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Tuesday, 26 April 2022

Electricity subsidies live on

SETTING THE RECORD STRAIGHT – Electricity subsidies haven’t been phased out. Electricity is and will continue to be subsidized by the state until the planned phase-out in 2025, Electricity Minister Mohamed Shaker was quoted as saying by Al Borsa yesterday. His comments came after Bloomberg Asharq reported that the government had spent nothing on electricity subsidies over the past two fiscal years, citing a government document.

Subsidies are paid to electricity plants and will cost the state treasury some EGP 76 bn over the next five years, Shaker reportedly said, adding that the state will continue to support low-income citizens to pay their power bills even after prices are fully liberalized.

Phasing out power subsidies has been on the agenda for years: The government first raised electricity prices back in 2014, and two years later committed to implementing further cuts to power subsidies under the three-year, USD 12 bn IMF programme in 2016. It originally planned to fully eliminate subsidies by July 2022, but decided in 2020 to push the date to the same month in 2025 (pdf) to give state-owned companies more time to adjust as part of planned split of the Egyptian Electricity Transmission Company from the Egyptian Electricity Holding Company (EEHC). Prices rose by up to 26% last July, 16-30% in 2020 and by an average of 15% in 2019.

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