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Thursday, 12 November 2020

Investors union, EGAS to look at lower gas prices for industry

Could natgas prices for factories be liberalized? Long-term demands from factories for lower gas prices will be considered by a newly-formed task force made up of the Egyptian Federation of Investors Associations and EGAS, EFIA member Sobhy Nasr told Youm7. The group will look at aligning local and international prices, waiving interest fees on late gas payments, and allowing the original debt to be paid in installments over 15 years, he said.

Local gas prices remain well above international prices despite the government slashing prices over the past year. Factories are currently paying USD 4.5 per mmBtu for gas, which is more than 30% above the current USD 3/mmBtu international spot price. The government has twice reduced prices since October 2019, cutting them by up to 25% last year before making another 25% reduction in March in response to the covid-19 pandemic.

Manufacturers and exporters have in recent months demanded that the government lower prices at least to USD 3.5/mmBtu, while others suggested an even deeper cut to USD 2.5 is in order to help them recover from the covid-19 crisis. The recent economic stress caused by the pandemic and ensuing lockdown restrictions have placed pressure on the sector, which has for years argued that high gas prices have weighed on production and export growth.

MPs have been getting more vocal on the subject: Representatives sitting on the House Industrial Committee have in recent weeks sided with factories and called on the government to take action. Anonymous government sources told local media in September that policymakers were considering reducing prices to USD 4/mmBtu but there hasn’t been any official comment on the matter since.

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