The debts of the industrial sector owed to the Egyptian Natural Gas Holding Company (EGAS) amounted to EGP 7bn, according to a source at the company.
According to the source, who asked not to be named, the indebtedness of the industrial sector has increased recently as a result of factories tending to pay only a small part of their monthly dues.
The source said that EGAS has put forward an initiative to settle debts owed by the industrial sector, for up to two years, and that companies must commit to paying their current consumption of gas. Yet, companies have asked to extend their repayment periods, which is currently being negotiated. The source added that most of the debts are owned by cement factories.
The government raised gas prices for non-energy-intensive industries in 2012 from $2.3 per MBTU to $3 per MBTU, while prices for energy-intensive industries have been increased from $3 to $4 per MBTU.
According to the source, many cement companies did not pay for the price difference since 2012, which accumulated the debts even further as the government recently applied a new tariff increase on energy prices in July.
In July 2014, the price of oil fuel for the use of food industries has increased to EGP 1,400 per tonne and to EGP 2,250 for cement companies, while the price of gas for the fertiliser and petrochemical industries rose to $4.5 per MBTU and $8 for cement industries, $7 for the iron and steel, aluminium, and copper industries, but the government has raised the price of oil fuel for cement companies to EGP 3,500.
EGAS contracts show that cement companies’ contracts amount to 600m cubic feet of gas per day, while the size of the iron contracts amount to 150m cubic feet per day. The household and vehicles gas consumption amount to 250 cubic feet per day. However, the real contractual size for cement factories is estimated at 430 cubic feet, while they receive 50m cubic feet of gas per day for working with coal and oil fuel.
Egypt produces about 5.2bn cubic feet of gas per day. About 300m cubic feet of gas is used inside the fields for operation, and the remainder is channelled to the local market.