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Wednesday, 10 June 2020

Electricity prices to rise 16-30% July, but subsidies are with us until 2025

Your electricity bill will rise by as much as a third in July — but subsidies won’t be fully lifted for another five years: Average rates for electricity sold to residential consumers will increase between 16-30% from 1 July as the government has fully lifted subsidies on the uppermost consumption bracket. Many businesses, however, won’t be paying more as the tariff charged to retail and other commercial consumers will be left unchanged.

Factories will also be getting a EGP 0.10/KWh reduction in their August bills. Factories have been struggling to keep up with rising costs, and have been calling for price cuts. Meanwhile, farmers using electricity for irrigation will pay EGP 0.85/KWh, up from EGP 0.75/KWh in fiscal year 2019-2020.

Natural gas prices for electricity plants, meanwhile, remain unchanged. Prime Minister Moustafa Madbouly had decided in March to set the price of natgas for electricity plants at USD 3.25 / MMBtu, but plants currently pay USD 3 / MMBtu and state coffers cover the remaining USD 0.25.

Subsidies are also with us until 2025: A plan that would have seen subsidies entirely wiped out by July 2022 is being stretched out: Subsidies will now taper off through July 2025 to help consumers better cope with the impact of the covid-19 pandemic. When the government had first mapped out its planned elimination of electricity subsidies in 2014, the plan had been to lift subsidies entirely in 2019, but extended the timeline under orders from President Abdel Fattah El Sisi. Electricity prices increased by at least 15% in July 2019 and by an average of 26% in 2018.

Extending the phase-out will cost state coffers EGP 78.6 bn over the next five years, with households in lower consumption tiers benefiting to the tune of EGP 26.7 bn, manufacturers getting benefits of EGP 22 bn, and natural gas fired power plants receiving subsidies worth EGP 29.9 bn.

Top-down approach to lifting subsidies: Subsidies in July will only be entirely lifted for households consuming more than 650 KWh a month. Households consuming 1,000 or more KWh/month, which are currently the only band not handed subsidies, will also be used starting July for cross subsidies that benefit those in lower consumption tiers.

Tap or click here (pdf) for a review of the administration’s plan to postpone phasing out electricity subsidies, and figures for the coming fiscal years.

The new pricing structure for household customers:

Consumption tiers (with state subsidies):

  • The first 0-50 KWh/month used will be charged EGP 0.38/KWh, up 26%. Those consuming within this band can expect to pay up to 20/month;
  • The next 51-100 KWh/month used will be charged EGP 0.48/KWh, up 20%. Those consuming within this band can expect to pay up to 45/month;
  • The next 101-200 KWh/month used will be charged EGP 0.65/KWh, up 30%. Those consuming within this band can expect to pay up to 136/month;
  • The next 201-350 KWh/month used will be charged EGP 0.96/KWh, up 17%. Those consuming within this band can expect to pay up to 285/month;
  • The next 351-650 KWh/month used will be charged EGP 1.18/KWh, up 18%. Those consuming within this band can expect to pay up to EGP 643/month.

Consumption tiers (with no subsidies):

  • Those consuming 651-700 KWh per month could pay up to EGP 851/month from a previous 618/month. A flat rate of EGP 1.18/KWh will be applied to this band.
  • Those consuming 701-800 KWh per month could pay up to EGP 969/month from a previous 758/month. A flat rate of EGP 1.18/KWh will be applied to this band.
  • Those consuming 801-900 KWh per month could pay up to EGP 1087/month from a previous 898/month. A flat rate of EGP 1.18/KWh will be applied to this band.
  • Those consuming 901-1000 KWh per month could pay up to EGP 1205/month from a previous 1038/month. A flat rate of EGP 1.18/KWh will be applied to this band.
  • Those consuming more that 1,000 KWh per month will continue to pay up to 1491/month, rate was unchanged EGP 1.45/KWh, but subsidies lifted on monthly bills.

The new pricing structure for commercial buyers:

  • 0-100 KWh per month: unchanged at EGP 0.65/KWh;
  • 101-250 KWh per month: prices will go up by 7% to EGP 1.23/KWh;
  • 251-600 KWh per month: unchanged at EGP 1.40/KWh;
  • 601-1000 KWh per month: unchanged at EGP 1.55/KWh;
  • Average consumption higher than 1,000 KWh per month: unchanged at EGP 1.60/KWh;

The average breakdown of industrial prices (measured in KV) — before the EGP 0.10/KWh discount afforded specifically to manufacturing plants:

  • 132-220 KV lines: prices will remain unchanged at EGP 1.09/KWh;
  • 33-66 KV lines: prices will remain unchanged at EGP 1.17/KWh;
  • 11-22 KV lines: prices will remain unchanged at EGP 1.23/KWh;
  • 380 V lines: prices will go up to EGP 0.93/KWh from 0.83/KWh

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