(MENAFN- Muscat Daily) Officials and experts closely following Oman's fuel subsidy issue have said that the situation is not at a pressure point to warrant urgent or dramatic action.
They said subsidies are a complicated issue that require a long-term strategy and more studying and should not be considered among the immediate means of compensating for a drop in government revenue due to decreased oil prices.
Additionally ending subsidies however gradual would have larger social implications.
'It's (subsidy) not at a level that's unsustainable' said an official from Oman Investment Fund (OIF) the government investment arm requesting anonymity. 'The government has enough money accumulated from when the oil prices were above government budget projections. It's not a fiscal emergency.' Debates were catalysed by comments in late October by H E Darwish bin Ismail bin Ali al Balushi Minister Responsible for Financial Affairs on 'probable' cuts in 2015 linked to decline in oil prices.
Officials say that the two options to cover any subsidy cut – gradual implementation and special programmes like a voucher system to benefit the needy – are possible.
According to a Central Bank of Oman (CBO) report the government spent more than RO1.1bn in 2013 on fuel subsidies which is more than half (54.6 per cent) of the total money spent on all subsidies.
Besides petrol the government subsidises water electricity gas and certain food staples. However only fuel subsidies have come under discussion.
Also requesting anonymity a professor at Sultan Qaboos University's economics and finance department said petrol was the easiest manageable subsidy to cut but noted that such a move would run counter to government priorities in recent years that emphasised on social provisions.
Suleim al Hekmani chairman of the Majlis A'Shura's Economics and Finance committee said the Majlis would study any ministry proposal to adjust subsidies but that they still need more time to study the issue. 'We need to talk about it in more detail. It's not a simple amount. We need to understand it better.'
He said that in no way would a new subsidy law be tied to the 2015 national budget which will be announced in January. However he said it could be discussed during the coming year as part of preparations for the ninth Five-Year Plan (2016-20).
He called for a measured approach that considers the repercussions and offers alternatives for the public.
'I strongly believe that ideally there should be no subsidies. But we're not ready at this point' he said.
'It's not easy to tell citizens today it's RO10 and tomorrow it's RO20. We believe subsidies need to be looked at but it doesn't mean we should cut them. Maybe they need to be redirected.'
The OIF official said that besides reducing government expenditure the removal of subsidies is also aimed at reducing petrol consumption which in turn could encourage use of fuel-efficient vehicles or public transport.
The SQU professor however noted that it would be unrealistic to tie any immediate removal of subsidies with provision of public transport since this facility is still in development stages.
He said the public should be continued to be educated about the nature of subsidies. The OIF official admitted it would be hard to convince the public to adapt to something they have become used to. 'People don't like to pay more. The benefit of a subsidy is immediate' he said. However he thought reform was prudent. 'It's money that can be better spent' he said.
Mixed reactions to likely subsidy cut
Many people feel that their expenses would rise if the subsidies are lifted. Some also support offering exceptions to poorer segments of society others felt all should pay an equal price.
Asad al Jabry a civil servant said he wasn't willing to pay more for petrol. 'Cars are necessary for work.'
Nasser al Hammami a taxi driver said 'Having a car is a must and we want cheap petrol. We wish the price was 50bz per litre. If there's not enough petrol I'll ride a donkey like the old days.'
Idris al Dhamri a civil servant said he trusts the government decision and would not mind paying more for petrol.
'I will have to use my car regardless of the price. There's no alternative. Maybe the government needs to do this for certain reasons. It has a plan. We won't oppose it or have a problem with it. It would be great if it lifts the subsidy gradually so that it does not come as a shock' he said.
Hammami said the if the subsidy is lifted the government should make exceptions for people with low incomes.
'Not all Omanis have money. The government should only focus on the poor. Rich people own buildings and businesses and I have to sit under a tree' he said.
This Jabry felt will create issues of disparity. 'People will not be happy. The government isn't obliged to help the poor. The poor should learn to manage their lives.'<
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