Minister of Electricity Mohamed Shaker told Daily News Egypt that the government will completely abolish subsidies on electricity in 2022, with continuing cross-subsidisation at EGP 5.6bn. “The state will bear nothing,” he stressed.
He explained that cross-subsidisation is being implemented in the current fiscal year (FY) on the segments consuming over 2,000 KW/h, where they pay EGP 696 (25.4%) as a subsidy for the low-consuming segment.
Consumers of 3,000 KW/h pay some EGP 1,024 on top of their bill in cross-subsidisation.
Shaker said that the allocated subsidy in the current FY amounts to EGP 52.7bn, which will drop to EGP 43.3bn in FY 2018/2019, then to EGP 31.8bn in FY 2019/2020, then cut in half to EGP 16.5bn in FY 2020/2021, leaving only cross-subsidization of EGP 5.6bn in FY 2021/2022.
He claimed that increasing the electricity tariff is unrelated to the loans from the World Bank and the International Monetary Fund, noting that the increase was based on the tariff restructuring plan penned in 2014.
Shaker pointed out that average cost of electricity production is at 95.1 piasters this year.
He also stressed that there will be no increase in the prices of the practice system. “A decision has been issued. The plan is to regulate the situation of the violators through the installation of a metre. Any individual who wants to install a code metre after inspection and pay the measurement fees and counter value will have that done.”
He noted that the ministry is seeking to increase the collection of bills, as the average last month amounted to 80% of all bills, most of which are households, as many government agencies still do not pay.
Moreover, he said that the era of blackouts and load shredding has ended and that the limited emergency blackouts are solved quickly thanks to the allocation of EGP 37bn to expand and develop the transmission and distribution grid over the coming two years.
On the tariff of solar energy, Shaker said that the prices of power purchase agreement will not be changed, especially as the prices of components went down.
Finally, he said that all of the Dabaa nuclear power plant contracts have been completed and sent for revision by the State Council, expecting ratification of contracts within months.