DUBAI: The emirate of Abu Dhabi will raise electricity and water tariffs to fight waste and limit rapid consumption growth, in a fresh sign that plunging oil prices are prompting Gulf governments to economize.

Electricity tariffs for residential consumers will be hiked by between 10 and 40 percent from Jan. 1, state news agency WAM quoted the body regulating utilities as saying on Thursday.

Mindful of the risk of political discontent, Abu Dhabi and other Gulf economies have hesitated to reduce the lavish state subsidies they pay to keep electricity and water prices among the lowest in the world.

But the plunge in global oil prices to four-year lows in recent months has reduced the huge surpluses that the governments earn from oil exports, and prompted them to look again at ways of saving money and reducing waste.

For households of UAE citizens, electricity tariffs for consumption above a threshold will rise 10 percent from the current 5 fils (1.4 US cents) per kilowatt hour. For foreigners, who make up most of Abu Dhabi’s population, electricity will rise 40 percent from the current 15 fils.

Major industrial users will have to pay twice as much for electricity during peak summer months. Abu Dhabi will start charging UAE citizens for water consumption, while foreigners will have to pay 170 percent more for water.

Utility costs in Abu Dhabi will still be very low by global standards; in Britain, for example, electricity costs around 15 US cents per kWh.

The finances of most Gulf oil exporters remain strong despite oil’s slide.

Abu Dhabi is believed to be running a budget surplus even at current prices, while it has huge fiscal reserves. But Gulf governments are preparing for the possibility of at least several years of tougher revenue conditions.

Kuwait’s government said last month it planned to cut subsidies for diesel fuel and kerosene, and Oman’s financial affairs minister told Reuters his government was likely to start reducing some subsidies next year.

 
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