Wednesday, 3 Mar 2021
The subsidy on electricity in the sultanate went down by 8.3 per cent in 2017 over the previous year, leading to a saving of RO41mn for the government. The reduction in subsidy is attributed to the introduction of Cost Reflective Tariff for large consumers in 2017.

Govt saves RO41mn in energy sector subsidy

The electrical energy subsidy for 2017 was RO456mn as compared to RO497mn in 2016. In contrast, the energy subsidy in 2016 had gone up by RO42.6mn more than 2015 (RO454.4mn), although there was a enormous 58 per cent jump in subsidy in 2015 more than 2014 (RO287.1mn).

According to Nama Group’s Annual Report, subsidy per consumer has also dropped by 14 per cent from RO463 in 2016 to RO398 in 2017 and subsidy per unit also dropped from RO16.43 per MWh in 2016 to RO14.14 per MWh in 2017, a fall of 13.9 per cent. 

“The reduction of subsidy per customer was largely attributable to the introduction of Cost Reflective Tariff for certain categories of customers. The 2017 Group total assets increased by 17.4 per cent – from RO3.595bn in 2016 to RO4.220bn in 2017,” Hassan Mohammed al Lawati, chairman, Nama Group, stated in the Chairman’s Report for 2017.

He additional added that in 2017, the consumer base for electrical energy organizations in the nation improved by six.eight per cent to 1,147,401 subscribers compared to 2016 and the electrical energy supplied improved by seven per cent to 32,277GWh. “The group companies invested RO469.7mn in network expansion in 2017 compared to RO448.9mn in 2016.” 

Although group’s gross operating income improved by .18 per cent from RO1.121bn in 2016 to RO1.123bn in 2017, its net profit right after tax fell by 59 per cent to RO36.176mn in 2017, compared to RO89.009mn in 2016. “This is largely owing to the increase in tax rate and onetime adjustment of deferred tax asset and due to increasing financing costs for capital expenditure and working capital requirements,” the chairman stated.

The group also saw fall in price per MWh from RO34.295 in 2016 to RO32.875 in 2017. “Cost per unit has primarily decreased due to a reduction in total direct costs and savings in general and administration expenses,” the business stated.

Total electrical energy supplied reached 32,277GWh in 2017, a seven per cent improve. “Majority of the demand growth was driven in the Main Interconnected Network. Cost Reflective Tariff customers form 34 per cent of total units sold in 2017, which contributed significantly towards reducing the government subsidy.”

Information Source: Muscat Daily

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