Expatriates living in Bahrain could start paying unsubsidised electricity and water bills if negotiations between legislators and the government pan out, a report said.

Businesses could also face a similar hike in prices, but authorities have pledged Bahraini families will not be affected despite plans to redirect government funding, reported the Gulf Daily News (GDN), our sister publication.

Senior government officials, led by Deputy Premier Shaikh Khalid bin Abdulla Al Khalifa, and MPs, led by parliament chairman Dr Khalifa Al Dhahrani, yesterday agreed that a new subsidies system had to be drawn up to save funds.

It was the second meeting held between the Cabinet and National Assembly to discuss all government subsidies.

Shaikh Khalid said the current subsidised rates do not differentiate between Bahrainis and non-Bahrainis, or households and companies.

"We are looking for common grounds on the issue considering current fares, which are subsidised, are benefiting everyone," he said. "One thing has to be made clear that any change to the current system will not see Bahrainis affected, instead it will see them benefit."

The GDN earlier reported that the cost of government subsidies has increased by 73 per cent in five years.

They rose from BD822 million ($57.6 million) in 2007 to BD1.126 billion last year.

Minister of State for Electricity and Water Affairs Dr Abdulhussain Mirza yesterday said the government has been spending BD700 million on electricity and water subsidies this year and last year.

"It is a 48 per cent increase to the amount allocated in 2007, which was BD168 million," he said.

"Non-Bahrainis have benefited from electricity and water worth BD40.282 million in 2012 with BD24.832 million going towards electricity subsidies and BD15.450 million towards water. Expatriates have 50,958 accounts out of 154,526 domestic accounts from a general total of 350,000 accounts."

He said the production, transportation and distribution costs were cheap compared to other Gulf countries.

"Electricity costs us 28 fils for a kilowatt per hour, while it costs us 725 fils for water per metre square," he added.

Dr Al Dhahrani said the negotiations were headed in the right direction, but authorities should reassure the Bahraini public that living standards would not be affected.

However, Al Asala Bloc president MP Abdulhaleem Murad accused the government of failing to present guarantees that the new system will benefit citizens.

"We need a comprehensive economic study reflecting inflation and price rise, guarantees that payments will be directly going to people's bank accounts monthly and that removing subsidies would be done in stages," said Murad, who is also parliament financial and economic affairs committee chairman.

He said talks were a positive sign the government was willing to negotiate rather than make decisions without consulting parliament. The meeting comes after a deadlock between MPs and the government ended on December 31 on controversial diesel price. – TradeArabia News Service