Abu Dhabi subsidies under review

The government of Abu Dhabi is conducting a review of its electricity and water subsidies, aiming to reduce consumption. The governmental review will look at the possibility of increasing prices and creating several tariffs based on consumption patterns.

The IMF, with data gathered by Abu Dhabi’s Department of Finance, has projected that “subsidies and transfers” will account for almost 20 percent of annual expenditure, or $13 billion, in 2014.

The Abu Dhabi Executive Council predicts electricity and water subsidies will cost Abu Dhabi around $4.76 billion in 2014, up from roughly $4.35 billion in 2012. This could rise to $12.25 billion over the next several years.

Last week, Minister of Energy Suhail Al Mazrouei outlined the need for new legislation to better regulate energy consumption.

“In view of the rising prices of fuel, especially current and future gas imports, the water and electricity generating sector would have to deal with a significant challenge in terms of costs, especially considering the current wastage levels, which could lead to a review of energy fees and subsidies,” he said.

Per capita energy consumption in Abu Dhabi, amongst the highest in the world, is increasing at around 8 percent per year.