Egypt government hikes electricity prices by 40% to reduce subsidy bill

The Egyptian government will hike electricity prices this week by 40 percent or more for household, commercial, and industrial consumers, the independent Mada Masr news site has reported, as the country tries to reduce subsidies.

A source at the electricity ministry told Mada Masr on Thursday that the increases will be made public soon on the Egyptian Electric Utility and Consumer Protection Regulatory Agency’s official website. 

The planned electricity price increases have been delayed several times in recent years over concerns about public anger in Egypt, as the country goes through a cost-of-living crisis.

Egypt’s Prime Minister Mostafa Madbouly said the price increases comply with International Monetary Fund (IMF) recommendations about cutting subsidies, as part of an ongoing $8 billion loan programme with the international institution.

There has been growing dissatisfaction in Egypt over the soaring cost of basic goods, frequent power cuts during the summer, and growing inflation.

The subsidy changes will see the average selling cost of electricity for the industrial sector increase by around 40 percent from 1.389 Egyptian pounds to 1.94 Egyptian pounds per kilowatt, according to electricity ministry sources cited by the privately owned Al-Masry Al-Youm newspaper.

Government sources told Reuters that price increases for these consumption brackets will go up to 50 percent and will be implemented from this month. 

The price hikes mark the first change to electricity fees in the industrial sector in four years, with more increases expected.

Reports of price hikes have caused widespread panic among citizens even though the government has not officially announced the new increases, with people and businesses calling for greater transparency.

Coupled with recent fuel price increases and further austerity measures adopted since 2014, the news will likely cause further frustration among Egyptians.

According to Mada Masr, rising energy costs have exacerbated inflation over the last two years, affecting production and input costs, which has made transportation, food, and other commodities more expensive.

Last month, Egyptians expressed outrage after a sudden increase in the price of all types of fuel by up to 15 percent.

In May, for the first time since 1988, the government increased the cost of subsidised bread, the most strategic commodity in the country, by 400 percent, which Madbouly said was essential due to "the increasing financial burden inflicted on the state".

Egyptian President Abdul Fattah al-Sisi has repeatedly blamed several factors for the economic crisis, including the 25 January revolution of 2011, the Russia-Ukraine and Sudan conflicts, and Israel's war on Gaza. 

Experts believe that severe economic mismanagement played a significant role in Egypt's current predicament, particularly with the government investing billions of dollars in 'white elephant' projects, including the New Administrative Capital costing taxpayers about $60 billion.