Minister of Electricity Mohamed Shaker announced on Tuesday an increase in electricity prices effective July.
Shaker stated the price increase is vital to ensure the continuation of the services, “If we do not increase current prices then electricity subsides would reach 69 billion pounds.”
He added that despite these increase in prices, the government has been subsidizing electricity more than ever, explaining that the subsidies have increased 26.6 percent. 25 percent of this increase has been directed to subsidize home electricity.
The minister also said that is a good deal compared to the recent price increase in natural gas, adding that Egypt has managed to buy gas at lower than world prices, “We buy natural gas to produce the Egypt’s electricity for $3 per 1 million MmBTU.”
“The real price is $4.5 which means there is a higher subsidy the country created to pay less,” he added.
Shaker said that factories play a major role in the increase of electricity due to high consumption, as factories are responsible for 41 percent of electricity quota.
Consumers get a fair deal according to Shaker, since the country subsidizes most of the electricity cost away,
“What consumers pay for 50 KW of electricity does not exceed 18 percent from the cost of electricity. 100 kw costs LE 123 to produce, consumers pay between LE 28 and LE 95, meaning people pay 23 percent of the actual cost,” he explained.
Shaker also added that the price increase will be proportionate to consumption rates, as consumption rates reflect on the general financial capabilities of the consumers, therefore it is a fair rate increase, “The more consumed, the higher percentage is paid as those while those who consume less come from a lower financial capability, so they won’t pay as much.”
The minister said that there will not be any subsides for those consuming more than 1000 kilowatt per month, and tat those people will pay more than the electricity price to cover the subsides.
“The challenge is for the increase to affect the poor the least,” he stated.
Finally, he announced that high-voltage consuming factories will face a 41.8 percent increase in electricity prices.
Last year witnessed a LE 30-billion-government subsidy for electricity and the kilowatt cost 95 cents, according to international gas prices. Despite that, 2017 witnessed a price hike on all consumption levels.