Communication - Press

Businesses feel the pinch of rising costs, hope for utility bills reprieve

BUSINESSMEN in Bahrain have joined the ranks of those complaining about massive electricity bills.

The cost has surged more than 800 per cent in the space of just three years for expat residential customers, prompting some foreigners to leave Bahrain because it is now so expensive.

However, the country’s private sector is also feeling the pinch – with companies seeing electricity costs almost double over the same period.

“We believe the government will consider a rethink on power tariffs for businesses as well so that it would help, especially the small and medium enterprises, which constitute over 95pc of the market and are a major contributor to the national economy,” said Abdulhakim Al Shemmari, who heads the Bahrain Chamber of Commerce and Industry (BCCI) commercial markets committee.

Before the phased price increase commenced in March 2016, expats and Bahrainis with more than one home paid 3 fils per unit of electricity consumed.

That rose to 29 fils per unit in March this year.

Larger consumers, such as businesses, previously paid 9 fils per unit if power consumption exceeded 3,000 units per month – and 16 fils per unit if it surpassed 5,000 units.

These charges also rose to a flat rate of 29 fils per unit in March this year.

Authorities last week announced temporary relief for Bahraini households, amid complaints about higher costs, even though they qualify for a subsidised rate of just 3 fils per unit for the first 3,000 units consumed.

The GDN reported last week that expats are hoping for a similar reprieve, but now businessmen are also making the case for a review.

Mr Al Shemmari revealed businesses were already suffering from a general drop in public spending, which was driven by rising costs of living.

“With people trying to balance expenses, spending has gone down and businesses are affected,” he said.

“Higher charges on power have indeed impacted the public heavily, which obviously is reflecting on the market – especially small and medium businesses.”

Skyrocketing

Some leading businesses were reluctant to discuss the issue when contacted by the GDN.

However, cold store owners said their electricity costs had skyrocketed – particularly during summer – due to their reliance on air-conditioning, chillers, freezers and other appliances running around the clock.

Papaya Fruit and Vegetable owner Lathief Ayancheri said the situation had been compounded by the introduction of VAT in January, revealing that some commercial landlords were even raising rents despite market conditions.

“Landlords are increasing rent without any notice at the end of contracts, which affected us – and then came VAT, which was another major blow,” he said.

“Now electricity bills have broken small businesses like ours.

“Utility bills are at least three to four times more than they used to be and our profit margin is less than 10pc.

“Most of the shops are still open, but there is not much business and they could shut down.

“Our customers are families in the neighbourhood, who are also affected by increased utility bills – hence their spending has gone down.

“We hope the government will address our concerns as well and order a revision of electricity tariffs.”

An investigation has been launched by the National Audit Office over irregularities in electricity and water bills.

Meanwhile, Bahrainis with one home will have their bills for June, July and August recalculated amid widespread dissatisfaction at rising charges.

Aseel Supermarket owner Abdul Rahman said he was hoping for a rethink across the board, revealing his business was down almost 25pc this summer.

“The tariff for businesses (consuming more than 5,000 units of electricity a month) was 16 fils per unit (in 2016), but it is now 29 fils – almost double,” he said.

“We have seen a similar increase in our bills.

“Usually business is down by 10 to 15pc during July and August, as people travel, but this year it is down by almost 25pc.

“Expats are mostly affected by the high utility bills, which makes them spend less and it affects businesses.”

Bahraini households qualify for a subsidised electricity rate of 3 fils per unit, but if they exceed 3,000 units in a month the rate increases to 9 fils and then 16 fils if it goes over 5,000 units.

Source: http://www.gdnonline.com/Details/582585