Egypt announced new hikes in electricity prices by up to 42 percent for households as part of a government reform programme that will include removing power subsidies entirely over the next few years.
The new price hikes range from 18 to 42 percent depending on consumption levels and will take take effect as of this month's bill, electricity minister Mohamed Shaker said Thursday during a press conference aired on state TV.
The new price hikes come as the government seeks to phase out costly subsidies to repair its finances, as part of a reform programme hailed by the International Monetary Fund (IMF).
Egypt began a programme of price increases in 2014 to gradually lift domestic electricity subsidies. Electricity subsidies were planned to be eliminated entirely by the end of the 2018-19 fiscal year beginning in July but the phase-out plan has been extended to 2021-2022 fiscal year due to the current economic conditions Egyptians are suffering from since the floatation of the currency last November, the minister said.
"we have extended the period [for subsidies] by three more years because of conditions associated with the huge rise in the exchange rate, " Shaker told the news conference.
The minister said that the price of electricity might fall, provided that the Egyptian pound regains its value against the dollar. The pound currency has lost more than half of its value against the dollar after the Central Bank floated the local currency in November, leading to a dramatic surge in prices.
Shaker said the flotation of the pound has caused power subsidies incurred by the government to rise from EGP 40 billion to 82 billion.
The new price hikes will help the government reduce that figure to EGP 52.7 billion in the current fiscal year, and then to LE 43.4 billion in the 2018-19 fiscal year.
The last time the government pushed electricity prices up was in August 2016, by up to 40 percent.
Thursday's announcement came a week after the government hiked fuel prices by up to 50 percent, a sharp rise and further restraint for many Egyptians struggling with soaring living costs,