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Kuwaiti energy customers will see an up to 80 percent rise in fuel prices on September first, according to an announcement made by the national cabinet on Monday.
The move comes as part of economic reforms designed to combat falling oil revenues. The measure will increase the price of low-octane petrol by 41 percent to 28 cents a liter, the price of high-grade petrol by 61 percent to 35 cents a liter and the price of environmentally friendly “ultra” petrol by 83 percent to 55 cents a unit.
The increases are a first for the OPEC member in almost twenty years. The Kuwaiti government has historically subsidized oil prices in order to market its products as economical.
Kuwait represents the last country in the Gulf Cooperation Council to increase the price of oil, though the nation had liberalized its energy pricing model in January 2015, allowing rates to be changed on a monthly basis.
Other GCC countries, including Bahrain, Oman, Qatar, Saudi Arabia and the United Arab Emirates, had liberalized their pricing model in mid-2014 due to the sharp dip in oil revenues since the price crash that year.
Kuwait’s new prices will be subject to review every three months, and may be adjusted depending on the ups and downs of international oil prices, according to the cabinet’s announcement.
A government-sponsored bill to increase electricity and water prices for foreigners residing in Kuwait passed the parliament in April. The country now houses 1.3 million natives and 3 million foreigners.
The bill, the first of its kind in nearly five decades, will go into effect September 2017.
Earlier this month, Bloomberg named Kuwait as the second most affordable place for homeowners to satisfy their energy needs. The per-gallon price of oil stood at 88 cents, in a country where the average daily wage stands at $68.69.
In total, Kuwait’s residents spend just 1.27 percent of their wages on gas, according the business news site’s calculations.
By Zainab Calcuttawala for Oilprice.com
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Zainab Calcuttawala is an American journalist based in Morocco. She completed her undergraduate coursework at the University of Texas at Austin (Hook’em) and reports on…