Energy heats our food, keeps us warm in winter, and lights our lives. So how are the changes to energy price structures affecting the daily lives of Syrian families?

Pipelines and geopolitics seem very distant concerns for the Hanana family on a weeknight sitting around the kitchen table in their home in central Afif, Damascus.

Home strung light bulbs brighten the room. Haifa wails from the television in the corner. There’s dinner on the gas stove, lunch for the family of five tomorrow, and an electric heater struggles to warm the stone walls of the traditional Damascene home.

This winter, which saw early snow blanket the city in a way not observed since 2003, the family are making do with traditional sobia diesel heaters in three rooms and one electric heater upstairs, despite the increased price as a result of the latest September's decrease in subsidies the government provides for fuel. Still, the house is never really warm.
Nazeer Hanana, a music teacher and part time construction worker, 62, explains the decision to return to the diesel option after experimenting with gas heating the previous year.

“It wasn't efficient and the smell was awful,” he explained.
September saw the latest of a series of Presidential decrees issued to phase out the fuel subsidy system implemented, with a decision to increase the gasoline price by 4 SP a litre to 20 SP a litre.

Faced with a massive budget deficit, and with subsidies accounting for over $2 billion each year as a result of excessive usage of fuel and petroleum products due to its relatively low cost and the decline in oil reserves in Syria, phasing out subsidies became a priority of the Syrian government in the tenth Five-Year Plan of 2007.

By reducing subsidies, it was reasoned, the government would not only allow fuel and electricity prices to meet international or at least break-even prices, but make more funds available for public investment.
According to the new 11th Five-Year Plan, announced in November, the government needs to meet new electricity demands of 280 billion KW of electricity. Of this, it plans to generate 260 KW nationally. An additional 20 billion KW is to be generated through private investors, while the production of the remaining 20 billion KW is yet to be determined.

Target subsidy reductions for energy consumption and cost savings are still to be set, but even after an initial saving of over 50% in fuel and gasoline consumption after the initial 2007 hike in gasoline prices, household electricity consumption shot up by an average 10% each year and now accounts for an estimated 50% of overall Syrian energy consumption - inconceivably high compared to an average of 22% worldwide.

Inefficiency is largely to blame, with nearly 30% of total energy generated lost on the electricity grid, attributed to an ageing and badly maintained grid, illegal connections and inefficient household appliances, largely imported from China.
The quick fix solution in reducing subsidies may have gone some way to alleviating the burden on government expenditure, but what effect is it having on families while we wait for the long term de-nationalization policies to take effect?
Director of the Arab Information Centre, Hamidi Abdullah, says while the redistribution of subsidies has had little to no impact on the wealthy strata of Syrian society benefiting unduly from the subsidy system, the effect on lower income families has been devastating.

“For lower income families, the subsidy reductions have pushed them well below the poverty line.

“Certainly it has forced people who couldn't afford it to rationalize their energy usage. But the increase in costs has not been met with an increase in income for salaried consumers.”

The Hananas, who support three dependants on an average monthly income of 35,000 SP and spend the Syrian average of about 1,000 SP a month on electricity alone, agree.
With two working men in the family driving two vehicles for work, the gasoline price increase has forced the family to stop using one car and make cuts to their household spending - on things like heating.

Importantly, the latest hike in fuel prices forced Hanana to increase his music lesson charges to cover added costs.
Hanana estimates the reduction in subsidies over the last four years has added an extra 30% to monthly family expenditure.

“Let’s just say the increased income has not matched the increased household costs,” he said.

Liberalizing the economy might have its benefits long-term, he says, but for now the family say they have trouble seeing them.

Bassel Kaghadou, a government advisor on economic affairs, says the increase in energy prices must not be considered as a standalone issue.

“It must be remembered that the negative effects of the redistribution of subsidies has been matched by long-term investment in things like education.”
Syrians, he said, have to be patient, to benefit from a free market economy.
“Yes, we are asking families to give away an easier way of life for a future that they may not even see – but their children certainly will,” he said.

Until now, no government study has been conducted to evaluate the effect of reduced fuel subsidies on living standards or how Syrians view the change in circumstances.

The 2009 household survey, which was published late last month, may have valuable indicators for this kind of study, which if used wisely, may form the basis of evidence-based policy decision-making.

Until then, household experiences and the hip pocket will serve as the only assessment of whether the policy is working.

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