No subsidized fuel for expats in four months? – Removal of electricity subsidies may follow Fuel prices in Kuwait are poised to increase by 25 to 30 percent in four months’ time, according to a study to remove subsidies on petrol, which seems to have received strong support in the parliament and Cabinet. But the step will mostly affect expatriates, as the legislative and executive authorities are studying a mechanism to allow Kuwaitis to access a certain amount of subsidized fuel based on their level of consumption. While several MPs expressed support to the idea as a way to rationalize spending, others voiced objection on the basis that the negative sides of the decision – such as projected inflation – surpass any positive results that a number of lawmakers still believe will not be very effective in avoiding a budget deficit by 2021. Nevertheless, the parliament and government seem to agree in principle on the need to remove subsidies on fuel, which could go into effect within 4 months pending the two sides’ ability to come up with a mechanism to protect Kuwaiti citizens from the repercussions of this decision. “There is a parliamentary-governmental agreement on lifting subsidies from fuel (gasoline and diesel) and reach a mechanism that ensures citizens are not affected,” said ‘governmental and parliamentary’ sources quoted by Al-Rai yesterday. Several lawmakers had warned of the potential impact that ending expatriates’ access to subsidized fuel would leave on the country’s estimated 2.7 million foreigners. But that argument seems to be losing strength against parliamentary voices which see that the country should no longer guarantee public services with low fees for expatriates if it’s affecting the government’s ability to maintain sustainable welfare for Kuwaitis. To ensure that the decision would not affect Kuwaitis, the government mulls proposals that include giving fuel coupons to Kuwaitis with the Tamween (ration) cards that grant citizens exclusive access to subsidized food. Another proposal stipulates using the new civil ID that is equipped with a microchip to buy petrol. In general, the decision allows Kuwaitis to receive between KD 40 to KD 70 in fuel subsidy a month, the sources said. But the report does not explain how the government plans to protect citizens from inflation projected after fuel prices increase. It does say, however, that the decision would be followed by similar steps if it is successful. “If the operation is successfully implemented, the next step would be a gradual removal of electricity subsidies,” the sources said. These decisions are almost certain to immediately affect Kuwait’s expatriate communities, which make up two thirds of the population, with most paid less KD 200 a month. “The government has told MPs that removing fuel subsidies will pull between 100,000 to 200,000 vehicles owned by expatriates off the streets,” the sources said, hinting that the state is promoting the decision as an effective way to resolve the traffic crisis too
Posted on: Sun, 20 Apr 2014 07:02:32 +0000