RAS AL KHAIMAH // Energy chiefs aim to trim Dh3.5 billion from the power and water subsidy bill by encouraging people to turn off their taps and switch off their lights.
“Today, as never before, we see the urgent need to reduce consumption,” said the Minister of Energy, Suhail Al Mazrouei. “The squandering of resources is the enemy of development.
“We are working on supporting a culture of reasonable consumption in various government and private establishments, as well as in homes, schools and mosques.”
The low oil price makes generous discounts on already cheap commodities harder to afford. Mr Al Mazrouei hopes consumers will cut their consumption by 10 per cent – instead of increasing it at a rate of 6 per cent a year.
The ministry says it spends Dh35bn on subsidies for fuel and water. The International Monetary Fund estimates that the actual bill to the government is higher, at about Dh46.4bn – but points out that the real cost in terms of pollution, forgone tax, overconsumption, traffic accidents and congestion is closer to Dh100bn.
The price of oil has more than halved since June last year. This has hit government revenues, more than half of which are earned from oil exports.
This shortfall means that Government will run its first budget deficit since 2009, according to the IMF.
To counter this, the Government has trimmed Dh6.8bn from its spending on fuel subsidies this year. Abu Dhabi cut subsidies on electricity and water for expatriates at the beginning of the year, and the Ministry of Energy changed the way it sets fuel prices in August, which has led to increased prices at the pump.
Low prices, a lack of awareness about the real costs of electricity and water consumption, and the absence of uniform energy efficiency regulations for buildings all mean that consumers and businesses use more energy and water than they need to, said Glada Lahn, a senior research fellow at Chatham House.
Overconsumption of air conditioning, which accounts for 60 per cent of a building’s energy use, and a stock of energy-inefficient buildings mean the Government ends up spending an unnecessarily large amount on subsidies, Ms Lahn said.
“Apartments and skyscrapers haven’t been built with fuel or energy efficiency in mind, and there is a lot of inefficiency in the way people use air conditioning.”
“In Gulf countries, because energy and water are so available and plentiful, which is great, people lose a sense of the value of it. The answer is to make costs more transparent. People need to understand the full cost of the energy they’re using.
“It’s not part of many companies’ business considerations if it’s not making a dent in profits. And until it affects your budgeting, and you’re aware of it, you won’t be willing to spend money to reduce your bills.”
abouyamourn@thenational.ae
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