Electricity Ministry set to decide on new tariff increase this month

Mohamed Farag
2 Min Read

The Ministry of Electricity will decide on the increase in electricity prices this month and will be applicable starting July.

Sources at the ministry said that the Electricity Regulatory Authority (ERA) and the Egyptian Electricity Holding Company (EEHC) are close to finalising the new tariff and it will be issued by the board of directors of the ERA, which is chaired by Electricity Minister Mohamed Shaker.

The sources added that the tariff will include all segments, but at different levels based on consumption and average income, noting that the subsidy will continue for five more years, even though it was planned to be removed completely in 2019.

The sources said that the increase will be applied on the basis of income and expenditure, which show the proportion of per capita expenditure on electricity and indicated that spending on electricity in the highest segment is below 4% of income. So the new scheme will adopt a cross-subsidisation system.

The sources noted that the new scheme includes four segments: the neediest (0-100 KW), limited income (100-200 KW), average (200-600 KW), and high consumption (600-above 1,000 KW).

The sources said the planned increase for the neediest and limited-income consumers up to 200 KW will range between 10% and 20%, while consumers of over 200 KW will see an increase of 40%. The figure rises higher on the higher consumption segments.

The sources pointed out that the factory and company consumers of extra high, high, and medium voltage will see less of a subsidy.

Furthermore, the source said that the production cost of electricity in FY 2017/2018 will increase, especially as the tariff in 2016/2017 was based on an exchange rate of EGP 8.88 to the dollar, while the exchange rate has now hiked to EGP 18.

As a result, the cost of producing electricity surged to EGP 0.95 per KW/h, up from EGP 0.637 in the current fiscal year. The original price restructuring programme included a cost of EGP 0.475.

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