CAIRO: Talk of a new electricity law raised speculation about the new regulations for power generation and distribution as well as fears of higher electricity prices.
After three years of planning, the implementation of the new electricity law is underway. The new law, approved this past July, will allow local and international private sector companies to bid for electricity generation and distribution licenses.
With the final touches being applied to the new law before it goes into effect, many are concerned that the entry of the private sector will raise the price of electricity. However, officials insist that the changes will not affect prices, but rather introduce regulatory and monitory measures for the Egyptian Electric Utility and Consumer Protection Regulatory Agency (EEUCPRA).
“I heard they [the government] will raise the price of electricity. It is a basic necessity, my children can’t live without it, if they [the government] raise prices, I won’t be able to afford it, Mostafa, a porter, told Daily News Egypt.
However, Hafez Al-Salmawy, the executive director of the EEUCPRA, told Al-Masry Al-Youm, “The new law will not affect the price of the service, it gives specific measures for the EEUCPRA to work by, but does not affect general governmental policies.
Under the new law, the EEUCPRA will evaluate the electricity prices proposed by private companies, after which it will approve the most affordable price for the sector to abide by.
The prices will be pending approval of the Cabinet, and if the government considers the price to be too high for the average citizen, it will pay for the difference through subsidies.
Previously, it was up to the Electricity Holding Company and the Ministry of Electricity to set the price for electricity service, which was also approved by the Cabinet.
“The important aspect of the new law is that it will end the current monopoly by the Electricity Holding Company by allowing private sector companies to enter the market, which will improve the quality of the service within a competitive market, Alaa Helal, the EEUCPRA communications manager, told Daily News Egypt.
The new law will encourage private sector companies to penetrate the renewable energies domain and generate electricity using economically-friendly means. Licenses to build renewable energy power generators – either wind or solar – will be put up in public tenders. The company that proposes the cheapest kilowatt per hour rate will win the license.
The companies that win licenses to produce energy will go through another tender with energy distribution companies. The energy distribution companies will partner with the energy producing companies to offer the cheapest price and technical schemes.
“Energy distribution companies will be required to do more than distribute electricity, their role in raising awareness on how to efficiently utilize electricity will be mandatory, Helal said.
Energy distribution companies will have to provide several services, including awareness programs about home appliances that consume high electricity rates. At the end of every year, the EEUCPRA will penalize companies that do not fulfill their awareness raising duties.
According to the EEUCPRA, six private companies have requested production licenses and eight have requested to be distributors to date.
