The Federation of Egyptian Industries has requested that the Egyptian government take urgent measures to protect local industry from “unfair competition with imported products and smuggling” due to recent price increases.
The federation said the government must enable industry to withstand the wave of extensive energy price increases that were recently approved by the government.
“Industry will bear the cost of the energy price increases because the current economic situation does not allow for any alternative, and there is no point in accepting or rejecting the increase in energy prices,” said Mohamed Zaky Al-Suwaidy, Chairman of the Federation. “We are facing a fait accompli, and we have to bear with it until these difficult economic circumstances end.”
Al-Suwaidy said that adjusting energy prices is the first step to resolve Egypt’s energy crisis, adding that factories have recently suffered from a shortage of energy supplies.
“The government no longer has the resources to subsidise energy or supply it,” he continued. “Factories are vulnerable to closure, and raising prices is a guarantee that factories will continue their work by reforming the subsidy system and providing energy from diverse sources.”
He added: “Throughout the recent past, the government has depended on grants and petroleum aid from the Arab countries, and they cannot continue to rely on these sources.”
Al-Suwaidy asked the government to take measures to protect industry and enable the sector to work at its full capacity in order to increase production and foot the bill of the energy price increase.
“We need legislation to fight indiscriminate importing, organise internal markets, and tighten oversight,” he added.
He pointed out that the government also must prevent citizens being exploited through transportation and food price increases as a result of the surge in diesel and petrol prices.
Mohamed Al-Morshedy, Chairman of the Industrial Union of Garments-Chamber of Textile Industries, said that factories understand the government’s desire to reduce the budget deficit. He also said there was an understanding that reforming the subsidy system was necessary, and that everyone agrees that adjusting energy prices is necessary.
However, he said that the government, on its part, must protect local industry from unfair competition with imported products.
“Local product costs will rise as a result of increased energy prices, while the price of imported products will remain stable. This will lead to expanded imports because the products are lower in price,” said Al-Morshedy.
He called on the government to halt indiscriminate imports and protect local production.
He said that the government must form a supervisory mechanism to control prices, explaining that the energy’s relative impact on costs for the spinning, weaving, and garment industry range between 4-5%. Likewise, the final production price increase must not exceed 2-3%.
He emphasised the importance of combating the smuggling of imported products into the market and avoiding customs payments, a phenomenon that makes local markets vulnerable to unfair competition.
According to the Federation’s Energy Commission, industry represents 16% of total local diesel consumption, 46% of fuel oil consumption, and 27% of gas consumption.
Fuel Oil Prices for Various Sectors – EGP per Tonne
|Brick Kilns and Other Uses|
Gas Prices for Industrial Sectors – Dollars per Million BTUs
|Fertilizer and Petrochemicals||4.5|
|Iron and Steel – Aluminum – Ceramics and Porcelain –Flat Glass||7|
|Food Industry – Spinning and Weaving – Drugs – Engineering – Brick Kilns – Other Industries||5|