Oil and electricity do not mix

The minister of finance has just announced a series of financial reforms the country will introduce in order to address the continued budgetary deficit, reduce state expenditure and instate financial efficiency.

Among the measures was the decision to link the rate of electricity fees to the price of oil.

Such linkage might appear rational and defensible on the surface, but it is not.

The prices of oil swing quite unpredictably and often in the international market.

Basing pricing of local fuel, a monthly endeavour, on international oil prices is logical. Making a basic life necessity like electricity — for which many households budget carefully — so heavily dependent on the fluctuating oil prices is not right and, one would think, highly impractical for those needing to calculate and adjust prices.

Unlike fuel, for heating or cars, electricity use is so basic that it cannot be left solely to the market trends to regulate.

In these modern times rarely does one find buildings unconnected to the electricity grid. Irrespective of their economic situation, people cannot live without electricity; they do live without cars, obviously.

Many citizens live on a very tight budget and can ill afford sharp, or even periodic, spikes in the cost of their basic necessities.

True, the government may incur losses if it continues to provide electricity at the same fixed price, without pegging it to the cost of fuel that generates it, but these losses must be absorbed by other means than keeping citizens, especially those in the lower and middle classes, hostage to the fluctuating prices of oil.

Authorities in charge of determining electricity rates could make at least short- and medium-term projections about oil price trends and fix electricity rates accordingly, perhaps on yearly basis.

That might be easier to absorb, although not a very scientific measure.

But since it will definitely not be fair to make the public bear the consequences of poor projections about oil prices, perhaps even this last suggestion should not be taken.

Those in charge might get enlightened and work out an electricity charge formula that is just to all. Oil prices do not seem right for it.