The electricity sector will pay its outstanding dues to the ministry of petroleum within five years, after achieving balance and lifting subsidies from electricity prices totally in the fiscal year (FY) 2021/22, the Minister of Electricity and Renewable Energy Mohamed Shaker told Daily News Egypt on Saturday.
“We will not subsidise electricity prices after FY 2021/22. However, the ministry of finance will financially support a very limited category of consumers, including those of limited-income and the most vulnerable. The electricity ministry will not interfere in the form or value of the support, and will charge everyone for the real price of electricity,” he explained.
The arrears owed to the petroleum ministry by the ministry of electricity and its subsidiaries amounted to EGP 127bn. These debts are the cost of fuel supply to the ministry’s power plants. The ministry of finance will pay a part of this debt, which is the value of subsidy on fuel supplied to power plants.
Shaker added that the ministry-affiliated electricity companies will be able to repay the instalments of loans, plus interest, which it obtained to implement projects in the fields of power transmission, production, and distribution after lifting subsidies on energy prices and turned to profits.
“We will not be able to offer electricity companies on the Egyptian Exchange while proving subsidies. Shareholders would want to make profits. This is our goal in the coming period,” said Shaker.
He explained that subsidised electricity prices were supposed to change by the end of this year. However, due to the many changes that have occurred, the subsidy was extended for three more years. He pointed out that household subsidies amount to EGP 46bn, while the allocations in the budget for this item is only EGP 16bn. “If you were to ask me what we do, I would say God only knows,” he stressed.
He pointed out that the liberalisation of the exchange rate caused a large increase in subsidy allocations, which prompted the government to extend the subsidy system for three more years.
Shaker stressed that his ministry was able to fulfil all its obligations to Egyptian and foreign investors, saying “No invoice was provided without disbursing its value. This is a directive from President Al-Sisi.”