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No subsidized energy, fuel for expats?
April 10, 2014, 9:27 am

The government and parliament agree on the need to eliminate subsidies on public services through a mechanism that does not affect Kuwaitis with limited income, a lawmaker said Tuesday. This agreement might have already gone into effect based on information that Oil Minister Ali Al-Omair has sent an official letter to the Ministry of Finance requesting cancelation of diesel fuel subsidies, said MP Jamal Al-Omar.

The government and parliament had discussed the financial position of the state during a closed session last week. The discussion revealed that removing subsidies from some goods and services can save the state nearly KD 7 billion, according to Omar.

“The money saved from removing those subsidies and addressing the imbalance in the public sector’s payroll can be directed towards the national budget while allocating a share for the future generation’s fund,” Omar told Al-Rai daily. The government is studying a ‘strategic alternative’ project to organize the payroll system in the public sector and unify salaries of workers with similar job classifications and requirements.

Omar said that he has information about plans to remove subsidies from electricity and water in the commercial and investment sectors, but not the housing one. This means that shops and apartment buildings will have to pay actual energy prices, while citizens living in government houses will still pay the subsidized fares. The plan is also to remove gas fuel subsidies, while granting ‘subsidy cards’ to citizens that they can use when they fill their car tanks, Omar added. The card would be similar to the Tamween ration cards that Kuwaitis use to obtain food items with subsidized prices.

Expatriates are not entitled to these cards. The plans are still under discussion with no clear date on when they could be officially adopted. Discussions regarding potential removal of subsidies have become more common this year after the government highlighted the need to cut spending in order to avoid a budget deficit by 2021.

Kuwait’s welfare system includes providing subsidized petrol and energy for all residents, in addition to food and housing for Kuwaitis only. Subsidization has allowed Kuwait to maintain one of the world’s cheapest electricity and water fee rates for decades. In November, Prime Minister HH Sheikh Jaber Al-Mubarak Al-Sabah said that the welfare state was ‘unsustainable’ and mentioned the need to rationalize spending in order to maintain decent welfare levels for Kuwaiti citizens.

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