CAIRO: The government is expected to introduce increases to the price of electricity for the industrial sector, according to press reports.
Minister Rachid Mohamed Rachid said the decree will be issued on Wednesday, reported Al-Mal newspaper, in line with plans to gradually eliminate subsidies granted to energy-intensive industries.
The Ministry of Electricity and Energy says the new prices were decided upon by industrial authorities who outlined price increases of energy and natural gas for energy-intensive industries last year.
In August 2007, Rachid said price increases – 61 percent for electricity and 110 percent for gas spread over three years – will be applied to Egypt’s iron, cement, aluminium and fertilizer industries.
Energy-intensive industries were identified as those consuming over 50 million KWHr or 66 million cubic meters of natural gas annually.
The first price increase to electricity and natural gas was applied in October 2007, as part of a three-year plan. However, the government’s decision to raise the price of natural gas for energy-intensive industries on May 5 necessitated another rise in electricity prices.
“The increase in electricity prices is natural because electricity power plants use natural gas, so their prices are correlated, Aksam Abul Ela, the official spokesman for the Ministry of Electricity and Energy, told Daily News Egypt.
According to Al-Mal newspaper, the prices of electricity will rise to LE 0.217/KWHr for very high voltage, LE 0.255/KWHr for high voltage and LE 0.334/KWHr for medium voltage.
Ministry of Trade and Industry officials were unavailable for comment at press time.
“With these increments in both electricity and natural gas, we believe the gap between the actual cost price and the market sale price is narrowing, with the bigger gap being currently concentrated in diesel (gas oil) and butane gas, Beltone Financial said in its daily market report two days ahead of the expected increases.
Energy subsidies cost the government LE 20 billion a year, with LE 4 billion going to industry, of which the 40 most energy-intensive companies receive about 70 percent.
Responding to industry claims that energy prices are now “unfair for businessmen, Petroleum Minister Sameh Fahmi announced that the ministry is currently studying an initiative to allow businessmen to buy natural gas directly from private companies operating in Egypt, said the ministry.
Private companies will set their selling price and industries are free to accept or refuse them. This initiative is expected to create a free natural gas market.
