VICTORIA — The Cabinet of Ministers has approved a recommendation to delay the scheduled adjustment of electricity tariffs, which was originally slated for April 2026. The decision, announced by Vice-President Sebastien Pillay during a press conference at State House, is a precautionary measure aimed at maintaining economic stability in the face of rising international uncertainty.
Strategic Response to Global Pressures
The postponement is primarily driven by volatility in the global energy market. Vice-President Pillay identified two major external factors influencing this shift in policy:
- Fuel Price Uncertainty: The ongoing conflict in Iran has created significant unpredictability in global fuel prices. As Seychelles relies heavily on imported fuel for power generation, fluctuating costs present a direct risk to the utility sector.
- Tourism Fluctuations: The government is monitoring potential downward shifts in electricity demand, which could occur if the international climate leads to a slowdown in the tourism industry.
Prioritizing Consumer Protection
By maintaining current rates, the government aims to shield both the energy sector and the public from immediate financial strain. This strategy is designed to prevent sudden, aggressive price hikes later in the year, ensuring more predictable costs for households and businesses.
“By keeping tariffs unchanged for now, government aims to protect the electricity sector from rising costs, exchange rate pressures, and reduced revenue,” Vice-President Pillay stated.
Refusal of Cost-Reflective Framework
While the Cabinet reviewed a proposal to move toward a “cost-reflective” tariff system—which would have separated social support mechanisms from the base tariff structure—the move was not approved.
Instead, the government decided to retain the existing system, which utilizes cross-subsidies to support specific groups. Officials indicated that further review is necessary to fully grasp the potential impact on consumers, particularly vulnerable households, before any structural reforms are implemented.
The administration maintains that this cautious approach is essential for ensuring a reliable and affordable electricity supply while navigating the current “preoccupying” international context.
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