Jordan Times
Tuesday, September 13, 2005
'Gov't studying
alternatives to address rising oil bill'
By Mahmoud Al Abed
AMMAN — The government is studying all available alternatives to address the
rising oil bill, a senior official said on Monday.
At the weekly press briefing yesterday, Deputy Prime Minister Marwan Muasher
said the oil subsidy shouldered by the government has increased to JD772 million
due to rising oil prices on the international markets. The price for a barrel of
crude oil hit the $70 mark a few weeks ago.
According to government estimates, a one-dollar rise in the price of this
strategic commodity costs the budget JD20 million.
When the government drafted the 2005 budget, “we were speaking about subsidising
the oil bill by JD300 million,” Muasher told the presser. “And when the
government presented its policy statement to the Lower House, the sum had jumped
to JD600 million. Now, according to this week's oil prices, the oil subsidy has
soared to JD772 million.”
A barrel of oil cost $53 at the time the budget was drafted.
“The government is now studying all the alternatives at hand to address this
problem,” the minister said, stressing that no decisions had been taken yet.
The deputy premier was responding to a local press report, which cited an
unnamed official as saying he expected the government to hike the prices of oil
derivatives for the second time this year to offset the rising costs of oil.
In July, the prices of oil derivatives were raised by 10-33 per cent to earn
JD130 million. The hike was part of a three-year plan to completely lift the oil
subsidy. The next increase is planned for spring 2006.
Economist Fahed Fanek told The Jordan Times that the government has to decide
the size of the subsidy cut for the coming year before the end of this year. The
decision must be taken so as to base the 2006 budget on the reduction, he said.
Fanek said alternatives at hand are merely measures to reduce reliance on
imported oil and rationalise consumption. Increased use of the relatively cheap
Egyptian gas and energy saving measures are among the ideas the Cabinet might
consider, he said.
He ruled out the possibility that the government might hike the prices of oil
this year.