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Kuwait to compensate citizens for petrol price hike

Kuwaitis queue up to fill their cars with fuel at a petrol station [AFP]

Date of publication: 6 October, 2016

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The Kuwaiti government has agreed to compensate citizens with 75 litres of "free petrol" monthly following reform measures to plug a budget deficit resulting from low oil prices.

The Kuwaiti government agreed to compensate citizens for hiking petrol prices in a plan to "partially liberalise" the fuel subsidy, parliament speaker Marzouk al-Ghanem said on Wednesday.

Those holding driver's licences would be compensated with 75 litres (20 gallons) of "free petrol" each month, Ghanem told reporters after a three-hour meeting between the government and a number of lawmakers.

The cost of petrol would be revised on a monthly basis depending on the price of oil on international markets, he said, adding this represented a "partial liberalisation" of subsidies.

He added that the country's legislative and executive powers were committed to make sure that any measure to reduce budget deficit would not affect the Kuwaitis' standard of living.

Kuwait fully liberalised the prices of diesel and kerosene at the start of 2015.

Foreigners, who make up almost 70 percent of the oil-rich Gulf state's 4.3 million population, still pay the full price.

The hike, ranging from about 40 to 80 percent depending on the type of fuel, went into effect on 1 September as part of reform measures to plug a budget deficit resulting from low oil prices.

It was the first such increase since 1998.

But a number of MPs who attended the meeting rejected the deal as insufficient.

"This is not acceptable to us. We can not agree to a deal that harms Kuwaiti citizens' income," said MP Saad al-Khanfour.

"I plan to question ministers over this issue," he told reporters.

MP Majed Musa said he and a group of lawmakers were working on a certain move against the government. He did not elaborate.

This is not acceptable to us. We can not agree to a deal that harms Kuwaiti citizens' income.
- MP Saad al-Khanfour

"Kuwaiti citizens are not beggars. Any measure that negatively affects citizens' income is rejected," Musa said.

Kuwait's lower court last week ruled that the increase of petrol prices was unlawful because of procedural flaws.

The government has challenged the ruling before the appeals court defending its procedures.

The OPEC member recorded a budget shortfall of 4.6 billion dinars ($15.3 billion) in the fiscal year which ended on 31 March, according to official figures.

It was the first shortfall since the fiscal year to March 1999. Gulf States including Kuwait were hoping oil prices would stabilise in 2016. 

The continued lows pushed revenues down by 45 percent to $45.2 billion while spending was cut by 14.8 percent to $60.5 billion.

Oil income was $40.1 billion, a slump of 46.3 percent from the previous year.

Oil currently account for 89 percent of total revenues.

Last year, Kuwait raised the prices of diesel and kerosene and also decided to lift electricity and water charges on foreign residents.

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