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CAIRO, July 6 Egypt will hike electricity pricesby up to 42 percent this fiscal year for households but keepenergy subsidies in place three years longer than expected,Electricity Minister Mohamed Shaker said on Thursday.
The government has been looking to slash the subsidies ituses to keep consumers’ energy prices down and raise taxes in abid to tighten up government finances. The measures are part ofa three-year $12 billion International Monetary Fund loanagreement it hopes will lure back foreign investors who fledafter a 2011 political uprising.
It said previously it would phase out electricity subsidiesentirely by the end of the 2018-19 fiscal year beginning inJuly, but Shaker said tough economic conditions brought on bythe floating of the pound currency in November means thesubsidies will be phased out more gradually, by the end of2021-22.
“Owing to conditions related to the big increase in theexchange rate, we have extended the period (for subsidies) bythree more years,” Shaker told a news conference announcing thenew electricity prices.
Inflation has soared in import-dependent Egypt following thecurrency float, reaching a three-decade high of over 30 percent.Price rises are expected to continue following hikes to theprices of electricity and fuel.
Shaker said Egypt spent 64 billion Egyptian pounds ($3.58billion) on electricity subsidies during the 2016-17 fiscal yearwhich ended in June, more than twice the 30 billion initiallyexpected in the budget, largely a result of higher import costsfor liquefied natural gas (LNG), which supply its powerstations, following the float.
The price hikes, which will take effect beginning August 1,will cut subsidy spending to 52.7 billion pounds in the currentfiscal year and then to 43.4 billion pounds in the 2018-19fiscal year, Shaker said.
($1 = 17.8726 Egyptian pounds)(Reporting by Omar Fahmy; Writing by Eric Knecht; Editing byToby Chopra)