Muscat: Oman’s Council of Ministers has allocated 100 million riyals to help citizens most impacted by the removal of fuel subsidies, according to a statement on Sunday.
“The Council of Ministers tasked a specialised committee [announced at the beginning of this year] to finalise mechanisms and executive procedures to lend support to [deserving] segments of society following the liberalisation of fuel prices, with the aim of alleviating the impact on these segments,” the statement.
The statement added the designated committee must announce the steps to be taken for enabling people to benefit from the scheme from January 2018. The committee is expected to follow up on the implementation.
In January 2016, the Omani government started a review of fuel prices, following in the footsteps of other Gulf states that increased fuel prices.
Oman introduced M91 fuel in November 2016, which is a new type of petrol that has octane levels between M90 and M95.
In February, the Omani government asked a committee to find mechanisms to reduce the impact of oil price fluctuations, including introduction of fuel subsidies for people most affected by the changes.
The Council of Ministers ordered that the price of M91 fuel be frozen at 186 baisas (about Dh1.75) until the government finds alternative mechanisms to help those who have been affected by the fuel price hike. The 2017 general budget included major spending cuts due to the plunge in oil prices.
In April, the Oman Shura Council urged the government to allocate 200 litres of free fuel on a monthly basis for low-income Omani families.
The council said the move would protect those that have been most affected by the hike in fuel prices.
Government spending this year is projected to total 11.7 billion riyals (Dh111.3 billion) and revenue is projected at 8.7 billion riyals. Oman posted a budget deficit of 5.3 billion riyals in 2016, as revenues declined by more than 30 per cent.
Oman has smaller oil reserves and less of a cushion in government savings than its wealthier neighbours, making it vulnerable to the impact of lower oil prices that has depressed growth across the region.
Moody’s Investors Services cut Oman’s rating to its second-lowest investment grade in July, citing the country’s limited progress in addressing structural vulnerabilities.