Power station in Egypt (Photo: Al-Ahram)
Egypt’s electricity sector owes a total of LE80 billion ($11.2 billion) in arrears for oil products supplied by the country’s petroleum ministry, state-run news agency MENA reported on Sunday.
Electric power generation in the country of 87 million is still largely reliant on fossil fuels such as natural gas, mazut, and diesel.
Electricity production accounts for some 67 percent of domestic consumption of natural gas, of which Egypt became a net importer in recent years, as slowing production has failed to keep up with rising local demand.
The government set feed-in tariffs for renewable energy production for the first time in September, in an effort to diversify the sources of power generation through private sector investment.
Last month, the ministry of petroleum also vowed to pay the $4.9 billion in arrears owed to foreign oil and gas firms operating in Egypt within six months, to stimulate exploration and production, which had all but ground to a halt in recent years.
The ministry of finance shoulders 50 percent of the costs incurred on the ministry of petroleum on behalf of the electricity sector each month, which amount to between LE3.6 and 3.9 billion, an official at the Egyptian General Petroleum Corporation told MENA.
It is accountable for LE36 billion out of the LE80 billion owed by the ministry of electricity.
In an effort to rein in a growing budget deficit, Egypt raised the prices of widely-used fuels and electricity earlier this year, with the aim to cut its state fuel subsidy bill by LE44 billion in the current fiscal year.
The government is now predicting a LE70 billion ($9.8 billion) fuel subsidy bill for the 2014/2015 fiscal year, taking into account the falling global price of oil.