Know Your Electricity Bill After 5% Tax Imposition in Saudi Arabia

With the start of New Year, the government of Saudi Arabia also starts the implementation of Value Added Tax (VAT) in various products and services. This included tax on electricity that will bring electricity bills up to threefold increase.

According to Saudi Electricity Co. (SEC), the 5% VAT will be implemented on electricity bills, connection and service charges alongside with revised bill calculation system.

The Electricity and Cogeneration Regulatory Authority (ECRA) has also revised its decades-old bill calculation system.

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Earlier, it was charging a nominal tariff of 5 halalas for first 2000 kilowatt per hour (kWh) of electricity consumption per month. A moderate tariff of 10 halalas was being charged for consumption from 2001 to 4000 kWh, and 20 halalas from 4001 to 6000 kWh per month.

Now ECRA has removed the consumption slab calculation system.

The new system will calculate up to 6000 kWh in a single slab.

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Residential electricity consumption of 1-6000 kWh per month will cost 18 halalas kWh. But consumption above 6000 kWh per month will cost 30 halalas kWh.

With the threefold increase in electricity tariff, a consumer currently paying SR200 per month for modest power consumption for three air conditioning units, a few fluorescent tubes, iron, television, washing machine, game console and a refrigerator will now have to cough up SR600 per month.

A high number of consumers will be affected most families living in flats.

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In Saudi Arabia, 50% of total power consumption comes from household accounts and more than P70% of this is being used for air conditioning.

The implementation of the new tariff was first announced by ECRA last December 2017.

Aside from utility bills, petrol and diesel, food, clothes and hotel rooms in Saudi Arabia are now subject to 5% VAT. This is a measure of the government to increase the revenue due to lower oil prices.

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Electricity Bill In Saudi Arabia Set To Increase Starting January 1, 2018

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Gradual revision of changes to electricity tariffs of including energy prices in the Kingdom has been approved by the Council of Ministers effective from Jan. 1. 2018, the Electricity and Cogeneration Regulatory Authority (ECRA) announced on Tuesday.

Residences with consumption of 1-6000 KWh/month will cost 18 halalas/KWh. But consumption above 6000 KWh per month will cost 30 halalas/KWh.

Commercial establishments with electricity consumption of 1-6000 KWh/month will cost 20 halalas/KWh. But consumption above 6000 KWh/month will cost 30 halalas/KWh.

Agricultural electricity use or by non-profit organizations, foundations, charities etc. will cost 16 halalas/KWh for 1-6000KWh consumption/month. But consumption above 6000 KWh/month will cost 20 halalas/KWh.

Private healthcare institutions, education institutes and private schools electricity will cost 21 halalas/KWh.

Industrial use will cost 18 halalas/KWh and for government use it will cost 32 halalas/KWh.
It said the changes to electricity tariffs will help redirect support to the most deserving beneficiaries through the Citizen’s Account Program, which is implemented and supervised by the Ministry of Labor and Social Development.

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ECRA explained that the approved tariffs are designed to cover the cost of services and ensure sustainable electricity supply throughout the Kingdom.
It will also contribute to improving the quality of service, increasing productivity, as well as opening up the field for competition.
The Authority explained that it is working in coordination with both the Saudi Electricity Company (SEC) and the Power and Water Utility Company for Jubail and Yanbu (MARAFIQ) to take all necessary measures for the amendment of the billing system .

Source: Saudi Gazette

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