The Ministry of Electricity stressed the need to increase the tariff across all segments and apply the new price starting July. However, the parliament’s Environment Committee rejected the increase in prices next month and called for the postponement to next year to ease the burden on citizens.
Sources at the ministry said that all segments of consumption will see tariff increase at variable rates according to consumption rates, income and expenditure studies, with continuing subsidy for five more years, instead of lifting it completely in 2019.
The sources told Daily News Egypt that the increase is set to be implemented on consumption of up to 350 KW/h by 10-15%, and up by 20-40% on high-consumption segments.
The parliament’s Energy and Environment Committee held a meeting on Tuesday with the officials of the Egyptian Holding Electricity Company (EEHC) and called the company to postpone the tariff increase or implement the increase with exclusion of consumers up to 200 KW/h.
MP Sayed Hegazy said that the committee presented official requests to postpone the increase and extend the subsidy removing period to 10 years, but officials have not responded.
He added that they proposed to apply the increase on the higher segments and keep prices unchanged on low-consumption segments, but the officials of the EEHC said that the increase takes the limited income consumers into consideration.
The sources said that several scenarios were proposed to the cabinet regarding the increase of electricity prices; however, these scenarios did not include postponing the increase. The scenarios varied from applying a slight increase on the first segments and imposing more increases on the segments with higher consumption, which is called “cross-support”.
The scenarios also included increasing prices on the segments of 200 KW/h by 10% and an increase of 15% for consumers in the 350 KW/h segment, with gradual increases based on consumption.
Sources explained that for high-voltage consumers and medium consumers, including hotels and hospitals, the subsidies will decrease gradually and quickly, compared to the household sector. The subsidy provided to these institutions will be removed within three years.
Furthermore, the source said that the production cost of electricity in FY 2017/2018 will increase, especially as the tariff in 2016/2017 was based on an exchange rate of EGP 8.88 to the dollar, while the exchange rate has now hiked to EGP 18. As a result, the cost of producing electricity surged to EGP 0.95 per KW/h, up from EGP 0.637 in the current fiscal year. The original price restructuring programme included a cost of EGP 0.475.
