Saudi Arabia is attempting to optimize their water and energy consumption with a new national program. On Monday, their cabinet released a statement announcing the program, where the government is moving closer to eliminating large subsidies. Policy incentives that are currently in place for water and energy sectors will be reviewed by the new program, while taking into account the needs and inequality of economic productivity.
The statement that did not go into detail about where the new program will be located within the government. Neither did they share the effects the program may have on cuts to the extensive power and water subsidies for the kingdom. This announcement has been released, while there is a lot of restructuring being made to the kingdom’s water and energy sectors to intentionally support economic reform plans to eliminate their dependence on oil from the world’s largest crude exporter.
By 2020, Saudi Arabia plans to use the reform drive to reduce the water and electricity subsidies by approximately 200 billion riyals ($53 billion), while also reducing the non-oil subsidies by nearly 20%. In December, the first subsidy cuts for water and power were introduced. The minister that was responsible was sacked, after there was an outcry in the public about the way water tariffs were being applied to the average Saudis. The Deputy Crown Prince that is responsible for their economic reforms, Mohammed bin Salman was quoted for saying the implementation of water price increases didn’t go as planned.
In May, the ministries that were responsible for handling the energy and water policies were restructured by King Salman. Through royal decrees, Salman separated the old Water and Electricity Ministry. He then turned over the electricity responsibility to a new ministry for Energy, Industry, and Natural Resources that is controlled by the chairman of Aramco, Khaled al-Falih.