Oman’s residential electricity costs did not increase between 1987 and 2020, despite inflation of roughly 80% over the same period. But Qaboos bin Said Al Said’s era is over and the new ruler, Sultan Haitham, has pledged to put public finances on a healthy footing. 

Budget austerity is likely to hit electricity rates, but not just yet. The sharp increase in oil prices bought Oman some precious time. The previous decision to phase out residential electricity subsidies by 2025 has been adjourned, and they are now expected to run for ten years.

Although non-subsidized power is a matter for the future, new rates give a clear hint at Oman’s long term strategy. Citizens no longer enjoy lower prices than migrant workers; the two segments have been unified with a starting price at 14 baisas per kilowatt-hour ($0.036). Also, the Authority for Public Services Regulation reserves the right to hike prices up to 2 baisas annually, in other words, a 14% maximum increase in 2023.

“We will not see zero subsidies; that would be unreasonable,” said economist Adham Al Said, assistant professor at Sultan Qaboos University’s College of Economics. He told Al-Monitor the era of indiscriminate subsidies had given way to targeted support to households who dearly need it. The National Subsidy System, launched in 2018, offers additional subsidies on energy to 83,000 eligible Omani families based on income. During an interview with Al-Monitor President Andrew Parasiliti last month, Oman’s Foreign Minister Sayyid Badr Albusaidi reaffirmed the country’s aim to provide an “appropriate social safety net.”