By Mohamed Adel
The next government will not cut energy subsidies before Egypt’s people are “enriched” and the country’s economy is moving again, presidential candidate Abdel Fattah Al-Sisi said in the second half of a two part interview Tuesday night.
Al-Sisi said Egyptian households, around 25 million residential units, consume 46% of the energy in Egypt. Addressing the energy crisis, the former minister of defense said electricity production is around 30,000 MW, with households consuming 15,000 MW of this, of which 6,000 are used exclusively in lighting.
The Egyptian economy will not be able to bear subsidies at their current annual 3% rate of increase, he said, which means the subsidies bill will reach EGP 140bn pounds for next year.
The rate will increase to about 6%, according to Medhat Yousef, petroleum expert and vice president of the Petroleum Authority previously.
“The announcement of not reducing subsidies means that Al-Sisi is certain to receive oil from the Gulf as soon as he is elected,” he said.
Previous announcements by the current government included raising fuel prices and reducing subsidies.
Youssef pointed out that the market for petroleum products is led by a “mafia” of top businessmen, who he said smuggled fuel by 7% of the amount pumped. “If the government is serious about delivering support to those who deserve it, it has to liberalise prices and support the poor [with direct cash transfers],” he said.
The presidential candidate said that EGP 200bn of the state’s budget has been allocated for subsidies, adding that crisis would not be solved by “traditional” methods, such as the construction of power plants, since this takes three years.
He stressed that “rationing of consumption is the basis for the next stage and [Egypt must advance to] the use of new and renewable energies as soon as possible”, adding that such measures “won’t affect the poor.”
The deficit of electricity in Egypt is about 2,000 MW, according to Mohammed Sobky, chief of the Energy Research Centre at the University of Cairo. Homes consume about 40% of the energy produced, with 80% of consumption wasted in lighting, the centre said. Power stations in Egypt produce a total of 30,000 MW, and “face major waste as a result of technical problems,” Sobky said.
