The Ministry of Finance and Public Enterprises has stated that there is currently no policy to introduce any changes to electricity tariff rates.
Deputy Minister at the Ministry of Finance and Public Enterprises, Ahmed Saaid Musthafa said that any change to tariff rates would increase the financial burden on the state.
Speaking on PSM News’ “Raajje Miadhu” programme about government fiscal policies, particularly those related to the energy sector, the Deputy Minister outlined the government’s position on electricity tariffs. He noted that there is no intention to revise tariff rates as part of efforts to manage government expenditure on the energy sector. The ministry also highlighted that existing tariffs are already relatively low when compared to international standards. He added that prior to the current administration taking office, electricity tariffs were revised in May last year, with domestic tariffs being reduced.
Deputy Minister Saaid explained that many factors must be considered when adjusting tariff rates. Policy decisions so far have taken into account whether electricity bills are proportionate to household income. However, he acknowledged that this does not reflect the situation equally across all islands. He illustrated that even if many people share a room, an air conditioner must work harder to cool it, especially when outdoor units are often installed in poorly ventilated areas. This increases electricity consumption and results in higher bills. Therefore, he said, reducing tariffs further would significantly increase government expenditure.
Electricity generation in the Maldives operates at a loss, and the government currently provides substantial subsidies to maintain the service. These subsidies are funded by taxpayers, and the ministry stressed the importance of exploring alternative solutions before increasing this burden.
The government’s current policy, Deputy Minister Saaid said, is focused on reducing the cost of generating each unit of electricity.This includes increasing the use of renewable energy and replacing existing generators on islands with more cost-efficient alternatives.
“If we can improve efficiency on the generation side, we will not be in a situation where tariffs need to be increased,” he added.
While there are no plans to change tariffs, the government is implementing reforms to improve the operations of Fenaka and State Electric Company Ltd (STELCO).
As part of these efforts, some islands currently managed by Fenaka will be transferred to STELCO, particularly in central regions. This is expected to reduce Fenaka’s burden and allow it to focus more on providing services in the northern and southern atolls, according to the Ministry.