CAIRO: Egypt plans to double the price of natural gas piped into some homes and businesses from next month, but the move will trim its huge fuel subsidy bill only slightly because few premises are connected to the gas network.
Energy prices in Egypt are among the lowest in the world, and the cash-strapped government spends more than a fifth of its budget on keeping them down.
According to a government decree issued late on Sunday, residential and commercial users of less than 25 cubic metres of gas per month will pay 0.40 Egyptian pounds ($0.06) per cubic metre from May.
The Oil Ministry’s website shows the current price of gas for households at 0.20 Egyptian pounds ($0.03) per cubic metre, or about $0.80 per million British thermal units (mmbtu).
State newspaper Al-Ahram reported that the current price is 0.10 Egyptian pounds ($0.01) per cubic metre for consumers that use less than 30 cubic metres a month. No officials from the ministry could be reached yesterday, a public holiday in Egypt, to confirm the current price.
The price hike, announced in the country’s official gazette, does not apply to the electricity generation sector, which is the largest consumer of gas in Egypt.
State news agency MENA quoted an unidentified Oil Ministry source as saying that the move would increase state revenues by 800m to 1bn Egyptian pounds ($114.5m-$143.1m), “which will be used to finance projects that deliver natural gas to homes and expansion (of the grid)”.
The decree also says that bakeries, which produce the staple food of most Egyptians, will not have to pay any higher price.
The price hike therefore only affects a small number of citizens whose homes have been connected to the gas network. Most poor Egyptians use cylinders of butane for cooking.
Egypt raised the price of the cylinders last year for the first time in two decades ahead of talks with the International Monetary Fund on a $4.8bn loan.
Talks later broke down, and some analysts said the price hikes were regressive, as they cut fuel subsidies for poorer Egyptians.
The government last year began a World Bank-backed plan to link 800,000 households a year to the gas grid in a bid to get consumers to use less state-subsidised butane. Reuters
