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Tuesday, 24 May 2016

Electricity Ministry stretches power subsidies phase-out to eight years, will implement executive regulations to Electricity Act in two weeks

The Electricity Ministry wants three extra years to phase out power subsidies, saying the process will take eight years as opposed to the original five, judging from remarks by Electricity Minister Mohamed Shaker, Youm7 reports. The decision was supposed to “alleviate some of the burden” of the March devaluation and a change in the nation’s fuel mix with petroleum products now accounting for 30% of the nation’s fuel consumption (versus 14% when the plan was developed), Shaker added at a talk on the power sector given at the Egyptian-Canadian Business Council. As we noted earlier this month, the ministry had launched a study to explore prolonging the phase out, which was supposed to be completed next month, said Deputy Electricity Minister Sabah Mashaly. Shaker stated that the subsidy reform plan will include raising the prices of top tier consumers annually, a move which is meant to cut costs and make prices for these tiers more competitive to encourage the private sector’s entry into the market.

Shaker also announced that the executive regulations of the Electricity Act had been completed and will come into effect in two weeks when it is published in the Official Gazette. As we noted back in March, the regulations will separate the Egyptian Electricity Transmission Company from the Egyptian Electricity Holding Company (EEHC) over a period of five years to allow for current projects to be completed, he added. The separation is a key step in the long-awaited deregulation of the electricity market, which would see the state become the regulator and (separately) owner of transmission infrastructure, but not the sole market player.

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