(MENAFN - AFP) Saudi Arabia is considering raising its heavily subsidised domestic energy prices, the oil minister said Tuesday, as the kingdom confronts a record budget deficit caused by falling oil revenues.
"All prices eventually rise," Ali al-Naimi said on the sidelines of a mining conference.
"Is it under study... the answer is 'Yes'," he told reporters, without commenting further.
Fuel consumption in Saudi Arabia has risen nine-fold since 1971, making the country one of the largest consumers per capita in the world, according to one study.
Saudi petrol prices are the cheapest in the Gulf and among the lowest on the planet. Motorists in the kingdom can fill their tanks for around $6 (5.40 euros) for a sedan or $18 for an SUV.
Electricity and water are also heavily subsidised.
Last year, a senior World Bank official said the oil-rich Gulf states spend more than $160 billion on energy subsidies annually.
Saudi Arabia accounted for about half that figure.
A 2013 report from the University of California, Berkeley, said the kingdom had the world's largest fuel subsidies, at about $25 billion in 2012.
Oil makes up roughly 90 percent of government revenue but global prices have dropped by more than half from early last year to less than $50 a barrel, reducing revenue.
The International Monetary Fund projected a budget shortfall this year of 19.5 percent of Gross Domestic Product, or around $130 billion, although the deficit is seen falling in 2016.
It said the kingdom had informed it that it was considering energy price reforms for commercial and industrial users.
Adjusting Saudi gasoline and diesel prices to that of levels elsewhere in the Gulf would save $17 billion this year.
The United Arab Emirates, another oil producer facing a budget deficit, ended subsidies on fuel in July, in a move expected to conserve billions of dollars annually.
- 'Blessed' with minerals -
At the conference, Naimi denied that falling oil revenues have given an urgency to developing the kingdom's other resources, saying there were already significant efforts underway to do so.
"The investment in mining is really substantial," he said. "You can see the economic activity in the country."
Phosphates, bauxite and silica are not the products usually associated with Saudi Arabia, the world's biggest oil exporter.
But Naimi and other officials said those and other minerals will play an increasing role as the kingdom tries to diversify its oil-dependent economy.
By 2035, Saudi Arabia wants mining to account for between four and five percent of GDP, double the current contribution, Sultan bin Jamal Shawli, deputy minister for mineral resources, told the gathering.
Plans call for mining to become the third "economic pillar" after petroleum and petrochemicals.
"Every wise country diversifies its economy," Naimi told reporters.
"The kingdom is blessed with a lot of minerals, phosphates, bauxite, gold, silica, sand," he said at the government-sponsored conference and exhibition to promote the sector.
In 2012 aluminium production began from the kingdom's first smelter at the Ras al-Khair complex in Eastern Province.
The $10.8 billion joint venture between the Saudi Arabian Mining company, Ma'aden, and US giant Alcoa includes a bauxite mine.
Officials said the kingdom's potential resources beneath the desert are under-explored.