Minister: Egypt raises electricity prices

Egypt’s electricity prices began to rise this month as part of a plan to reduce subsidies that will see prices double within five years, the electricity minister said in comments reported by the state news agency on Thursday.

Mohamed Shaker said the average price for a kilowatt hour, currently around 0.23 Egyptian pounds ($0.03), would reach almost 0.51 pounds after gradual increases over five years.

The move was an initial step by new President Abdel Fattah al-Sisi’s government in what is expected to be a range of politically sensitive reforms to the country’s costly subsidies system.

Egypt’s cash-strapped government spent 144 billion pounds ($20 billion), or around a fifth of its budget, on energy subsidies in the fiscal year that ended on June 30.

Shaker said the reform plan would enable the government to eliminate electricity subsidies from the budget within five years and start turning a profit from the utility.

The state currently sells electricity for less than half its production cost.

Planning Minister Ashraf al-Arabi said on Wednesday the government was going to raise prices on most petroleum products and electricity "within days" but the government has not announced a date.

Artificially low prices for energy - among the lowest in the world - provide little incentive to curb consumption, despite a fuel supply crisis in the most populous Arab state that causes daily blackouts.

($1 = 7.1501 Egyptian Pounds)