Political risk speculation from Egypt's increase in electricity prices

Political risk speculation from Egypt’s increase in electricity prices

Egypt’s ministry of electricity has yet to announce details of the electricity price increases, and speculation has abounded with respect to the changes.

Ministry sources speaking with the press have most recently stated that the ministry will recommend price increases of 33%-55% for all consumers. They have emphasised that only the Cabinet has the power to exempt a particular tier of customers from the changes.

One possible scenario is that the Cabinet will allow frustration to build after the ministry of electricity announces the new pricing, moving at the last minute to announce only modest price increases for the lowest consumption bracket or exempt them entirely, thereby alleviating tensions.

However, the recent high profile arrests may indicate that the government plans to go ahead with the broad-based increases, and believes that citizens will be too fearful to protest in large numbers. This is not so surprising, given the trend of heavy handed security towards dissident voices.

Meanwhile, the government currently has other plans in place to lessen economic burdens on the poor. An EGP15 billion (US$840 million) social safety net package is expected to be announced at the start of July, according to government sources quoted in Al Mal. Prime Minister Sherif Ismail had previously reported that the package would be implemented during Ramadan, but it appears that the government hopes the package will lessen public frustration prior to electricity subsidy cuts. According to some anonymous sources, changes will include wage increases for civil servants and a small increase in the allowances used by ration card holders to purchase subsidised goods.

In the longer term, current drafts of the 2018–2019 Fiscal Year budget allocate EGP86.18 billion (US$4.81 billion) to commodity subsidy spending, representing an increase of over 35% from the FY 2017/2018 budget.

This section is from Menas’ Egypt country analysis. To receive a free sample, or to discuss subscriptions, contact us here.

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