Egypt hikes electricity prices but extends plan to phase out subsidies three more years

Ahram Online , Tuesday 9 Jun 2020

Mohamed Shaker
A file photo of Egypt's Electricity Minister Mohamed Shaker (Photo: Al-Ahram)

The Egyptian government will hike electricity prices by up to 30 percent for households next fiscal year but will extend its plan to phase out power subsidies by three more years due to the economic fallout of the coronavirus crisis, Electricity Minister Mohamed Shaker said on Tuesday.

The new price hikes range from 17 to 30 percent based on consumption levels, the minister said in a televised press conference. The rises will take effect starting July 1 and will appear on the electricity bills for August.

Egypt was initially planning to entirely phase out electricity subsidies by the end of the 2018-2019 fiscal year but extended the period until the end of the 2021-2022 fiscal year before announcing Tuesday that subsidies will be phased out even more gradually through 2024-2025.

The delay in the gradual lifting of subsidies is estimated to cost the government EGP 26.7 billion (approx. $1.64 billion), the minister said.

The move is intended to alleviate the economic burden on Egyptians on the back of the coronavirus crisis, the minister added.

Egypt is also reducing prices for industrial users by 0.10 Egyptian pounds per kilowatt-hour (kWh) or around 8-9% for very high, high and medium-voltage electricity and will keep these prices stable for the next five years, at a total cost of EGP 22 billion.

Industrial consumption this fiscal year makes up almost a third of Egypt’s power use, while household consumption accounts for over 41% of total use, according to electricity ministry data.

The new price rises come amid mounting electricity consumption by Egyptians due to heavy use of air conditioning in summer and longer hours spent at home amid the coronavirus restrictions.

The minister said the government is working to eliminate errors that occur in electricity bills through several mechanisms including by expanding the installation of pre-paid electricity meters.

Here are the new household rates based on the level of consumption:

- First tier of usage: first 50 kilowatt hours (kWh) – price increased from 30 to 38 piastres per kilowatt-hour (26.6%)

- Second tier: 51-100 kilowatt hours – increased from 40 to 48 piastres (20%)

- Third tier: first 200 kilowatt hours – increased from 50 to 65 piastres (30%)

- Fourth tier: 201-350 kilowatt hours – increased from 82 to 96 piastres (16%)

- Fifth tier: 351-650 kilowatt hours– increased from 100 to 118 piastres (18 %)

- Sixth tier: 651-1,000 kilowatt hours – is fixed at 1.40 piastres.

- Seventh tier: above 1,000-kilowatt hours is not subsided and is sold for 145 piastres. 

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