By Ahmed Tolba
Egypt’s natural gas holding company EGAS has begun planning a series of meetings to be held with businessmen and members of industry to help identify appropriate ways to determine natural gas prices for high consumption factories, in particular those producing steel, iron and cement.
An official within EGAS clarified that these meetings came as part of an attempt to help reassure members of Egypt’s industrial community about the sound nature of new measures being used to determine natural gas prices. He added that the company: “Would soon agree to private sector’s demands to import more natural gas and sell it on the Egyptian market by 13 January, as part of a set of conditions for a new round of bidding stipulated by EGAS late last year.
The source further went on to say that the finalisation of all private sector demands and eventual awarding of contracts would be concluded within the next month, in concurrence with the establishment of the country’s first national agency tasked with selling, distributing and setting prices for natural gas in Egypt.
The distribution of all imported natural gas is set to begin next May, at an expected rate of anywhere between 1,500 and 2,000 cubic feet per day.
The official added that these meetings would also seek to address confusion regarding contracts already signed between factory owners and EGAS. Many of these contracts stipulate that high consumption factories are set to receive natural gas at $4 per million BTU, a price far lower than both the world average and expected price of newly imported gas. He emphasised the need to quickly reach a solution in order to prevent the existence of more than one market price for natural gas.
The source said: “Any agreement would require a gradual increase in the price of natural gas for contracts made between EGAS and Egyptian factories, in order to match current import price levels. These prices would serve as the standard for Egypt’s new national agency tasked with selling and distributing natural gas.
Gas prices for steel, iron and cement factories are expected to rise to $6 per million BTU, and are to be implemented with the onset of the distribution of newly imported natural gas. The fluctuation of gas prices for other factories is set to begin during the period in which new rates are determined during meetings between factory owners and EGAS. State owned electrical stations, in addition to natural gas allotted for use in cars and homes, will be exempt from future price increases as they come in concurrence with government plans to restructure its subsidies programme. The restructuring of the programme seeks to better direct subsidies only to those industries that truly need them.
