Egypt: Gov. already eliminated electricity subsidy two years ago

A recently published document has revealed that the Egyptian government has already liberalized electricity prices

The document showed that the government did not provide any support to citizens over the last two fiscal years, where the electricity subsidy item was registered as “zero” in the final accounts of FY 2019-2020 and FY 2020-2021.

The document, which was published by Al-Sharq newspaper, stated that “no subsidy was provided to electricity requirements for FY 2020-2021”, and that the officials at the Finance and Electricity ministries declined requests from Al-Sharq newspaper to comment on the document.

In July 2014, the Egyptian government started a plan to gradually cancel electricity subsidies. This plan was scheduled to continue over 5 years to end in 2019, before deciding to extend the subsidy program until June 2025 to mitigate the repercussions of the Coronavirus Pandemic on citizens.

One of the representatives of the  told Al-Sharq, who asked not to be named, “This document means that the price of electricity has already been liberated, and that there is no electricity subsidy provided to citizens,” said a member of the Egyptian House of Representatives (Parliament) on condition of anonymity.

According to its plan, the government raised electricity prices last July by 8.5 to 26% for home use, more than 28 million subscribers, while the price of electricity for the industrial sector was stabilized until 2024-2025.

In 2020, Egypt canceled the subsidy entirely for home consumption, exceeding 650 kilowatt hours per month, where citizens get electricity at the actual cost, while the reciprocal support from consumers continues for more than 1,000 kilowatt hours per month, which means that consumers of this category get electricity at more than the cost price in favor of supporting the least consuming segments. .

“The document means that the electricity revenues covered its expenses, and it may have made profits. Therefore, there is no need to increase electricity prices during the coming period, unless this is linked to the increase in the prices of fuels used to generate electricity,” said Dr. Hassan El-Sadi, Professor of Finance at Cairo University.

“There is no other government subsidy for electricity, unless fuel prices rise, then the state may intervene by subsidizing part of the prices again,” Dr. El-Sadi added.

In June 2020, Egypt announced that the electricity subsidy would amount to EGP 78.6 billion uring the period from FY 2020-2021 to FY 2024-2025, by EGP 26.7 billion pounds to support electricity destined for home consumption, and EGP 22 billion to support electricity provided to the industrial sector, in addition to EGP 29.9 billion for electricity stations powered by natural gas.