Government Maintains Current Electricity Tariffs to Protect State Finances and Households

The Ministry of Finance and Public Enterprises has confirmed there are currently no plans to adjust electricity tariff rates across the Maldives. The decision aims to balance the financial stability of the state with the affordability of essential services for citizens. Speaking on PSM News’ “Raajje Miadhu” programme, Deputy Minister Ahmed Saaid Musthafa explained that revising tariffs upward would be a last resort, while further reductions would place an unsustainable financial burden on the government. He noted that current tariffs remain relatively low compared to international standards, following a domestic rate reduction implemented in May of last year. Deputy Minister Saaid highlighted the complexity of setting a uniform rate, acknowledging that electricity consumption varies significantly across different islands. He pointed out that environmental factors, such as poor ventilation for air conditioning units, often lead to higher consumption and bills for some households regardless of the tariff rate. Because electricity generation in the Maldives operates at a loss, the government provides substantial subsidies funded by taxpayers to maintain service. To address the high cost of power without raising prices, the government is shifting its focus toward reducing the cost of generating each unit of electricity. This strategy includes expanding the use of renewable energy and replacing aging generators on islands with more fuel-efficient and cost-effective alternatives. According to the Deputy Minister, improving generation efficiency is the primary path to avoiding future tariff hikes. Alongside these fiscal policies, the government is implementing operational reforms for the State Electric Company Ltd (STELCO) and Fenaka Corporation. To streamline efficiency, management of several islands in the central regions will be transferred from Fenaka to STELCO. This restructuring is intended to reduce Fenaka’s operational burden, allowing the company to focus its resources and services more effectively on the northern and southern atolls.