CAIRO: During controversial discussions on energy pricing, Mohamed Abul-Enein, head of the Parliament s Energy and Industry committee, said the price increase should be applied with caution in the fertilizers industry.
“Those operating in the fertilizers industry are considered members of the minimum wage bracket and they will suffer with the new prices, unlike energy-intensive industries that achieve high profits and are able to afford an increase in prices, Abul-Enein said.
In the presence of a delegation of the Ministry of Petroleum and Ministry of Electricity, the parliamentary committee discussed Minister of Trade and Industry Rachid Mohamed Rachid’s new energy pricing strategy. The respective ministries laid out their numbers and defended the new initiative, as long as it does not affect the end user.
“Although the price of electricity for industry will increase, it is still much lower than international prices, Minister of Electricity Hassan Younis told the committee.
Nevertheless, the fear of price increases affecting the end-user continues to prevail. Although Abul-Enein called on the committee to apply the new pricing system on companies operating in the Free Zone Areas, he told them to be cautious in applying it to the fertilizers industry.
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. Under the new system, the price of natural gas and electricity for industry will increase gradually over the next three years. .The new pricing mechanism will be applied to 40 companies operating in industries that consume large volumes of energy – more than 66 million cubic meters of natural gas per year and more than 50 kilowatts per hour.
On the other hand, Minister of Petroleum Sameh Fahmi told the committee that in the fiscal year 2006/2007, Egypt sold around 41.3 million tons of gas, 71 percent of which was used by the domestic market and 29 percent exported to international markets.
After applying the new pricing strategy, the ministry is expecting to be able to provide gas to non-energy intensive industries at more convenient prices.
Although analysts feel that the decision to cut subsidies was “overdue and “energy-intensive industries are capable of paying the extra money, foreign investment interest does pose an important challenge.
According to economic analyst, Mohamed Kamal, “The question is: will the country have enough gas and electricity to provide?
“The ministry of petroleum realizes this challenge, but there are reserves we can use and we are studying the optimization of old oil fields that can be reused, the ministry of petroleum said.
However, Kamel argues that the new prices will encourage many to invest, “because foreigners recognize we are making a difference and are setting new rules, in addition, our prices remain extremely low compared to the international ones.
“I think the officials are discussing the wrong issue, it is not the prices that are a problem, it is the issue of managing increased demand with limited resources, he said.
