Saudi Arabia to "restudy" energy pricing policy, says new industry minister

Energy subsidies have cost the Saudi economy billions of dollars annually in lost revenue

The Faisaliya tower stands among other buildings in the Saudi capital Riyadh on December 5, 2019. / AFP / FAYEZ NURELDINE

Saudi Arabia is looking at a "restudy" of its domestic energy pricing policy, according to its new industry minister.

“The idea is to have something stable for 10 years," Bandar Alkhorayef told Bloomberg TV in an interview in Riyadh.

In 2017, Saudi Arabia, the world's largest oil exporter, pushed back the implementation of major energy subsidy cuts by five years to 2025.

Energy subsidies have cost the country's economy billions of dollars annually in lost revenue. Following some fuel price reforms in 2015, the share of petroleum subsidies to the kingdom's gross domestic product halved to 4 per cent in 2016 from 8 per cent in 2013. It, however, remains the highest for any oil-exporting country in the region, according to the International Monetary Fund.

On Sunday, Saudi Arabia unveiled plans to spend more than 1.02 trillion riyals (Dh999 billion) as part of its budget for next year.

The kingdom forecast revenue of 833 bn riyals and expects to run a deficit of 187bn riyals, the equivalent of 6.4 per cent of its GDP next year. The country will see its deficit rise by 131bn riyals or 4.7 per cent of GDP in 2019. International and domestic bond issuances will help plug the deficit, according to the country's finance minister Mohammed Al Jadaan.

Saudi Arabia, which will list 1.5 per cent of state oil company Saudi Aramco's shares tomorrow, has lowered its expenditure for next year compared with spending plans for 2019.

Mr Alkhorayef, who takes over the portfolio for the newly established industry and mineral resources ministry next year, said the kingdom would be undertaking a geological survey covering an area of “approximately a third of Saudi Arabia”. A Saudi royal decree decoupled the industry and mineral resources portfolio from the kingdom's energy ministry earlier this year.