(AFP Photo / STR)
Prime Minister Ibrahim Mehleb has agreed to hold all industrial companies accountable for their actual gas consumption rather than their contracted quantities, according to Minister of Trade and Industry Mounir Fakhry Abdel Nour.
In a press release on Saturday, Abdel Nour said the decision to hold industrial companies accountable for using natural gas in operating their plants will be based on actual consumption, not the contracted quantities with the Egyptian Natural Gas Holding Company (EGAS). This will be done with a retroactive effect extending to January 2011.
However, Chairman of Suez Steel Company Gamal El-Garhy said that this decree is currently useless, and that the more important step would be providing gas to plants. This procedure was not necessary to protect the steel industry, El-Garhy said.
He added that the steel industry suffers a shortage in gas and only operates with 40% of the gas needed. The government must provide gas to plants, El-Garhy said, adding that he would not import gas because it is costly.
“Holding companies responsible for their actual gas consumption will have a positive impact on attracting new investments to the Egyptian market in the coming period,” said Abdel Nour.
Egypt has been plagued by a major gas shortage, while cement plants are permitted to import coal as an alternative energy source. The private sector is permitted to import gas.
“Providing gas is the only solution to revive the steel industry. We do not get the contracted quantities. I am held accountable already for my consumption, but we fear new increases that would make things worse,” added El-Garhy.
Regarding the use of coal as energy in the steel industry, as in cement plants, El-Garhy pointed out that coal is ineffective. This is because gas is one of the raw materials for manufacturing steel, and is not an energy source, thus, it is indispensable to manufacture steel using gas.
“Many industrial companies were affected after being held accountable for the quantities stipulated in the contract with EGAS, even if these quantities were not consumed, which financially burdened these factories,” Abdel Nour added.
He also said that EGAS holds the plants accountable for the stipulated quantities, although these factories are facing severe shortage of the provided quantities. The reason behind this was EGAS’ inability to fulfill its contracted quantities to supply plants with the gas.
“The decision is to ease the burden off the Egyptian industry and to liberate the industrial establishments from any additional costs, which may increase the industrial products’ costs and prices. This would thus decrease their capacity for competition,” added Abdel Nour.
