Manama looking to significantly decrease subsidy costs in 2016
Bahrain has increased domestic fuel prices as it looks at ways to alleviate declining revenues from falling oil prices.
The decision to raise fuel prices follows recommendations from the executive committee after consultation with the National Oil & Gas Authority (Noga), according to the Bahrain News Agency. Fuel prices in Bahrain have been unchanged for 33 years.
The price of 95 Octane will be set at 160 fils (42 cents) a litre, and the price of 91 Octane will be set at 125 fils a litre. The new prices came into effect on 12 January.
Energy Minister Abdulhussain Mirza said the cabinets decision forms part of the governments wide-ranging programme of structural economic and fiscal reforms that will further strengthen the countrys long-term development.
The minister added that the decision would contribute to addressing current fiscal challenges faced by Bahrain, as a result of the unprecedented drop in global oil prices.
Although Bahrains 2016 budget has not yet been released, the kingdom has pressed ahead with several economic reforms to better balance the countrys fiscal challenges amid declining oil prices and instability in the wider region.
Earlier this month, MEED reported that Bahrain is planning to cut electricity and water subsidies in a bid to boost government revenues amid low oil prices and declining income streams.
In a statement released by the energy ministry, Manama said plans to cut subsidies and generate an estimated BD171m in additional revenues over the next four years.
The government says funds generated from subsidy cuts will be redirected to benefit citizens.
Since the fall of oil prices last year, it has been key for Bahrain to limit public spending to curb its modest reserves.
The main challenge facing the government this year will be cutting public spending while raising revenues to prevent the fiscal deficit from escalating out of control.
Bahrain has received several guarantees from Saudi Arabia, which has said it is committed to helping the kingdom alleviate the impact of falling hydrocarbon prices by supporting major infrastructure schemes across the country.
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