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Cement production to be impacted by energy cuts and higher fuel prices

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The government’s decision to cut natural gas subsidies to factories followed shortly after the reduction of petroleum subsidies on Saturday.

Reduction in gas supplies, which forced to cement firms to halt production, raised concerns of Oxford Business Group. (AFP Photo)

Reduction in gas supplies, which forced to cement firms to halt production, raised concerns of Oxford Business Group.
(AFP Photo)

By Evline Meshreky

Oxford Business Group has raised concerns over the impact of the inadequate supplies of natural gas on the cement industry, after several firms were forced to halt production after the Egyptian Natural Gas Holding Company (EGAS) stopped the flow of gas to 10 plants, which account for two-thirds of the industry’s output.

In 2012, the decline in public spending on construction and infrastructure impacted output in the building materials industry. The value of investments in the sector fell by 71% according to data by the Central Bank of Egypt, with private investment also decreasing.

In late 2012, prices for cement companies that used Mazut fuel oil peaked to reach $328 per ton instead of $143 per ton.

In 2013, the interim government pledged to pump $4.3bn stimulus package into construction in order to revive the economy.

In late June 2014, Environment Minister Khaled Fahmy said in a press conference that coal will be introduced to the cement industry due to its energy-intensive nature, Al-Ahram Online reported.

The minister added that the introduction of coal suits Egypt’s current economic situation since the international price of coal is $4 per tonne. He said that the price of gas is $14 per square metre.

The government’s decision to cut natural gas subsidies to factories followed shortly after the reduction of petroleum subsidies on Saturday. This decision is expected to raise the price of natural gas to $8 per million British Thermal Units (BTUs) for cement factories, reported Reuters.


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