Riyadh Cuts Fuel Subsidies, Petchem Producers Count The Cost

As part of its budget announcement for 2016, Riyadh announced an increase in fuel prices in a bid to reduce the kingdom’s reliance on heavy subsidies for fuels and electricity (see p18). While the intention is to improve efficiency of energy usage across the board, at a time when government revenues are being squeezed by low crude oil prices, the burden will not be shared evenly.

The headline price rises are for gasoline and gas. Drivers will be hit by a 50% hike in the price of 95 RON gasoline to $0.24/liter and a 67% rise in 91 RON gasoline to $0.20/liter. Electricity generators and industry will see the price for natural gas fuel rise by 67% to $1.25/mn BTU, with electricity generators being trapped between increased fuel costs and still heavily subsidized electricity prices (see p8).


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