Petroleum minister criticizes continued energy subsidies

Petroleum and Mineral Resources Minister Abdullah Ghorab criticized on Monday the continued government policy of energy subsidies at the expense of improving health and education in Egypt.

“Unfortunately we still provide subsidies for energy commodities and natural gas in Egypt at the expense of health, education and other daily requirements of citizens like housing, food and water,” Ghorab said at a seminar organized by the Gezira Rotary Club.

“We use LE95 billion of the state budget for energy subsidies, which requires reevaluation of which citizens we target, as [the subsidies] sometimes go to those who don’t deserve them,” he added.

Ghorab also said that lowering energy subsidies will contribute to solving many of Egypt’s accumulating problems, including unemployment, low wages and other issues for which the government needs to find quick solutions.

The continuous increase in national consumption of energy products and gas forms a great challenge as well, he added, as there exists a “need to build new refineries, develop old ones, and rehabilitate and upgrade the infrastructure to meet the increased requirement for energy products that need enormous investments.”

Finance Minister Hazem al-Beblawy said last September, “The government is considering eliminating subsidies in fields that do not affect consumers, especially energy subsidies for factories.”

The government’s intent to eliminate subsidies for factories was met with wide approval from energy experts, especially because it will limit an increasing state budget deficit that reached LE134 billion this year.

Egyptian news reports indicate that the government is seeking a compromise formula for the elimination of subsidies, especially with regard to industries with heavy energy consumption such as cement, steel, fertilizer and ceramic.

Political activists severely criticized factory-oriented energy subsidies during the rule of former President Hosni Mubarak; those factories were dominated mainly by businessmen close to the old regime such as Ahmed Ezz, the steel tycoon and former secretary general of the dissolved NDP, and Mohamed Abul Enein, also a former NDP member and ceramic industry figure.

Translated from the Arabic Edition

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