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Saudi Arabia develops new water and energy programme

The kingdom aims to massively reduce water and electricity subsidies by 2020 [AFP]

Date of publication: 22 November, 2016

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Saudi Arabia will establish a national programme to optimise water and energy consumption, it announced on Monday, as the government continues to cut back on subsidies.
A national programme to optimise water and energy consumption in Saudi Arabia will soon come into effect in what appears to be the kingdom's latest austerity move.

The new programme seeks to review current incentives on energy and water and eliminate large subsidies, a cabinet statement released on Monday said. 

The effects the programme is likely to have on cuts to the generous power and water subsidies remains unspecified, but the kingdom's water and energy sector will come under restructure as part of Saudi economic reform plans. 

The kingdom aims to reduce water and electricity subsidies by about 200 billion riyals [$53 billion] while also reducing the non-oil subsidies by nearly 20 percent by 2020.

Last December, the first subsidy cuts for energy and water were introduced as the kingdom tried to rein in spending after a steep drop in oil prices. 

The changes were met with widespread public outcry that resulted in the sacking of the water and electricity minister as well as the dissolving of the ministry.

A royal decree handed responsibility for electricity to the new energy, industry and natural resources ministry.

Prince Mohammed bin Salman – the Saudi king's son and second-in-line to the throne – promised that the kingdom will limit the impact of cuts on its citizens by developing a programme to provide cash to low- and middle-income Saudi families.

Mohammed bin Salman is currently leading the biggest shake-up of the economy in Saudi Arabia after oil prices fell from the end of 2014. 

His "Saudi Vision 2030" is a broad policy agenda aimed at diversifying an economy that depends on oil for 70 percent of state revenues.

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