Oman’s RO 7.3 Billion Subsidy Expenditure: Implications for Investors and Businesses During the 10th Development Plan
MUSCAT: The Omani government has allocated a significant RO 7.3 billion in subsidies for essential utilities and public services during the 2021–2025 period of the 10th Five-Year Plan. This substantial investment highlights the government’s commitment to protecting citizens from rising costs while maintaining social stability and economic resilience.
As detailed by the Ministry of Finance, these allocations were part of the annual State General Budgets throughout the 10th Plan, addressing various sectors, including oil products, electricity, water and sewage services, solid waste management, basic food commodities, and housing loan interest subsidies. The aim is to ensure social protection, safeguarding the most vulnerable segments of society in light of ongoing economic initiatives.
The Ministry emphasized the government’s focus on national support for essential services and products to mitigate the impact of economic fluctuations. This budgetary strategy seeks to cushion citizens against the volatility of oil prices and inflation, as outlined in the 2026 State General Budget handbook.
Of the total subsidies, approximately RO 2.733 billion was allocated to the electricity sector during the 10th Plan, averaging about RO 546 million each year. However, future plans indicate a shift towards cost-reflective pricing, alongside the redirection of subsidies to eligible low-income households through the National Subsidy System.
Transport fuel subsidies amounted to RO 1.464 billion over the same five-year period, accounting for nearly 20% of total subsidy allocations. This support was intended to stabilize domestic fuel prices amidst fluctuations in the global oil market. After reaching a peak of RO 730 million in 2022, these subsidies are projected to decline significantly to an estimated RO 90 million by 2025.
Water and sewage subsidies totaled RO 904 million, while interest subsidies for development and housing loans reached RO 227 million. Other sectors benefiting from government support included basic commodities (RO 71 million), solid waste management (RO 357 million), and transport services (RO 381 million). Notably, the newly introduced Social Protection System received cumulative allocations of RO 1.078 billion in its first inclusion in the annual budget in 2024.
For the fiscal year 2026, the government will continue its supportive stance towards essential public services and utilities, with considerable allocations for social protection, utilities, transport, and debt management. This includes RO 614 million for the social protection system, RO 509 million for the electricity sector, RO 241 million for water, wastewater, and waste services, and RO 82 million for transport.
Overall, the budgetary subheading for "Contributions and Other Expenses" saw a 6% increase, reaching RO 2.475 billion for the 2026 Budget, up from RO 2.345 billion estimated for 2025. This rise reflects higher allocations for oil product subsidies, which increased by RO 55 million to RO 90 million, along with an additional RO 65 million in subsidies for electricity, water, and sewage services, cumulating utility subsidies to RO 779 million.
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The Omani government’s substantial RO 7.3 billion subsidy allocations for essential utilities and services reflect a strategic commitment to social stability and economic resilience. For businesses, this creates opportunities in sectors like utilities and housing, while also presenting risks as the transition to cost-reflective pricing could alter market dynamics, particularly in electricity and water. Smart investors should focus on aligning strategies with the government’s long-term fiscal plans, especially in sectors targeted for gradual reforms and support for low-income households.
