Hurt by cheap oil, Saudi government will make water more expensive

RIYADH (Reuters) - Saudi Arabia will raise the price of water for non-residential consumers, local media reported, a sign the government is cutting back an expensive system of subsidies as low oil prices strain its finances.

The rate for industrial, government or large corporate users will rise to 9 riyals ($2.40) per cubic meter from 4 riyals now, starting on Dec. 16, the local newspaper al-Watan reported in an article posted on the website of the Ministry of Water and Electricity.

A ministry spokesman could not be contacted to comment on Monday. Some other Saudi newspapers carried similar reports, quoting unnamed sources in the ministry as saying the government aimed to reduce the growth of water consumption and discourage waste.

Residential users, who have long enjoyed cheap water as part of lavish social welfare benefits provided by the government, will not pay higher prices, the reports said.

The plunge of oil prices since last year has saddled Saudi Arabia with an annual state budget deficit exceeding $100 billion, putting pressure on it to reduce spending, although the government is reluctant to make politically sensitive cuts.

The oil minister said last week the kingdom was considering whether to reduce domestic fuel price subsidies; he did not elaborate.

The media reports did not say how much money the government might save by raising water prices. The move could help to limit energy use, because much of the desert country’s water is produced by desalination plants.

Writing by Andrew Torchia, editing by Larry King