Bahraini MPs’ outrage over subsidies threat

Bahraini MPs’ outrage over subsidies threat

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15

The government is reviewing its subsidies policy, to ensure that only those in genuine need benefit instead of everyone, parliament heard at its weekly session.

The revelation came as Oil and Gas Affairs Minister Dr Abdulhussain Mirza and Finance Minister Shaikh Ahmed bin Mohammed Al Khalifa appeared before parliament to answer questions on earlier media reports that the government planned to increase prices at the petrol pumps.

But the ministers refused to give a definitive answer on whether this meant an end to subsidies on fuel, consumer goods, or services – saying only that the current system was unworkable and was under review.

Angry MPs halted the session, demanding a clear answer and went into recess while parliament chairman Khalifa Al Dhahrani met Shaikh Ahmed for two hours, behind closed doors.

MPs returned to the session with their anger unabated and voted for a letter to be sent to His Royal Highness Prime Minister Prince Khalifa bin Salman Al Khalifa, demanding a written ‘Yes’or ‘No’ answer by next Tuesday’s session.

MPs said that if they don’t get an answer, then the two responsible ministers would be questioned and the Cabinet would face a vote of no confidence.

Mr Al Dhahrani told MPs that the notice was too short, saying that letter would be only sent tomorrow after being studied by the general-secretariat office.

He said MPs should give the Premier until the January 12 session to reply, but MPs said later they would be discussing it again next week, regardless.

Dr Mirza told MPs that the government spent BD235 million last year subsidising all oil products fed into the local market, including imports, of which BD112m went on petrol.

He said the government was obliged to ensure that those benefiting from subsidies were those in real need.

"The subsidies policy as it is now is general and this can’t continue and we are currently studying other options," said Dr Mirza.

Prices at the fuel pumps have been pegged since 1983, while the cost of importing oil has soared, he said.

"The oil imported for refining cost $ 10 per barrel in 2000, but now it costs $ 75 per barrel," said Dr Mirza.

"Last year alone, we spent BD112m to subsidise petrol prices and benefiting from it were nationals and expatriates, regardless of their income.

"Parliament has asked that we direct subsidies towards those in real need, which the current policies are not and that’s what we are trying to ensure."

Dr Mirza said that increases in the population and the number of cars had massively increased fuel consumption and the burden on the government in funding subsidies.

Pegged fuel prices have encouraged people to consume more, which the government believes has lead to environmental problems and financial waste.

Many people are using high-grade Mumtaz petrol in cars that only require the lower grade Jiyyad fuel, because it is so cheap, said Dr Mirza.

"Sixty per cent of car users opt to fuel with Mumtaz and 40pc with Jiyyad, while studies have shown that 60pc of the cars can run with Jiyyad, without any problem.

"This year we are expecting to spend BD115m on local oil products (excluding imports), with 58 pc (BD63m) going to gasoline," said Dr Mirza.

"Bahrain is the fourth cheapest fuel seller in the GCC, despite Bahrain’s oil field only producing 30,000 barrels a day, which is nothing compared to Saudi Arabia’s eight to 10 million barrels or Kuwait or the UAE production, which is around two million barrels a day.

"Jiyyad is sold in the UAE for 130 fils per litre, while in Bahrain it is 80 fils and Mumtaz is sold in the UAE for 141 fils, while in Bahrain it is 100 fils."

He said that petrol production per litre today costs Bahrain 158 fils for Jiyyad and 161 fils for Mumtaz.

"Internationally Jiyyad is sold for 185 fils and 188 fils for Mumtaz," said Dr Mirza.

To meet demand in Bahrain, the country is importing 235,000 barrels of oil a day from international markets, he said.

"By 2014, with an expected increase in the population and the number of cars, we will face a deficit of 18,000 barrels a day and this will force us to buy oil from abroad at international prices," said Dr Mirza.

Shaikh Ahmed said that the current subsidy policy was not working as it should, with it benefiting all rather than only those in need.

 

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