ALKHOBAR: Saudi Arabia’s government is studying whether to cut state subsidies that keep domestic gasoline prices at some of the lowest levels in the world, a local newspaper quoted unnamed sources as saying.

Al-Watan’s Saturday edition quoted the sources as saying Saudi authorities had been considering the issue for several years, but the matter had taken on additional importance after the UAE reduced subsidies and allowed gasoline prices to rise last month.

The newspaper quoted Fahad Al-Anazi, deputy chairman of the economic and energy committee in the Shoura Council, as saying any changes to subsidies would have to be accompanied by other measures to preserve public welfare, such as the provision of cheap public transport.

Because higher gasoline prices could lead to inflation in other goods, Al-Anazi suggested the government might introduce new subsidies for some food and other consumer items, or distribute cards allowing some people to purchase fuel at subsidised prices.

Such subsidies would be provided to Saudi citizens rather than the large number of foreigners in the country.

Economists estimate that removing subsidies on gasoline would save the Kingdom nearly SR30 billion annually, Al-Watan reported.