Blow of higher utility bills softened for low-income Saudis

December 24, 2016

Jeddah, Dec 24: Saudi Arabia spends billions on subsidies — so economists were hardly suprised when Thursday’s budget confirmed plans to raise energy and water prices to be more in line with market rates.

family

But what was an innovative move was the accompanying “Household Allowance” scheme, which is designed to soften the blow of the rate increases for some of the Kingdom’s most needy residents.

The Kingdom’s subsidies, or “energy benefits”, reached close to SAR 300 billion in 2015, when energy and water accounted for about 80 percent of the overall subsidies, the government’s “Fiscal Balance Program – Balanced Budget 2020” document shows.

But such subsidies disproportionately benefit richer Saudi residents: Lower income households — estimated to account for about 40 percent of the population — only benefit from around 30 percent of energy subsidies, the document shows.

Subsidy cuts

In line with moves made by other Arabian Gulf states, Saudi Arabia has been reducing subsidies, a move it terms “energy and water price reform”.

The first phase of this, which was introduced in 2016, included a “marginal” correction to energy and water prices, with very limited impact on low-income households. That phase produced savings of between SR27-29 billion, as well as reducing the growth rate in energy consumption, the Fiscal Balance Program states.

But the Kingdom plans a future phase of subsidy cuts, between 2017 and 2020, as part of its aim to eliminate its budget deficit during that time.

Domestic prices of energy and water products will be linked to the export price of the respective product, and this will fluctuate according to the international market. The prices of those products will be revised periodically, while the linkage of gasoline and diesel to reference prices is currently being studied, and will be implemented between 2017 and 2020.

The combined energy and water price reforms are expected to lead to saving of SR 209 billion per year by 2020, the Fiscal Balance Program states.

But this “phased increase in prices towards international market prices” will make it necessary to compensate low-income consumers.

Household Allowance

Indeed, the planned reforms between 2017-2020 “will significantly impact vulnerable household segments of the society, directly and indirectly”, according to the Fiscal Balance Program.

But it has a plan to soften the blow and in some cases boost the finances of low-income Saudis. The planned national Household Allowance aims to protect low- and medium-income households against the direct and indirect impact of the planned reforms.

Not only will this scheme compensate such households for the steeper costs of energy and water, it will also reward sensible energy consumption, the Fiscal Balance Program states.

“Instead of benefits that are built-in discounted prices of energy products, we will introduce bank transfers to the eligible households that will allow us to better redistribute benefits to the deserving households,” it stated.

“Today most of the vulnerable Saudi household segments are modest consumers. The allowance will cover the costs of sensible consumption, but those who currently consume more than these levels will need to moderate their consumption in order to limit the impact on their disposable income.”

Who can claim?

The principles of this cash allowance scheme have been based on “global success stories”, which suggest cash and bank transfers are the most efficient ways to target eligible recipients, and provide savings opportunities to households if they consume and spend wisely.

The first payment should be made before changing energy prices, according to the global best practices, to ensure that Saudi households can plan their expenditure ahead of price changes and feel relieved. And the amount should vary based on the number of people in a household and their income level.

The Household Allowance plan is open to mainly Saudi national households made up of first degree relatives. “The main beneficiaries of this program include Saudi households along with other segments, such singles who are living independently of their families, the non-Saudi household with a Saudi mother, and holders of a transit permit,” the Fiscal Balance Program states.

The value of the allowance is based on energy and water prices as well as other basic goods, to account for any indirect price rises.

The larger the size of the household, the greater the basic entitlement. In addition, the entitlement amount will be reduced for households with higher income levels — and those on the highest incomes will not have any entitlement at all.

The Ministry of Labor and Social Development responded to Saudi citizens’ many inquiries on social media over the unified “Citizens’ Account Program”, of which the Household Allowance scheme will be part. This will develop to become a comprehensive program that includes all different types of programs and government benefits.

These unified citizen accounts are for groups including Saudi families, unmarried individuals, Saudi mothers married to non-Saudis, and holders of free-movement cards, those that live near borders and have free movement between neighboring countries such as Yemen.

The ministry said on Twitter that the monthly income of the families will be the key factor to be considered. It called on Saudi citizens to shun listening to rumors and take news from credible sources such as the ministry’s call center.

How much will recipients get?

The Fiscal Balance Program gave an illustration on how the allowance could impact a household of six people in 2017, based on five income brackets.

The example showed that a household with an average income of SR4,500 a month would have an extra financial burden of SR450 a month due to higher energy and water prices. But they could receive an average allowance of SR700, leaving them SR250 a month better off.

But a household of six with an average income of SR34,500 a month would have an extra financial burden of SR1,100 a month, and not be entitled to an allowance.

“We will be spending generously, to ensure that we appropriately cover eligible Saudi households,” the Fiscal Balance Program documents state.

“The amount of Household Allowance will increase each year from 2017-2020 with the annual increase in burden on households resulting from gradual reforms. It is expected that the total annual amount of allowances will reach SAR60-70bn in 2020.”

On 1 Feb. 2017, a registration portal will be opened for the scheme, while all eligible social security recipients relevant to the Ministry of Labor and Social Development will be automatically registered.

All eligible beneficiaries will receive their first payment prior to implementing the new price changes, according to the Fiscal Balance Program.

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News Network
May 7,2020

Dubai, May 7: As India begins the world’s largest evacuation mission by repatriating its overseas citizens stranded due to COVID-19, as many as 354 of them from the UAE will fly into their home country in the first two flights to Kerala today.

An Air India Express flight, which is scheduled to take off from Abu Dhabi to Kochi at 4.15 pm is the first flight, which will be followed by a Dubai-Kozhikode flight of the same airline at 5.10pm. The Indian missions in the UAE finalised the list of passengers, who were chosen based on the compelling reasons they submitted while registering their names.

Selection criteria

These include pregnant women and their accompanying family members in some instances, people with medical emergencies, workers and housemaids in distress, families with cancelled visas, bereaved family members who couldn’t attend funerals back home, a few students and stranded visitors and tourists including two brothers who got stranded in Dubai International Airport for 50 days, the missions said.

Short-listing the first passengers from among a database of more than 200,000 applicants, who include around 6,500 pregnant women, has been a mammoth task which posed several challenges for the missions, Neeraj Agrawal, Consul Press, Information and Culture at the Indian Consulate in Dubai told Gulf News.

He said the consulate set up an operations room in a tie-up with community volunteers from Kerala Muslim Cultural Centre, Indian Association Ajman, AKCAF Task Force, the BAPS Mandir, Indian People’s Forum, and Tamil Ladies’ Sangam.

 “We are trying to accommodate as many deserving people as possible. We expect the understanding of the people. It has been very difficult to sort out everyone’s urgency.”

“We cannot do a lottery system in this and we had to make sub- categories to ensure there is a mix of people with different types of urgencies.”

“Though we want to give priority to pregnant women, it is practically not possible and not good for the health and safety of the applicants to allot a lot of them on the same flight.”

He said 11 pregnant women have been issued tickets on the Dubai-Kozhikode flight.

“That is the threshold we can allow on a flight.”

Volunteer support

The consul appreciated the support of the volunteers in finalising the flight manifest.

“But our response ratio was very less. Many people whose names came up on top of the list were not willing to go on the first flights.”

Due to various constraints like this and sometimes the details of accompanying persons not readily being available, he said the mission was not able to quickly reach out to who might be really in need.

“However, we have given due consideration to people who got in touch with us with their emergency needs. At the time of issuing tickets, we had about 20 such cases.”

He said the Consul General of India in Dubai Vipul led the entire operation and Pankaj Bodkhe, consul, education, was in charge of the Dubai flight.

A big challenge

“It has been a big challenge. Our only concern is that despite our best efforts, sometimes people with more compelling reasons might have got left out on the first flights because of the volume of people who have reached out to us.”

Since there is a chance that some passengers with tickets might not be allowed to fly if they fail the medical screening including blood tests to check antibodies for COVID-19, he said some applicants in the waiting list have been asked to be on standby at the airport.

People with emergencies wishing to fly to other destinations also could not be included, he pointed out.

“We had to ask them to wait. We are unable to send them to other destinations. We can see their desperation. We feel sorry and desperate.”

He said the government is trying to add more flights to un-chartered destinations and a new flight from Dubai to Kannur has been added on May 12.

Passengers of today’s flights have been urged to reach the airport four to five hours prior to departure to facilitate the medical screening.

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News Network
April 28,2020

Riyadh, Apr 28: The number of confirmed coronavirus cases in Saudi Arabia crossed the critical 20,000-mark on Tuesday with the discovery of 1,266 new cases. Eight new deaths were also recorded during the last 24 hours, bringing the virus-related death toll to 152.

Twenty-three percent of the new cases are of Saudi nationals, while 77 percent are of non-Saudi residents, Saudi Press Agency (SPA) quoted the ministry spokesman Dr. Muhammad Al-Abdel Ali as saying.

Out of the total 20,077 cases till Tuesday, 17,141 cases are active, he added. A total of 118 cases are currently critical, the spokesman said.

Out of the 1,266 new cases, 327 were reported in Makkah, 273 in Madinah, 262 in Jeddah, and 171 in Riyadh. There were 58 cases in Jubail, 35 in Dammam, 32 in Taif, 29 in Tabuk and 18 in Al-Zulfi. Additionally, nine cases were recorded in Khulais; eight in Buraidah; seven in Al-Khobar; five in Hufof; four each in Qatif and Ras Tanura; three in Adhum; two each in Al-Jafr, Al-Majaridah, Yanbu, Bisha and Diriyah; and one each in Abha, Khamis Mushayt, Baqeeq, Dhahran, Dhalum, Sabiya, Hafr Al Batin, Hail, Sakaka, Wadi Al-Dawasir and Sajr, the spokesman said.

The Kingdom saw a spike in cases when the health ministry began its field-testing efforts nearly two weeks ago, targeting suspected infection cluster areas. Since then, there has been a steady increase in daily cases.

Till Monday, around 1 million people were screened in various neighborhoods throughout the Kingdom.

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Agencies
May 26,2020

Riyadh, May 26: The authorities in Saudi Arabia have decided to ease some restrictions put in place over coronavirus fears, allowing movement and resumption of some economic and commercial activities, Saudi Press Agency reported early Tuesday citing an official source at the Interior Ministry.

The move also allows restarting of domestic flights, opening of mosques, restaurants and cafes and work attendance, however, the temporary suspension of Umrah pilgrimage remains in force.

The easing of restrictions will be carried out in a phased manner, with the first phase beginning on Thursday (May 28) and ending on May 30.

In the first phase, the movement within and between all regions of the Kingdom in private cars will be allowed from 6 a.m. to 3 p.m. except in Makkah. Economic and commercial activities will resume in retail and wholesale shops and malls but beauty salons, barber shops, sports clubs, health clubs, entertainment centers and cinemas will continue to remain shut due to social distancing concerns.

In the second phase, which begins on May 31 and ends on June 20, the movement is allowed from 6 a.m. and 8 p.m. in all areas of the Kingdom, except in Makkah. All congregational prayers, including Friday prayers, will resume in all mosques across the Kingdom except in Makkah.

The suspension of workplace attendance will end, allowing all employees in ministries, government entities and private sector companies to return to working from their offices provided that they follow strict precautionary guidelines.

The suspension on travel between regions in the Kingdom using various transport methods will no longer be in place. Airlines will be allowed to operate domestic flights if they adhere to precautionary measures set by the civil aviation authority and the Ministry of Health. The suspension of international flights, will, however, continue until further notice.

Restaurants and cafes serving food and beverages can reopen, however, beauty salons, barber shops, sports clubs, health clubs, entertainment centers and cinemas will be barred from reopening in the second phase. The ban on social gatherings of more than fifty people, such as weddings and funerals will also continue to remain in force.

In the third phase commencing on June 21, the Kingdom will return to "normal" conditions as it was before the coronavirus lockdown measures were implemented.

Meanwhile in Makkah, the first phase measures will be implemented between May 31 to June 20 and the second phase will begin on May 21. Friday prayers and all congregational prayers will continue to be held in the Grand Mosque, only to be attended by Imams and the employees.

Comments

Mohammed Sarfraz
 - 
Tuesday, 26 May 2020

I think second phase is May 31 to June 20. Must be a typo. 

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