Subsidies ‘the biggest ailment afflicting the Middle East energy sector’

Subsidies are “the biggest ailment that afflicts the Middle East power sector” according to Dr Hisham Khatib, honorary vice-chairman of the World Energy Council.

Speaking at the opening ceremony of POWER-GEN Middle East in Abu Dhabi today, Dr Khatib (pictured) said that Middle East power generation subsidies use 8.4 per cent of the region’s GDP and account for half of the energy subsidies in the world.

He said the continued use of subsidies was the key factor in the Middle East’s rocketing energy demand – up to 8 per cent a year for the last decade, which is almost four times the figure for any other country in the world.

Yet he added that “subsidies benefit the rich, less the poor”.

He said there were “shy” attempts to phase out subsidies but stressed that this needed to be made a “top priority” and put a price tag on this of $140bn of investment in the next five years – which rises to $230bn if transmission and distribution work is included.

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