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Friday, 10 April 2020

Egypt's electricity minister rejects MPs' request to lower energy prices for local industries

The minister said that lowering energy prices for factories would cost the government up to EGP 10 billion

Gamal Essam El-Din , Sunday 9 Feb 2020
Egypt Electricity Minister
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Egypt's Minister of Electricity Mohamed Shaker told MPs in a meeting on Sunday morning that he cannot approve their demand for lowering electricity prices for local factories.

“This would cost us a hefty amount of money, which could be as high as EGP 10 billion,” said Shaker.

“Although electricity prices for factories increased recently, I insist that they are still lower than the rates in many countries like Turkey,” said Shaker, adding that “if I decide to lower the price per kilowatt for factories by 10 piastres, this means that I would bear a cost ranging between EGP 6 billion and EGP 10 billion a year.”

Shaker’s words came in response to calls from MPs during a meeting held by parliament’s industrial committee on Sunday morning. Head of the committee and Alexandria industrialist Mohamed Farag Amer said there is a pressing need for lowering electricity prices in order to save local industries from collapse.

“This is a very important demand in order to stimulate industrial growth, boost exports, and create greater employment opportunities,” said Amer, adding that “it is very bad that the government subsidises electricity prices for those who watch TV and ignore those who operate factories.”

“After the US dollar lost much of its value against the Egyptian pound over the last year, many expected that prices would drop and that the government would move to lower electricity prices.”

Amer said the high electricity prices have caused great damage to a number of vital industries.

“We have a lot of industries in the area of paper, textile, glass, and fertilisers that need protection from foreign competition, but the high energy prices in Egypt push them to the verge of collapse,” said Amer.

MP and ceramics producer Ahmed El-Sallab said the Egyptian Federation of Industries has repeatedly called on the government to lower electricity and natural gas prices by up to 25 percent for factories as part of a greater plan to stimulate industrial growth.

“And what about the government initiative aimed at opening closed factories? Doesn’t this mean that these industries should receive some kind of incentives such as lowering energy prices to help them stand on their feet again and resume production?” said Al-Sallab, complaining that some countries like Turkey offer cheap electricity prices for their export industries, and as a result these have become a threat to Egyptian industries.

Minister Shaker said that “the more industrial production in Egypt increases the more the government becomes ready to lower energy prices.”

“Most of the electricity subsidies in Egypt go to household consumption, which represents 86 percent of the total,” said Shaker, indicating that “when the more industrial consumption exceeds that of household consumption, the more it is possible to redirect subsidies to the industrial sector and we hope that this will take place in the near future.”

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