Energy subsidies for heavy industries

Heavy industries are industries which require a large amount of capital but do not produce profits immediately and involve a high degree of risk. These include industries involved in the production of machinery, equipment, iron and steel, petrochemicals, fertilizers, cement and aluminium.

Subsidy allocations in the General Budget for 2010-2011 amounted to 115.92 billion pounds. Subsidies for petrochemicals have increased at the expense of food subsidies to 67.7 billion pounds, which is higher than the year before. Electricity subsidies amounted to 6.3 billion pounds. Thus, total amounts allocated for subsidising energy amounted to 74 billion pounds in the 2010-2011 budget. Of these subsidies, heavy industries acquire the largest proportion.

Supporters of subsidising energy for heavy industries argue that heavy industries like iron and so on are national industries that should be supported in order to compete in the local and regional markets. If we remove the subsidy, these will become more expensive than their imported counterparts, threatening such industries and their workers.

On the other hand, opponents argue that heavy industries are for-profit sectors. Those deserving to benefit from subsidies are not businessmen but rather ordinary citizens striving to secure their daily income. Moreover, removing subsidies from the heavy industries sector will reduce the burden on the General Budget and help reduce financial deficit.