Energy bills in Egypt higher than ever and hurting the poor
In its quest to rein in a growing budget deficit, the Egyptian government has turned to its extensive subsidy bill to find savings. The government has already announced plans to ration subsidies for petrol and diesel fuel, and hiked fuel prices for heavy industry by 33 percent at the beginning of the year.
However, it seems that the government has recently moved to reduce subsidies on electricity and natural gas, which make up a meagre 5 percent of Egypt's LE145 billion subsidy bill.
In the past few months, households across Egypt were surprised to see their electricity and gas bills rise without prior notice.
Fatma, a resident of Al-Abbasiya in central Cairo says her electricity bill has jumped from LE21 to LE32 in one month, while her gas bill climbed to LE30 compared to an average of LE10.
"My consumption level has not changed. I live alone, with my daughter occasionally spending the night with me every now and then," she says.
The February hike in electricity prices is the second of its kind in recent months, after a similar decision was taken in November.
Electricity prices in Egypt are subsidised according to an increasing scale so that the higher the consumption, the lower the subsidy.
The first consumption category, a monthly 50 kilowatts per hour or less, has not seen any changes, keeping the pricing structure for this category unaltered since 1993.
The tariff for the second category, whose monthly consumption is up to 200 kilowatts per hour, increased by 4.4 percent to LE0.12. Including the previous increase, this category has seen a 10 percent hike in cost since November 2012.
The two higher consumption categories saw an increase of more than 17 percent each.
The government, however, did not announce how the LE5 billion of electricity subsidies would be affected by the new decisions.
Electricity tariffs have not changed for more than a decade until 2004, when the government announced a plan to raise prices which was halted in 2008 as a consequence of the international economic crisis.
Officials deny recent gas price increases:
Many Egyptian households have also been complaining of hikes in their gas bills over the last couple of months.
Wafaa, a resident of Agouza, a Cairo district, says she paid LE25 for her monthly gas bill for the first time ever. Her normal bill is around LE10. Nabil, a lawyer, says his bill doubled during the last two months while Ragab, a teacher, reports a smaller increase from LE8 to some LE13 in the last month.
"Everybody is complaining this month. Some bills are really high. I feel embarrassed to deliver them to consumers," says Mohamed, a gas bill collector, in Giza Governorate.
Officials, however, have denied any recent price hikes.
"We have not imposed any tariff increases recently. The last time was in July 2012," Essam Awad, assistant of the president of the Egyptian Natural Gas Holding Company told Ahram Online.
"The last increase in tariffs took place few months ago and there were many complaints that month," an operator in charge of responding to consumers’ complaints at Petrotrade (the company in charge of collecting gas bills) told Ahram Online.
She explained that consumers who have old gas heaters are the one who saw the biggest increase in their bills.
In July gas consumption categories were reduced from three to two. The tariff for the first category of monthly consumption up to 30 cubic metres remained at LE0.10 per cubic metre.
Since July, any extra consumption is charged at LE0.5, versus a maximum of LE0.3 previously.
Natural gas, used for domestic as well as industrial purposes, is allocated LE2.5 billion worth of subsidies in Egypt's 2012/13 state budget.
- Theory vs. the Egyptian and Yemeni reality: is reforming fuel subsidies a legitimate tool for growth or an IMF farce?
- Price hikes in Egypt hurt consumers
- Subsidies not a sustainable way of helping the poor - IMF
- Dubai swims in billions worth of petrol subsidies
- The unintended consequences of energy subsidies