Egypt considers delay in lifting electricity subsidies

Published March 22nd, 2016 - 07:00 GMT
Electricity prices in Egypt remain unchanged between 1994-2003 and increased slightly between 2004-2008.  (File photo)
Electricity prices in Egypt remain unchanged between 1994-2003 and increased slightly between 2004-2008. (File photo)

The Ministry of Electricity is considering extending the previously set timeline for the complete lifting of subsidies on electricity, scheduled for 2019, according to Minister of Electricity and Renewable Energy Mohamed Shaker.

Shaker told Daily News Egypt that a proposal is being prepared, and will be sent to the cabinet after completion.

The government developed a plan in 2014, under which subsidised electricity rates will be lifted completely within five years, by raising the prices of consumption to ease the burden on the state budget. The decision however exempts middle- and low-income earners, for which subsidies will not be lifted.

Shaker said the restructuring process is underway and will be applied in July. He noted that the programme aims to achieve social justice and ease the pressure on low-income earners, where the state will bear the cost of at least EGP 9m to subsidise energy for them.

He explained that the ministry has resorted to restructuring the electricity prices, as the electricity sector has been suffering due to financial imbalance. This imbalance has prevented the sector from maintaining its existing power plants or adding new ones.

The minister noted that the electricity prices have remained unchanged for 10 years—between 1994 and 2003. This was followed by a slight increase between 2004 and 2008. This increase, the minister said, was introduced to bridge the widening gap between the actual cost of electricity and the rates at which it is provided to consumers.

Shaker added that the ministry is in negotiations with German company Siemens, in coordination with Ministries of Petroleum and Military Production, to establish the first company for the maintenance of power plants. Siemens will implement three stations with a total capacity of 14,400 MW in Borollos, the new administrative capital, and Beni Suef. The maintenance company’s capital has yet to be established.

The ministry is also looking into increasing the capacity of its electric power-sharing line with Jordan to 2,000 MW instead of 450 MW. In addition, the electric power-sharing project with Saudi Arabia is about to be inaugurated, the minister said. Egypt has another power-sharing line with Libya with a capacity of 100 MW and with Palestine of 32 MW.

He added that the ministry signed numerous contracts at the lowest prices to meet the demand of the citizens, under the oversight of sovereign entities.

By Mohamed Farag


© 2022 Daily News Egypt.

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