What to expect from the electricity price hikes to be announced today: Electricity Minister Mohamed Shaker has floated two different proposals to the Egyptian Electric Utility and Consumer Protection Agency’s (Egyptera) board of directors for a hike in electricity prices expected to take effect on 1 July, the local press reported, quoting unnamed sources. Shaker is due to reveal the price hikes at a press conference later today.

Scenario #1: The rates paid by households, stores, and SMEs will rise only slightly for lower consumption tiers and scale up for higher tiers. This would mean the hikes will be mostly borne by heavy consumers, leaving unchanged the existing system of cross subsidies in which low-income households are subsidized by the high markup charged to high-income ones.

Scenario #2: Rates will increase within a fixed 13-36% range for all tiers and sectors of the economy, while increasing cross subsidies to support low-income families.

Factories wouldn’t pay more under the first scenario as they have been struggling to keep up with rising costs on every front, and have themselves been calling for price cuts. Under the second scenario, the increase would reportedly be “very slight” for manufacturers. We noted recently that the government is also mulling exempting farmers to help shield them from the burden of the covid-19 pandemic.

Background: The Electricity Ministry is on course to fully phase out subsidies in the coming fiscal year, making this the final round of price hikes. The ministry had originally planned to reach this point by 2019, but extended the timeline under orders from President Abdel Fattah El Sisi. Average electricity prices increased by 15% in July 2019 and by 26% in 2018.