Al-Bilad newspaper

It has been over a month since the energy and water subsidies were lifted and VAT came into force. These economic reforms were unavoidable and are in line with the Kingdom’s Vision 2030. The government has recently issued a number of decisions to mitigate the impact of the lifting of the subsidies, especially for Saudis with low incomes. Custodian of the Two Holy Mosques King Salman ordered that SR1,000 should be paid each month to low-income families for one year to help them with living expenses.

We should realize that the smart use of energy and rationalizing water consumption are a national duty that we all must undertake to support the Kingdom. This does not involve lessening the use of energy but calls for being efficient in the way energy is consumed. This will lead to economic growth and increased investment opportunities. All of us must be smart in the way that we use energy.

Statistics about the Kingdom are alarming. The International Monetary Fund warns that the Kingdom might use up all of its monetary reserves in less than five years if it does not take measures to decrease government spending and increase revenues.

The fund also notes that the Kingdom has the highest rate of energy consumption in the world. We consume 4.5 million barrels of oil a day, which equals 40 percent of the Kingdom’s oil exports. The rate of oil consumption for the purpose of power generation is increasing at an alarming rate at 8 percent per annum, which is the highest in the world. In the US and Europe, this is 4 percent and 3 percent respectively. To put it another way, if this annual consumption rate continues, we will use up all of the oil we produce within 25 years and will not be in a position to export oil.

There is no doubt that this high consumption rate is due to the state subsidy which keeps energy prices low. In fact, the Saudi government spends SR90 billion a year in fuel subsidies and SR240 billion a year in water and electricity subsidies. The latest statistics show that a Saudi consumes 200 percent more than an American consumes and 160 percent more than a European consumes.

As for water consumption, the Kingdom ranks third globally because a Saudi consumes 300 liters a day while the global average rate ranges between 150 and 200 liters a day. We are high consumers despite having limited water resources. Recent statistics also indicate that 20 percent of water is wasted because of leakages while 30 percent is used in people’s gardens.

Smart consumption will increase public awareness of the importance of these resources and encourage people to change their habits. Moreover, decreasing energy subsidies will help the government invest more money in developmental and industrial projects, reduce the budget deficit as well as address the public debt. It will also increase local market competitiveness and attract more investments in the energy sector, which in turn will help increase GDP while reducing the rate of unemployment. Rationalization of energy and the consumption of water will help the government save SR59 billion this year, a figure that might reach SR209 billion in 2020.

These plans should be coupled with initiatives and programs that reduce our dependency on oil and raise public awareness of the benefits of rationalization in the long run. We should also make use of solar energy and other forms of renewable energy such as wind and water.