Saudi Arabia to establish national water and energy efficiency program

RIYADH (Reuters) - Saudi Arabia will establish a national program to optimize water and energy consumption, it announced in a cabinet statement on Monday, further moves in areas where the government is seeking to cut back huge subsidies.

The new program will review policy incentives currently in place for the energy and water sectors, taking into account both economic productivity needs and inequality within society, the statement said.

It did not elaborate on where the new program would reside within the government or whether its creation might augur further cuts to the kingdom’s extensive water and power subsidies.

The announcement comes amid major restructuring of the kingdom’s energy and water sectors, intended to support sweeping economic reform plans to wean the world’s largest crude exporter off its dependence on oil.

As part of the reform drive, Saudi Arabia aims to reduce electricity and water subsidies by 200 billion riyals ($53 billion) and reduce non-oil subsidies by 20 percent by 2020.

It introduced its first subsidy cuts for power and water in December, then sacked the minister responsible following a public outcry over how the new water tariffs were applied to average Saudis.

Deputy Crown Prince Mohammed bin Salman, who is responsible for the economic reforms, was quoted as saying the water price increases had not been implemented as planned.

In May, King Salman restructured the ministries responsible for handling water and energy policies.

Through royal decrees, he broke up the old Water and Electricity Ministry and handed responsibility for electricity over to a new Energy, Industry and Natural Resources Ministry headed by Khaled al-Falih, chairman of state oil company Aramco.

The water portfolio was incorporated into a new Environment, Water and Agriculture Ministry.

Reporting by Katie Paul; Editing by Toby Chopra