Subsidies not route to affordable energy, says Omani minister

Reuters/Lisa Leutner

• Affordable energy top priority
• Subsidies being phased out
• ‘Green as possible’

Providing affordable energy is the biggest priority for Oman’s minister of energy and minerals, but subsidies are still not an option. 

“Affordable energy, sustainable energy and clean energy in that order. We cannot flip it,” Salim Al Aufi told AGBI in an exclusive interview on Monday during the Oman Petroleum and Energy Show, which took place this week at the Oman Convention and Exhibition Centre in Muscat.

“We’ve seen what happened when the energy price went up and it wasn’t affordable,” he said. “Immediately we went back to coal.”

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While transition to more sustainable sources is important, supplying basic energy to everyone in the sultanate is the priority, according to Aufi. 

“We want energy to be as green as possible but if that means it’s no longer affordable to certain segments of consumers, then we have failed,” he said. 

However, the minister said subsidies are not the solution.

In January 2021 Oman started implementing a phase-out of its electricity and water subsidies. Before the reform these subsidies were available to all people regardless of their level of income.

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The plan is to gradually increase utility tariffs for all consumer categories until subsidies are fully phased out in 2025.

“We don’t believe in subsidies,” the minister said. “We need to make sure energy is sustainable financially to producers and consumers. Once you introduce a subsidy, you’re immediately saying it’s no longer sustainable.”