What we’re tracking on 24 May 2018
We hope you, like us, have had a wonderful week and are looking forward to the second weekend of Ramadan. We are forever grateful for the privilege of writing all of you each morning.
Our top three stories this morning are at the intersection of energy and social stability. Sources close to Cabinet tell us that ministers are pushing state-owned companies to start making good on arrears owed to energy companies. The energy companies have already been given new incentives — by rising oil prices (for IOCs) and a mix of state contracts and deregulation (electricity producers and contractors) — to play ball. That incentive is about to get sweeter (directly and indirectly) for some of them: Capital Economics suggests that rising oil prices could force the state to raise fuel prices by as much as 60% in the new fiscal year starting in July, and we’ve already reported this week that electricity prices could rise by as much as 55% this summer. Capital economics thinks the impact on inflation of the subsidy phase-out will be limited and transient. Either way, cushioning low income earners from the impact of subsidy reform this summer is high on Cabinet’s agenda: Ministers are reportedly preparing to sign off on an EGP 15 bn package of new spending to strengthen the social safety net.
We have chapter and verse in today’s Speed Round.