Higher electricity prices for everyone, charges for water consumption by Abu Dhabi nationals and a stinging increase in power use by industry during peak hours in summer are among the features of the most sweeping change in modern history in utility prices levied in the emirate due to come into effect on 1 January 2015.
The increases include a 170 per cent hike in the price of water paid by expatriates and charges for the first time to be applied to Abu Dhabi nationals. They also face a steep further rise for consumption above 700 litres a day.
Among the innovations are time of use premiums to be charged to industry for electricity consumption. The price of electricity consumed between 10am and 10pm in 1 June to 30 September will increase by 100 per cent to AED 0.3 ($0.09) a kilowatt hour. Off-peak consumption will be charged at only AED 0.16 ($0.05) a kilowatt hour.
The tariff increases had been the subject of debate throughout 2014.
Harald Finger, the IMF’s head of mission for the UAE, said on 5 November that Abu Dhabi was considering subsidy reforms.
The increases in electricity and water charges go further than most observers expected and reflect intensifying concern that consumption patterns are unsustainable.
They follow an IMF report in July calling for Middle East oil exporters to cut domestic energy subsidies, the highest in the world.
In July, the Egyptian government announced swingeing domestic petroleum price increases.
Analysts say that they believe further utility price increases are likely in Abu Dhabi and that cuts in subsidies on domestic petroleum are possible. They say they expect other GCC states to take similar action.