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Energy bill increase to hike rents, prices

KUWAIT: Kuwait has been buzzing with questions since the cabinet announced Monday approving a proposal to increase electricity and water fees, which would increase the cost four fold for consumers according to the indications of ordinary consumption. Furthermore, it is widely expected that the fees’ increase will automatically and unwillingly reflect on other fields, starting with apartment rents, and includes factories that produce national products and every facility that uses energy.

The proposal would increase electricity fees as follows: for private houses (normally inhabited by Kuwaitis), the bill proposes to raise current electricity charges of 2 fils per kilowatt to as follows: For consumption of up to 3,000 kilowatts – 5 fils per kilowatt; For consumption of between 3,000 – 6,000 – 8 fils per kilowatt; For consumption between 6,000-9,000 – 10 fils per kilowatt; For consumption above 9,000 – 15 fils per kilowatt. As for apartments (mostly inhabited by expatriate), the new proposed rates are as follow; For consumption of up to 1,000 kilowatt – 5 fils per kilowatt; For consumption between 1,000-2,000 – 10 fils per kilowatt; For consumption above 2,000 kilowatt – 15 fils per kilowatt. The bill also proposes smaller increases to water charges.

Third category
According to sources, most citizens would be classified in the third category, and would pay 10 fils per kilowatt according to current consumption rates. The sources questioned the government’s argument that the bill encourages saving energy, saying that the majority of consumption goes to power air conditioning “that cannot be replaced” during Kuwait’s long and extremely hot summer.
“How can rationalization reduce an invoice valued at KD 100 if air conditioning consumes nearly 70 percent of the bill?” the sources wondered. Specialists meanwhile warned that real estate owners will be left with no other choice but to increase rents to compensate for the increase in energy bills.

Ministry of Electricity and Water (MEW) statistics show that the average consumption of power in private residences (houses) of an area between 300 to 1,000 square meters reaches 7,500 kilowatts, which is equal to an invoice of KD 15 according to the old tariff, while it will reach KD 54 according to the new price. This means that the annual bill would increase from KD 180 to KD 648.
The average consumption of water in these residences is 30,000 imperial gallons, for a value that will reach KD 60 according to the new tariff, from the current KD 24.

As for residential apartments, where the average consumption of a two room flat is 2,700 kilowatts, the bill will increase fivefold from KD 5 to KD 25 a month. Four bedroom apartments with an area exceeding 400 square meters will go up to KD 75 per month, from KD 12 only.

Industrial sector
The industrial sector will probably be the most affected. With an average monthly consumption of 400,000 kilowatts, the monthly bill would jump from KD 800 to KD 4,000, since the tariff under the proposed plan increases from 2 to 10 fills per kilowatt. This would obviously lead to increasing the prices of products that these facilities provide. – Al-Rai

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