Wednesday, April 18, 2012

Arab energy subsidies waste billions: UN report... While government say they aim to protect low income families from high fuel costs, the subsidies help the rich more than the poor

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A worker at a gas station fills a Saudi man's car with petrol in Riyadh. Arab countries are wasting tens of billions of dollars on subsidies for petrol and energy but dare not roll them back for fear of a political backlash, a UN report said. (AFP Photo/Hassan Ammar)

While government say they aim to protect low income families from high fuel costs, the subsidies help the rich more than the poor, the report said.

In Egypt, the top 20 percent wage earners get 33 percent of the energy subsidies, against 3.8 percent for the poorest families. For gasoline, 93 percent of the subsidies go to the rich.

The subsidies also distort the economy by encouraging waste and holding up investment in renewable energy, the report said. Energy consumption in the Arab world tripled between 1980 and 2008.

UN researchers said the money could be better spent on infrastructure and social spending.
In 2008, spending on energy subsidies in Egypt, Jordan and Syria accounted for more than spending on education and health.

"While energy subsidies do benefit low income households, they must be seen as a costly and inefficient tool to protect the poor in the Arab world," said the report.

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