The government plans to add a legislative amendment allowing electricity trade after removing subsidies in the fiscal year (FY) 2021/22.
Minister of Electricity, Mohamed Shaker, told Daily News Egypt that the current electricity law does not allow electricity trading, while the new amendment will approve selling electricity to consumers for those who do not have a network or production plan, which he called “Electricity Merchant/Distributor System”.
He added that the distributor or electricity dealer gets a commission for the sale of energy directly to consumers, and contracts to buy electricity at the real price, which is difficult to implement currently due to the energy subsidies.
“We have no relation to setting prices for consumers. The role of the ministry will be only to regulate the market and facilitate free competition between private sector companies in producing and distributing energy,” he added.
He said that all electricity distribution companies will have prices that match the cost of fuel used at production sites, noting that a lower exchange rate will curb the electricity prices, where there will be no monopoly on production and consumers will have the right to get electricity from any supplier.
He stressed that the areas where there is no competition due to lack of several companies form a monopoly, which will then force the ministry to set a fixed price.
“At present, renewable power plants are operating with the IPP system and sell electricity directly to consumers and pay a commission to use the electricity grid.”
He explained that the ministry of electricity will make a breakthrough in the sector after removing the subsidies and generating profits to the distribution companies. The fees for inspection and measurement to install prepaid electricity meters will also be waived.
He added that any consumer has the right to obtain an electricity meter from any company other than the distribution companies, provided that it meets the standards and specifications that have been set.
Shaker said that among the ambitious goals that they seek to implement is that all the electricity sector can work in a smart manner, without any complications in wrong readings, faults, or complaints.
He said that the ministry of electricity has completed a detailed study showing the size of funds and the loans to be repaid, as well as the financial needs of the sector in terms of production and distribution.