Saudi cuts subsidy, raises fuel prices by 66%
The kingdom has raised prices for gas, diesel and kerosene, after posting a record $98bn budget deficit in 2015 due to the sharp fall in oil prices
Saudi Arabia has raised domestic energy prices, including fuel prices, state news agency SPA said on its Twitter account on Monday.
The world's largest oil exporter has set the price of 95 octane gasoline at SAR0.90 ($0.24) per litre, SPA said, up from the current price of SAR0.60 per litre.
The kingdom has also raised prices for gas, diesel and kerosene, according to SPA.
Saudi Aramco's chairman Khalid al-Falih said on Monday he was confident that local industries, including the Saudi petrochemical sector, would adjust to the rise in domestic energy prices and remain competitive.
Earlier, the government said it was hiking prices for fuels, water and electricity as well as gas feedstock used by industry, as part of subsidy reforms designed to help state finances cope with low oil prices.
The price of methane was raised to $1.25 per mn British thermal units and ethane to $1.75; previously, both were at 75 cents, among the lowest in the world.
Domestic fuel, water and electricity prices are currently among the lowest in the world because of heavy state subsidies.
The OPEC kingpin posted a record $98bn budget deficit in 2015 due to the sharp fall in oil prices, the finance ministry said yesterday.
Revenues were estimated at $162bn, well below projections and 2014 income, while spending came in at $260bn, ministry officials announced at a press conference in capital Riyadh.
The budget deficit is the highest in the history of Saudi Arabia, the world’s largest oil exporter, but was not as big as some expected. The country projects $87bn in deficit for 2016.
The International Monetary Fund (IMF) had projected the Kingdom’s 2015 fiscal deficit to be around $130bn and other reports also put it above $100bn.
The kingdom has seen a sharp drop in revenues as oil prices have fallen by more than 60% since mid-2014 to below $40 a barrel.
Raising the prices would reduce pressure on the state budget and would be one of Saudi Arabia's biggest economic reforms in many years.