The Ministries of Electricity, Petroleum, and Finance started to hold joint meetings to determine electricity prices for the fiscal year (FY) 2018/2019.
Government sources said that the electricity subsidies in the next FY are expected to reach EGP 43.3bn, and the distribution of subsidies for different consumption segments is based on EGP 18 per dollar.
The sources pointed out that the increase in electricity prices take into account the cost of fuel used in producing energy, the average cost of producing one kW, and the dollar exchange rate. These variables will determine the percentage of price increase for each consumption segment.
Electricity subsidies in the current FY 2017/2018 amounted to EGP 52.7bn, which means that electricity prices will increase by EGP 9.4bn in the next FY.
According to the sources, the government plans to lift electricity subsidies in 2022, and the limited-income and underprivileged people will be taken into account when determining the increase rate in electricity prices every year.
The committee formed to set the new prices of electricity, to be applied in 4 July 2018, set four scenarios to increase electricity prices. One of these scenarios suggests 27-40% increase for electricity consumption of 50-300 kWh per month.
The prices of higher consumption rates will be increased by 40-58%, according to the current scenarios.
The committee also suggested to allocate 89% of the next FY’s electricity subsidies for household use, bringing it to EGP 39bn in 2018/2019, with an EGP 8bn decrease compared to the current FY.
The sources stressed that there will be no exceptions in the coming increase in electricity prices. Moreover, the customer service and cleaning fees will increase in parallel with the increase in electricity prices and will be calculated based on consumption rates.
After lifting the electricity subsidies totally in 2022, the government will allocate about EGP 6.5bn to support electricity prices for low-income people.