Back to the complete issue
Sunday, 31 October 2021

Factories face higher utility bills as gov’t hikes gas prices

The government has hiked gas prices for factories by up to 28%, according to a decision published in the Official Gazette on Thursday, as global gas prices remain elevated. Cement, iron and steel, and petrochemicals and fertilizers producers will now pay USD 5.75 / mmBtu, up from USD 4.5 / mmBtu. Gas prices for other industries will rise 5.6% to USD 4.75 / mmBtu.

The move more or less reverses pandemic-era cuts that lowered natgas prices for industrial producers to USD 4.5 / mmBtu in a bid to increase exports and help firms withstand the covid-19 crisis. Before the cuts, cement companies were paying USD 6.00 / mmBtu, while metallurgy and ceramic manufacturers were paying USD 5.50 / mmBtu.

The great gas rally: Global gas prices have surged this year amid rising post-lockdown demand in Asia and tightening supply. Prices in Europe and the UK have soared to record highs while Nymex futures have more than doubled to hit their highest levels since late 2008.

The saving grace? Electricity prices will remain frozen for the foreseeable future, Vice Minister of Finance Ahmed Kouchouk told us recently.

Fuel prices at the pump have also been hiked three times this year as international oil and gas prices have risen. Car owners are now paying up to 12% more for fuel than they were at the beginning of the year after the government hiked the prices of all fuel grades by 0.75.

Taqa Arabia plans 6x increase in its solar capacity: Qalaa Holdings’ Taqa Arabia is looking to increase its solar energy capacity to 400-500 MW within five years from 70 MW currently, Qalaa Holdings’ chairman Ahmed Heikal said at an industry event in Riyadh last week, according to a press release (pdf).

Getting over the glut? This marks a departure from the company’s strategy, announced last year, when Taqa had said it would be focusing on small-scale solar projects to the tune of 2-10 MW in Egypt for the next two years amid an electricity glut that hit solar companies looking to invest in large scale projects. The company said earlier this year that it would be building two solar facilities worth USD 4 mn in Somabay, that would produce a combined 5 MW of power. In late 2020, the company received a USD 4.2 mn loan from the European Bank for Reconstruction and Development to fund a 6 MW photovoltaic solar plant supplying electricity to Dina Farms.

EDITOR’S NOTE: This story was corrected on 2 November to reflect that the price hike for other industries is 5.6%, not 21% as we previously reported.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2022 Enterprise Ventures LLC.

Enterprise is available without charge thanks to the generous support of HSBC Egypt (tax ID: 204-901-715), the leading corporate and retail lender in Egypt; EFG Hermes (tax ID: 200-178-385), the leading financial services corporation in frontier emerging markets; SODIC (tax ID: 212-168-002), a leading Egyptian real estate developer; SomaBay (tax ID: 204-903-300), our Red Sea holiday partner; Infinity (tax ID: 474-939-359), the ultimate way to power cities, industries, and homes directly from nature right here in Egypt; CIRA (tax ID: 200-069-608), the leading providers of K-12 and higher level education in Egypt; Orascom Construction (tax ID: 229-988-806), the leading construction and engineering company building infrastructure in Egypt and abroad; Moharram & Partners (tax ID: 616-112-459), the leading public policy and government affairs partner; Palm Hills Developments (tax ID: 432-737-014), a leading developer of commercial and residential properties; Mashreq (tax ID: 204-898-862), the MENA region’s leading homegrown personal and digital bank; Industrial Development Group (IDG) (tax ID:266-965-253), the leading builder of industrial parks in Egypt; Hassan Allam Properties (tax ID:  553-096-567), one of Egypt’s most prominent and leading builders; and Saleh, Barsoum & Abdel Aziz (tax ID: 220-002-827), the leading audit, tax and accounting firm in Egypt.