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Sunday, 3 November 2019

Nat gas price cuts for the petrochem industry may be on the way

Nat gas price cuts for the petrochem industry may be on the way: The Madbouly government is considering introducing a new pricing scheme that would lower the price of natural gas sold to petrochemical factories below USD 7/mmBtu, a government source told the press. The mechanism would be linked to global natural gas prices, and its details will be made public soon, the source said.

This comes almost a month after the cabinet decided to lower gas prices for cement, metallurgy, and ceramics manufacturers, heeding the call of lobbyists who have been pushing for this for years. The cement industry will now pay USD 6/mmBtu, while metallurgy and ceramics firms pay USD 5.5/mmBtu. The government also set up a committee to review the prices every six months.

The petrochemicals industry is claiming it is owed EGP 5.4 bn in overdue export subsidies by the Export Subsidy Fund, according to the press. Companies will be able to write off the overdue amounts against their taxes as an alternative to cash payments. They would also be allowed to apply for industrial land at a discount through the government’s new online land allocation portal, as well as receive discounts on their obligations to the electricity, oil, and investment ministries and claim redeemable IOUs from the Finance Ministry.

This comes as the government targets a 10.7% growth rate for the industrial sector by 2022, up from 6.3% currently, Prime Minister Moustafa Madbouly said at a press conference yesterday. A recently-launched electronic platform for industrial land allocation is one example of government efforts to achieve its target, Madbouly said.

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