By Beatrice Thomas
Sultanate is under pressure to scrap the scheme, which is expected to cost $2.23bn this year
Oman’s fuel subsidy could be reduced or cut altogether for high-income earners under a recommendation by a government committee set up to look at the sultanate’s costly energy subsidies, it was reported.
The government has been under pressure to scrap its subsidy for petroleum products, particularly petrol and diesel, which is expected to reach OMR860m ($2.23bn) in the 2014 budget, up from OMR740m ($1.92bn).
The figure constitutes 53 percent of the government’s total subsidy and participation budget of OMR1.61bn ($4.18bn), the Times of Oman newspaper reported.
“The recommendation is to reduce subsidy. The issue now is whether we implement it and when should we implement it," Oman Minister of Oil and Gas, Dr Mohammed bin Hamad Al Rumhy, told media on the sidelines of the ministry's annual media briefing on Monday.
Currently, oil sold in the domestic market fetches $35-40 per barrel, while the average international price of Oman Crude was $105 per barrel last year. As a result, the government paid the difference.
“It (subsidy) is not sustainable,” Al Rumhy said. “We can do it for may be this year or next year, but we cannot continue it indefinitely.”
He said cabinet was considering several options, including a phased removal, a gradual increase in fuel price over several years or withdrawing the subsidy from those who can afford market prices.
“But it is not easy,” he noted.For all the latest industry news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.