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Fuel price discrimination unfair, says Finance Ministry Undersecretary
January 6, 2016, 9:46 am

Finance Ministry Undersecretary Khalifa Hamada stressed that recommendations made by international advisor Ernst & Young on subsidies were still being reviewed and studied by two committees from the finance ministry and the subsidies committee. “Submitting recommendations and studies to the Cabinet does not mean a decision will be made. The study recommended using the new prices by the beginning January, but what the government decides is something else,” he underlined, noting that there was a huge difference between recommendations, studies and decisions.

Hamadah added that according to the study, energy consumed 70 percent of the total subsidies and that fuel and electricity prices would be prioritized, though the Cabinet’s final decision had not been made yet. However, he stressed that the new fuel prices were not yet set. Hamada also noted that 85 percent of vehicles in Kuwait consume special (95 octane) petrol and that this was more than what is being locally produced, and thus the government imports the balance at high prices.

Moreover, Hamada underlined denied intentions to discriminate between Kuwaiti and expat consumers in terms of fuel prices and that this was not recommended by the study as it would lead to misusing the dual prices. “Fuel prices will be the same for both citizens and expats,” he emphasized. Speaking about electricity, Hamada also stressed that the tariffs would be set according to consumption rates and that prices would get higher the higher those rates were.

Meanwhile, well-informed sources said that the study on financial reform and subsidies’ rationalization submitted by the finance ministry to the Cabinet estimated subsidies-related inflation at 2.2 percent and that Kuwaiti families deserving subsidies would be financially compensated.

The sources explained that according to the study, Kuwaitis were divided into four groups according to their monthly and annual incomes. The first category was those with limited income of less than KD 1,500 a month or KD 18,000 a year. “This category forms 12 percent of Kuwaiti families and will still receive subsidies,” stressed the sources, noting that the second category included families with incomes between KD 1,500-3,000 a month, who formed 41 percent of Kuwaiti families. “Subsidies for these families will be considered according to some factors such as the number of family members,” explained the sources.

On the other hand, the sources explained that the third category in the study included Kuwaiti families with above-medium monthly income of KD 3,000-4,500, that formed 28 percent of Kuwaiti families, who would not deserve any subsidies. The fourth and last category included Kuwaiti families with above KD 4,500 in monthly income, who formed 19 percent of Kuwaitis, and would not receive subsidies either.

Source: Al-Rai, Al-Jarida

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