Global oil prices fell to a record low due to the halt in economic activities worldwide as the COVID-19 pandemic spread globally. The demand for oil in the global market fell with excessive production of oil in March, leading to oil prices falling below zero for the first time in history. The news made headlines in Maldives also, leading many to wonder if the drop in oil prices would be reflected in their monthly electrical bill from STELCO
It is an important question to reflect on as with the spread of COVID-19 in the country resorts are closed and most of businesses are shut down, bringing the country’s economy to a near standstill. This economic downfall led to a vast number of redundancies, layoffs, and wage cuts all across the country. As a result, many locals are struggling to pay rent and other utilities.
Usually, in the case of a global economic slowdown and the demand for oil drops, the price of oil will also be lowered. Which often leads to the price of electricity fluctuation… in other countries. This does not apply to Maldives, however.
According to State Electric Company Limited (STELCO), they have a fixed price plans implemented, meaning that the electricity rates are set by the government and changes to the global oil market does not have any effect on it. Maldives has a subsidized rate set for oil prices to STELCO and FENAKA to ensure consistent electricity charges across the country.
In addition to that, government has announced that they will be subsidizing 40% of the electricity bill in April and May, to financially assist the public during the economic downfall.
Hence, a reduction in the electricity bill coinciding with the fall in global oil prices is highly unlikely in Maldives. It is advisable, just as STELCO has urged, for Male’ residents to economize and reduce the usage of unnecessary electrical devices during the global pandemic.
