EWA cuts costs but faces BD240 million deficit, sparking ‘financial stability’ concerns

TDT | Manama

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The Electricity and Water Authority (EWA) has saved BD167 million over three years, but this has done little to close its BD240-million operational shortfall, according to Electricity and Water Affairs Minister, His Excellency Yasser bin Ebrahim Humaidan.

Addressing Parliament yesterday, Humaidan said the authority’s cost-cutting measures had reduced annual expenses by BD31 million in 2022 and BD68 million in 2023, with similar results estimated for 2024, though accounts for the year remain open.

These savings are part of a financial recovery plan introduced after the government began scaling back its direct support for the authority in 2017, eventually halting it entirely in 2022.

Subsidy

The annual subsidy once stood at BD350 million.

“These steps are aimed at stabilising the authority’s finances,” said Humaidan, adding that Parliament’s cooperation would be essential in tackling remaining challenges.

The minister noted that indirect government support has continued, primarily through the provision of subsidised natural gas sold to the authority at $2 per million BTUs — far below the market rate of $4.

He estimated this support reduces the deficit to between BD85 million and BD90 million, which must be addressed in the next budget.

MP Mohammed Al Ahmed raised concerns in response, questioning why the authority had not yet reached financial stability despite its savings.

“We hear about efforts to cut costs, but the deficit remains. Are there new measures being considered to finally balance the books?” he asked.

Al Ahmed questioned whether the authority had done enough to address the long-standing cost of electricity production, which has remained at 29 fils per unit for decades.

“Has there been any effort to bring this cost down over the years? Or is 29 fils here to stay?” he said.

He also raised concerns about privatisation, asking how the formation of the Electricity and Water Holding Company might affect tariffs, particularly for unsubsidised citizens and small businesses.

Pinch

“If costs rise for these groups, what will that mean for local businesses already feeling the pinch?” Humaidan reassured MPs that the current shortfall had not resulted in increased electricity prices for citizens, as the authority continues to implement government-mandated tariff reductions.

“This is a decision from the government, not the authority or the ministry,” he explained.