Muscat: The Oman government is looking at revamping its fuel subsidy, which may result in changes in the retail prices of petrol and diesel in the near future. However, no decision has been taken so far.
According to news reports reaching here, the Minister Responsible for Financial Affairs, Darwish bin Ismail Al Balushi, yesterday said that the government is looking at reconsidering local fuel sale, in view of the fact that government support has reached OMR1 billion in the 2012 annual budget.
The minister was quoted as saying that current prices have been determined since the 1980s, when global oil prices did not cross $25 per barrel. He also indicated that since then no changes have been made on local fuel prices, except for prices of diesel in 2006. Since the 1980s, global oil prices have jumped at least four-times.
Oman sells petrol super grade for 120 baisas per litre, 114 baisas a litre for regular and 146 per litre for diesel in the capital area. However, it slightly varies beyond 100 kilometres from capital area.
Al Balushi added that the diesel smuggling issue has become a real concern for the Omani government, especially due to financial burden, time, and effort to watch and detain violators, which causes an additional burden on institutions concerned.
It was earlier reported that a panel is looking into revamping subsidy in such a way to get the benefits to the deserving income group, like other countries in the world. This follows a recommendation from the Majlis Al Shura.
The comprehensive study will suggest implications of the present subsidy system and alternatives for directly channelising it to the deserving groups. The present subsidy benefits are enjoyed by all sections of the society and the idea is to confine it to eligible groups. The total subsidies on all these are expected to touch an alarming level of OMR1.3 billion this year. This fund can be used by the government for other purposes, including youth training or investment projects that could generate new employment.
International Monetary Fund (IMF) has been calling on Oman, along with other GCC countries, to reduce subsidy in a move to prudently manage state resources. Countries in the Middle East and North Africa (Mena) region are spending $200 billion on general subsidies and there is a need to curb this spending.
According to IMF, these subsidies are not an efficient way of helping the poor, because the bulk of the spending is going to people who consume more energy, who are generally better off.
© Times of Oman 2013