Egypt to increase electricity price by 14 pct in July to bring economy back on track

Egypt is going to increase the electricity price by an average of 14.9 percent in the 2019-2020 fiscal year beginning in July, according to Electricity Minister Mohamed Shaker's statement given on Tuesday, May 21. The effort is to get the country's economy back on track.

According to Mohamed Shaker, the government of Egypt intends to trim the electricity subsidies to around USD 1.3 billion a year from the current level of around USD 2.9 billion. The government also raised electricity prices by an average of 26 percent last year. The country has committed to deep cuts to energy subsidies as part of economic reforms linked to a three-year, USD 12 billion International Monetary Fund (IMF) loan programme that is now in its final phase.

The latest price rises will come in the middle of the hot summer when electricity consumption rises due to air conditioning use. The average increase in prices for high-voltage electricity generally used in iron and steel plants will be around 10 percent, while the price for lower voltage power used in homes and commercial enterprises will rise by around 19 percent, Shaker said.

The reforms include a commitment to removing subsidies on most fuel products by next month. They have helped stabilise government finances while causing economic pain for Egyptians who have seen price increases for basic goods and services since the exchange rate was liberalised in late 2016.

Electricity subsidies will be fully phased out by June 2022, he said. Electricity generation is expected to shift fully to unsubsidised natural gas from fuel oil in the 2019-2020 financial year, according to the IMF's latest staff report on Egypt.

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