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Thursday, 20 December 2018

Egypt’s industry lobbies for cheaper gas, lower industrial property taxes

Manufacturers lobby for cheaper gas: Prime Minister Moustafa Madbouly has promised to consider revising downward the price manufacturers pay for natural gas, 10th of Ramadan Investor Association boss Samir Aref claims, pointing out concerns that current prices are above the global average. Most manufacturers pay between USD 7-8/MMBtu, a figure significantly higher than the global average of USD 5/MMBtul, he said. The news came following a meeting between association members and Madbouly during which they also called for lower taxes on industrial properties. Madbouly, Oil Minister Tarek El Molla and Finance Minister Mohamed Maait are set to discuss the factory owners’ demands in the coming days, the domestic press reports.

No backsliding, please: The Sisi administration has until now held the line on liberalizing the natural gas market, which will open the door for the private sector to import and distribute natural gas in peer-to-peer contracts. It has also been steadfast on the elimination of subsidies for energy, where the starting point was jacking up the price to industry. Whatever price distortion there may be in the energy market, the answer isn’t in handouts to corporations, it’s letting the open market do its job. Handouts have a place: They allow qualified welfare recipients, not companies, to cope with the impact of rising energy prices.

Background: The Natural Gas Act, which was signed into law last year, effectively allowed the private sector to apply for licenses to buy and sell directly — with the state’s role reduced to that of a market regulator and national grid fee collector. The Natural Gas Regulatory Authority, which was established as the regulatory body then, put in place last July the policy of issuing and revoking licenses for private sector natural gas industry players. However, it postponed the first planned issuance shortly after, saying at the time the private sector is not yet ready.

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