NSS. This is to ensure that subsidy is targeted to the most vulnerable households following the implementation of the new fiscal policies.

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