OBG talks to Ibrahim Sarhan, Chairman, e-finance

Interview: Ibrahim Sarhan

In light of the challenge of meeting rising energy demand, how can electronic processes improve the rationalisation of energy subsidies?

IBRAHIM SARHAN: Programmes such as the smart card system allow better control over the product, and so help subsidies reach those in need more effectively and efficiently. In the case of energy subsidies, electronic processes improve the information available about the recipient of the subsidies and the product being subsidised. It also makes it easier to identify which industries are most in need of subsidies and those which would be capable of operating without them. Through a detailed system of reporting, the real demand for subsidised fuel can be better monitored. This brings about a realistic use of information that allows the delivery of subsidised products on time and enables coverage throughout the country.

A further benefit of implementing electronic processes is that it allows the government to improve its planning capacity. It helps the ministries of finance and petroleum to build an actual data set to better address the needs for a specific target, within a given industry, in a particular geographical area. This will translate into the greater availability of public financial resources to be administered. People must be involved in the implementation of such processes as they will be the final beneficiaries of such programmes.

What are the challenges to implementing such programmes in the local energy sector?

SARHAN: A major obstacle to the implementation of such processes is the lack of information regarding users and their habits, as well as the quantity of power they require. The level of need for each product in different areas of the country must be determined. It is crucial to find out more about the number of customers per product. Overcoming such challenges would allow for the implementation of a daily monitoring system ensuring proper control over a product from its origins until it reaches the end user.

In what way do you foresee electronic processes being involved in these ongoing reforms?

SARHAN: Once all necessary data is collected, it will be up to decision-makers in each particular subsidised sector to implement electronic processes. These systems are designed to enhance resource control and ensure that subsidy policies are based on the real needs of each industry. This data must be collected first in order to establish any electronic process.

Government support has been critical in laying out the required infrastructure. Such infrastructure could be used in the implementation of electronic processes for reforms in sectors other than energy, as well as helping tax authorities enhance fiscal control.

Electronic processes, such as the smart card system that is being implemented for fuel subsidies, can also enhance the security of every single transaction that is being made. This ensures that data is accurate, which can have a positive impact on the overall economy, by allowing the government to increase the amount of control it has over its finances.

What steps are necessary to implement electronic systems for subsidy reform?

SARHAN: First, all necessary information regarding the final beneficiary of the subsidy programme must be collected. This would help the government determine the amount of each subsidised product that will be needed, as well as to enhance efficiency in the process of distributing such items.

Plans that take into account the efficiency of transportation and distribution, as well as the seasonal nature of each particular product, must also be implemented. Once this has been done, the availability of the product can be better determined.

Such steps have been taken for the implementation of the smart card system for subsidised oil, solar products and mazout, a heavy oil used mainly in generating plants and other such facilities. These steps could also be replicated for other subsidised products.