Bahraini farmers will have to operate on solar energy as the government plans to scrap subsidies on water and electricity, according to experts.

The Gulf Daily News (GDN), our sister publication, earlier reported that the second phase of cuts would see power and water subsidies, which are expected to cost the government BD325.5 million ($866 million) this year and BD315.7 million ($831 million) next year, scrapped.

It follows government plans to axe meat subsidies from August 1 and compensate eligible Bahrainis with payments into their bank accounts.

MPs have threatened to block the national budget for this year and next if the government insists on reducing subsidies.

However, the Agriculture Directorate has plans in place to help Bahraini farmers with the transition.

'They use a lot of water for cooling and electricity for green houses not to mention the water used to grow crops,' Dr Mohamad Foda, agricultural consultant to Agriculture, Livestock and Fisheries Under-Secretary Shaikh Khalifa bin Isa Al Khalifa, told the GDN.

'Two years ago we introduced, through the Bahrain International Garden show, self-sustaining solar powered green houses.

'These have solar panels that would produce energy for the green house itself so that they wouldn't even have to be connected to the grid.

'So there is a system there for farmers to switch to when the price of water and electricity increases.

'People will move more towards this kind of solar powered farming to cut their long-term overheads.'

Meanwhile, businessmen have raised concerns that cuts in electricity and water subsidies would affect citizens more than scrapping meat subsidies.

'To me, as a representative of the private sector and industry, the electricity and water subsidy cuts will be more serious [than meat],' said Bahrain Chamber of Commerce and Industry (BCCI) chairman Khalid Almoayed.

'We have concerns for merchants as human beings, as residents, as nationals '“ we don't only represent the industry we represent ourselves as individuals and we are concerned that the small man will not be represented in the formula and we hope that they [government] will take it into consideration.'

BCCI food and agriculture sector committee chairman Khalid Al Amin said the cuts will create a new budgeting culture in Bahrain.

'This will implement a new post-subsidy culture '“ now a citizen will have to begin budgeting,' he added.

The GDN earlier reported that MPs threatened repercussions if the government followed through on proposals to revoke subsidies.

The warning was issued in a parliament statement that was unanimously approved by MPs, some of whom have threatened to resign.

The statement also criticised the government plan for being vague, since it is not clear who will qualify for the food allowance once meat subsidies are scrapped.

Fees for government services that are currently subsidised will also increase from August 1, when they will be provided at cost price.

Oil and gas subsidies are likely to be stopped in the third phase of the subsidy reductions, but officials did not say when phases two and three would be implemented.

The government wants to cut back spending on subsidies due to lower revenues, which are expected to reach a total of BD4.255 billion in 2015 and 2016, compared with anticipated expenditure of BD7.292 billion over the same period.

A dramatic drop in the oil price, which accounts for more than 80 per cent of government revenues, has contributed significantly to a reduction in national income.

As a result, Bahrain is facing a fiscal deficit of BD1.47 billion this year and BD1.563 billion next year and last November raised its debt ceiling from BD5 billion to BD7 billion to meet the shortfall. – TradeArabia News Service