Egyptians face electric price shock

Marwa Hussein, Tuesday 7 Dec 2010

The government will resume its plans to reduce electricity subsidies after two years of suspension

elestricity streets
According to the suspended plan, electricity prices for houses should have increased by more than 15% by now

Electricity prices for households will increase next year, according to a government plan to reduce electricity subsidies.

The plan was announced in early 2000, but was suspended in 2009 and 2010 in order to reduce the adverse impacts of international economic crisis. It is scheduled to resume in 2011.

“Electricity prices for households will increase next year but it has not yet been decided when precisely or by what amount – that is the decision of the Cabinet of Ministers,” said the managing director of the Egyptian Electric Utility and Customer Protection Regulatory Agency, Hafez A El Salmawi, adding that the decision will be made by the end of the month.

The initial subsidy reduction plan set an annual price increase of five per cent from 2004 to 2008. The government had planned a second increase of seven per cent for 2009 and 2010.

Electricity subsidies reached LE 6.5 billion during the 2009-2010 fiscal year, an increase of LE1.5 billion since 2008-2009. Meanwhile, the government is considering different plans to reduce electricity consumption, including the introducing prepaid cards in areas such as coastal resorts.

This increase in electricity prices coincides with a period of high inflationary pressures, as food inflation is in double digits compared to just two years ago.

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