THE POLITICS OF REFORM147UNITED ARAB EMIRATESFour years after Dubai’s pathbreaking reform, described in chapter 7, the
UAE federal government in Abu Dhabi acted to abolish UAE- wide sub-
sidies on transportation fuels, allowing prices to fluctuate monthly based
on world benchmarks. Abu Dhabi had planned to raise prices shortly
after Dubai did in 2011 but shelved plans until August 2015, probably as
a result of the Arab Spring. Ironically, the adjustment in fuel price ini-
tially reduced prices for gasoline and diesel, since they had been fixed at
higher rates than those in world markets, which had fallen alongside
crude prices. By late 2017, however, gasoline prices had risen back above
$2/gallon, and the regime showed no signs of following the Omani exam-
ple of capping prices.
Abu Dhabi also increased water and electricity rates. Once again, the
biggest increases were handed to foreigners, who began paying six times
the citizen price for electricity and four times more for water. Even so,
nationals were still subject to groundbreaking price increases. In 2015,
Abu Dhabi nationals saw tiny increases in electricity charges and a
modest rise for water, which, like in Dubai, had always been given away
free in unlimited quantities. The price increases for citizens looked less
like a true fiscal reform than a warning that unlimited energy benefits
would not continue in perpetuity.
In 2017, the regime made good on the implied threat. Expatriates and
citizens received further increases. Over the two- year period, expatri-
ate electricity costs nearly doubled from 4.1 US cents per kWh to 7.2 cents
per kWh for small amounts of daily consumption. (For higher consump-
tion by foreign residents, subsidies were eliminated. The price rose to a
cost- reflective rate of 8.3 cents.) Citizen rates remained heavily subsidized
but increased from 1.4 to 1.8 cents per kWh. Unit costs for water rose by
a minimum of 270 percent for expatriates, from 59 cents to $2.12 per
1,000 liters, while citizens received water bills for the first time ever, at
56 cents per 1,000 liters.^29 The UAE’s two remaining utilities, in Sharjah
and the Northern Emirates, also raised prices, but only on foreign resi-
dents and industrial and commercial customers.^30