The Egyptian Ministry of Electricity announced raising electricity prices for homes during the current month, and fixing them for the rest of the other authorities in the country, until the end of the Corona pandemic or the next fiscal year 2022-2023. The increase came in a brief statement by Dr. Muhammad Shaker, Minister of Electricity and Renewable Energy, considering that the permit to visit comes within the “transparency framework” that the ministry follows with citizens, and the government seeks to eliminate subsidies for electricity completely by the fiscal year 2024-2025.
The minister’s words were shocking, for transparency, from his point of view, means notifying citizens of the burdens they will bear, representing between 8.5% to 26% of the value of monthly consumption bills, starting from the beginning of the new fiscal year 2021-2022, while the simplest matters of transparency required that the minister mention justifications This raise, and does the government still subsidize electricity prices, and who gets this support that the ministry claims?
In his statement, the minister indicated that electricity prices will reach consumers less than 50 kilowatts per month, reaching 48 piasters per kilowatt-hour, an increase of 26% from the prevailing prices over last year, and reaching 58 piasters in the 50-100 kilowatt category, an increase of 20.8%. 77 piasters in the category between 101-200 kilowatts, an increase of 18.5%, and between 201-350 piasters, 106 piasters, an increase of 10.4%, and from 351-650 kilowatts, it will reach 128 piasters, an increase of 8.5%. After these categories, 145 piasters will be paid per kilowatt hour, except for what exceeds 1000 kilowatt consumption, which will be borne by the burdens of fees for large subscribers, or to improve the power factor to meet the increased consumption of air-conditioning devices or water-lifting motors.
The minister had announced raising energy prices between 16%-30% in July 2020 over the July 2019 prices, which increased by 15%, for all sectors consuming electricity, which currently number about 30 million subscribers. Domestic consumption constitutes about 41.7% of the value of energy consumption generated at the level of the Republic, the industrial sector comes in the second stage by 27%, government departments about 4.8%, shops 4.8%, drinking water and sewage plants 4.2%, agricultural lands 4.8%, street lighting 3.1% and army forces And the police, the subway and other sovereign authorities, about 8.5%. Returning to the statements of annual increases for the energy-consuming segments, we find that the category that consumes the least, the least income and is deprived of household appliances that raise consumption rates is the one that has incurred the highest rates of price hikes over the past five years. The rate of increase in the price of the lowest tranche reached about 800%, dropping to about 500% for the second and fourth tranches, while it reaches 350% in the fifth tranche, in 4 consecutive years. The Ministry of Electricity documents reveal that these segments represent about 95% of the number of subscribers for domestic use. The documents published on the ministry’s website show that the actual cost per kilowatt is estimated at 121 piasters, meaning that the groups that receive subsidies are those consuming less than 350 kilowatts, while the rest of the segments have turned to support agencies for electricity because they buy it at cost prices or higher than the cost. The Ministry set electricity prices according to the actual cost in 2021, at 121.3 piasters per kilowatt, on the basis of which the annual rates of price increase were established for all segments and categories consuming electricity across the country. The ministry began selling electricity from that time, at a price of 149.5 to the higher segments of consumers, which include shops, commercial and administrative offices, and expanded to raise prices for the agricultural and industrial sectors that were fed up with the increase in the value of electricity consumption. Some major factories threatened to exit their industries from Egypt after the prices of electricity and energy in general became higher in Egypt than Saudi Arabia, Qatar and most countries of the world, which made them, lose their competitive value, especially in the industries of aluminum, iron, steel, petrochemicals, cement and tourism. The ministry did not stop the price escalation plan for these parties until after the emergence of the Corona pandemic and in front of the pressures exerted by the industrial chambers, the government reduced prices by 10% for factories, and granted payment facilities to tourist facilities, while the situation remained the same for the rest of the other sectors, even agricultural ones that need support A large part of the state, the price of a kilowatt reached about 84 piasters, with other royalties paid on consumption, bringing it to the point of the sale value for domestic consumption.
The Ministry of Electricity’s manipulation of subsidy pretexts did not stop at selling to consumers, but on what it exercises on private electricity companies that obtained the right to generate and sell energy to the public, in accordance with the legal amendments issued 4 years ago that prompted the private sector to expand the establishment of electricity generating stations, especially those that Solar powered. After the ministry agreed on the purchase price of electricity from companies at 125 piasters per kilowatt in 2015 when it was in dire need of electricity and had a generation deficit, and the high prices of imported fuel, it pressured the companies to reduce prices below 85 piasters per kilowatt. The ministry relied on its generation surplus amounting to about 29,000 megawatts and the availability of natural gas, which led to the closure of 24 companies that invested huge money in new and renewable energy projects, in addition to placing obstacles in front of citizens to prevent them from expanding power generation from their own stations, after Ensure that the pricing policy followed by the Ministry is detrimental to their facilities. The Ministry of Electricity refused to allow the state-owned Nagaa Hammadi aluminum factory to build its own power plant, which is currently the largest consumer of energy in Egypt with an annual bill of 5 billion pounds.
While the state’s general budget for the current fiscal year 2021-2022 reveals the absence of any financial allocations to support electricity, after its commitment with the International Monetary Fund and the World Bank, to completely lift subsidies on the energy and electricity sector by 2024, the amounts allocated by the Ministry of Electricity and the government for support are directed to the authority Nuclear plants at an amount of 3.4 billion pounds, and electricity subsidies for the metro, which are public projects, which are supposed to be financed from the public budget and not borne by the electricity producing companies. The support of these two parties was not behind the high cost of producing electricity, as there are a series of wrong actions that the public bears as a result. This series begins with companies paying bills for the value of power plants purchased by the ministry by direct order from Abdel Fattah El-Sisi, from the German companies Siemens, the American General Electric, the French Alstom, and the Italian ABB, as part of his desire to obtain political support. This made the sector possess a huge surplus in production amounting to about 45% of the generation capacities and the upper limit of consumption by more than 100% of the required reserves of electricity in the country. At a time when the generation plants exceeded the need, the ministry left the energy transmission sector in its weakest state, especially the distribution networks, which increased the rates of loss in electricity by up to 20%, which is more than double according to international rates, and created a permanent imbalance in the service of consumers and prevented the Exporting the surplus to neighboring countries despite spending billions of pounds on electrical interconnection networks and stations between Egypt, Jordan, Libya and Sudan. The debts of the electricity sector amounted to about 312 billion pounds until 2019, while the ministry expanded in appointing unskilled workers for political reasons, and agreed to establish a company affiliated with the General Intelligence to handle the collection of electricity bills, which incurs new expenses for the sector, without the need for this service that it performs Workers inside electricity distribution companies.
While electricity consumption has decreased since the float of the Egyptian pound in 2016, especially in the industrial, commercial and tourism sectors, due to the high rates of inflation, which intensified with the outbreak of the Corona epidemic, the government failed to sell surplus energy to neighboring countries, although the electricity networks are connected to Iraq and Lebanon, Syria and Palestine. The matter is made more difficult by the high economic cost of producing kilowatts with the failure to pay the electricity bills from the army, the police and their affiliated projects, and the Minister of Electricity’s threats to cut off the power to the offices of officials who do not pay electricity monthly, due to his inability to implement the decision politically. These authorities were satisfied with allowing the Minister of Finance to deduct the allocations included in the general budget annually to pay the value of electricity consumption, which does not actually represent a quarter of the value of actual consumption, which actually causes the large number of bad debts with the government apparatus, increase the cost of production, and charge citizens the value of political bills and the state of financial idleness And the administration within a sector tainted by a lot of corruption.