Economy, Politics

Government Ends Electricity Subsidy

The Saca administration has announced that it no longer has sufficient funds to continue the electricity subsidies for households that consume less than 99 kilowatt-hours per month.

(To put this in perspective, the average American consumes 600-800 kilowatt hours per month. One kWh would be enough energy for 4 evenings of TV or to power a small refrigerator for 24 hours. )

The $15 million monthly subsidies ended on March 12, 2009 and families that formerly received the subsidies will likely see a 30-50% rise in the electricity bills.

Government officials point out that they are eliminating the electricity subsidy in favor of continuing subsidies for water, propane gas, public transportation and school lunch programs.

The government blames the budget shortfall on the decline in tax revenue as a result of the global economic crisis. On the other hand, some analysts assert that the fragile state of the government’s finances is more a result of mismanagement and corruption by ARENA.

Economist Raul Moreno, head of research and monitoring at the Foundation for the Study of Applicatin of Law (FESPAD) worries that an increase in the cost of electricity will have a multiplier effect and raise the prices of other goods and services.

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