The concerned authorities in the Kingdom of Saudi Arabia has stated on Monday that they are going to raise the prices of petrol by more than 50 percent for some of the products as of Tuesday as the authorities are going to be cutting a range of various subsidies, after the Kingdom of Saudi Arabia posted a record deficit in the budget. It has also been announced that the prices for commodities such as water and electricity and other petroleum or fuel based products such as kerosene and diesel will also be increasing since they will be under the cuts which have been decided by the council of Ministers, which was headed by the Custodian of the Two Holy Mosques, King Salman. New prices will take effect from Dec 29, 2015.
The Council of Ministers has also decided to increase the price of the unleaded or higher grade petrol to $ 0.24 (0.90 Riyals) per liter from a previous price of around 0.60 Riyals which shows the 50 percent price hike of the product. As for the lower grade petroleum the price has now risen to $ 0.20 (0.75 Riyals) per liter which is a whopping 67 percent price hike from the older price. The prices of petrol and other similar products in the Kingdom of Saudi Arabia have been the cheapest in the entirety of the Gulf region and also one of the lowest prices in the world. The Saudi National Oil Conglomerate giant Aramco has stated on twitter that they would be immediately closing all of the petrol stations until midnight time on Monday, when the sales will resume in accordance to the new prices.
The cabinet in the Kingdom of Saudi Arabia has stated that the increase in prices is in line with the energy prices in the international market. The prices for other fuels and fuel products such as kerosene, natural gas, and diesel and also the substantially subsidized water and electricity, however the complete details and figures have not yet become available to the media.
The Kingdom of Saudi Arabia will also be following foot in foot behind the footsteps of their close neighbors the United Arab Emirates, which had become the first state in the Gulf region which liberalized their fuel prices only earlier this year. Another one of the neighbors of the Kingdom of Saudi Arabia, Kuwait had lifted several subsidies on kerosene and diesel products from the beginning of the 2015 year and are also planning on various other spending cuts which will be implemented early next year. These pending cuts in spending will be based around electricity and petrol.
The remaining countries in the Gulf region are also considering similar measures The IMF or the International Monetary Fund has suggested that the direct cost of these subsidies given on energy in the GCC or Gulf region totals to around $ 60 billion. Of the indirect costs such as road traffic expenses as well as certain environmental costs, the total would come in at $ 175 billion.
Source: Gulf News
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