Egypt, Elsewedy review progress on Ain Sokhna phosphate complex    US employment cost index 3.6% up in year to June 2025    Egypt welcomes Canada, Malta's decision to recognise Palestinian state    Pakistan says successfully concluded 'landmark trade deal' with US    Sterling set for sharpest monthly drop since 2022    Egypt, Brazil sign deal to boost pharmaceutical cooperation    Modon Holding posts AED 2.1bn net profit in H1 2025    Egypt's Electricity Ministry says new power cable for Giza area operational    Egypt's Al-Sisi, Italian defence minister discuss Gaza, security cooperation    Egypt's FM discusses Gaza, Nile dam with US senators    Aid airdrops intensify as famine deepens in Gaza amid mounting international criticism    Egypt exports first high-tech potato seeds to Uzbekistan after opening market    Health minister showcases AI's impact on healthcare at Huawei Cloud Summit    On anti-trafficking day, Egypt's PM calls fight a 'moral and humanitarian duty'    Egypt strengthens healthcare partnerships to enhance maternity, multiple sclerosis, and stroke care    Egypt keeps Gaza aid flowing, total tops 533,000 tons: minister    Indian Embassy to launch cultural festival in Assiut, film fest in Cairo    Egyptian aid convoy heads toward Gaza as humanitarian crisis deepens    Culture minister launches national plan to revive film industry, modernise cinematic assets    I won't trade my identity to please market: Douzi    Sisi sends letter to Nigerian president affirming strategic ties    Two militants killed in foiled plot to revive 'Hasm' operations: Interior ministry    Egypt, Somalia discuss closer environmental cooperation    Egypt's EHA, Huawei discuss enhanced digital health    Foreign, housing ministers discuss Egypt's role in African development push    Egypt reveals heritage e-training portal    Three ancient rock-cut tombs discovered in Aswan    Sisi launches new support initiative for families of war, terrorism victims    Egypt expands e-ticketing to 110 heritage sites, adds self-service kiosks at Saqqara    Egypt's Irrigation Minister urges scientific cooperation to tackle water scarcity    Palm Hills Squash Open debuts with 48 international stars, $250,000 prize pool    On Sport to broadcast Pan Arab Golf Championship for Juniors and Ladies in Egypt    Golf Festival in Cairo to mark Arab Golf Federation's 50th anniversary    Germany among EU's priciest labour markets – official data    Paris Olympic gold '24 medals hit record value    A minute of silence for Egyptian sports    Russia says it's in sync with US, China, Pakistan on Taliban    It's a bit frustrating to draw at home: Real Madrid keeper after Villarreal game    Shoukry reviews with Guterres Egypt's efforts to achieve SDGs, promote human rights    Sudan says countries must cooperate on vaccines    Johnson & Johnson: Second shot boosts antibodies and protection against COVID-19    Egypt to tax bloggers, YouTubers    Egypt's FM asserts importance of stability in Libya, holding elections as scheduled    We mustn't lose touch: Muller after Bayern win in Bundesliga    Egypt records 36 new deaths from Covid-19, highest since mid June    Egypt sells $3 bln US-dollar dominated eurobonds    Gamal Hanafy's ceramic exhibition at Gezira Arts Centre is a must go    Italian Institute Director Davide Scalmani presents activities of the Cairo Institute for ITALIANA.IT platform    







Thank you for reporting!
This image will be automatically disabled when it gets reported by several people.



Reducing energy subsidies is ‘good' but may raise prices: Egyptian Steel chairman
Published in Daily News Egypt on 27 - 05 - 2014

Reforming the subsidy system is a "good" step that should be followed by programmes to improve the lives of the poor, said Ahmed AbouHashima, chairmen of Egyptian Steel.
"It is time to lift subsidies for those who are able to get on without them [the subsidies], in order to reduce pressure on the state budget, which faces chronic deficits," said AbouHashima. "Why is the government subsidising the gasoline for my car?"
The government reduced energy subsidies in the 2014/2015 budget, which eats up 20% of public expenditure, in a move seen as critical to economic reform. The measure has raised fears among citizens over price rises, as one quarter of the population lives below the poverty line.
As for the policy's implications, AbouHashima sees any price rise by the government on gas for energy-intensive factories, such as steel or cement, as "inevitable", and notes that this will cause price rises of their products. The government is yet to disclose details on subsidy cuts in its budget, and whether they will raise prices for gasoline or natural gas for factories.
AbouHashima fears price hikes on basic commodities if prices for items like diesel fuel are raised. He called on the government to develop a plan of social protection to guarantee monetary support in order to lessen the burden of price rises on the poor, while also speeding up the development of consumer cooperatives to provide greater diversity of basic goods, which would also ease the burden of rising prices.
"The situation we are in now, in terms of energy crises and water poverty, is the result of the previous regimes having no vision and ignoring the future at the expense of the present," said the chairman. "Did these crises just appear in the middle of the night? Where was the government back when these crises were first becoming apparent?" he asked.
In AbouHashima's view, raising allocations for education, health, and social protections while reducing energy subsidies are steps that strengthen the new budget, but people are still waiting for such measures to be implemented.
AbouHashima noted that greater attention on technical education is necessary, saying that free education has led to deterioration of technical education. This in turn has, in his view, negatively impacted national industry, which now lacks skilled and trained labour. "I want trained workers, and I'm not finding any," he said. "I myself had free education, but I am against it."
The state spends 13% of its annual budget on supplying fuel and electricity for companies and consumers at prices far below market value. The Ministry of Finance estimates that subsidies for petroleum in the new budget will be EGP 104bn versus EGP 134.29bn in the current year's budget, which ends this June.
"The factories do not mind price increases in the gas they are getting as long as the government continues to supply the necessary quantities in a timely way, as supply shortages in fuels for factories decreases their energy supply and raises the cost on their final products," said Walid Al-Hilal, chairman of the Export Council for Chemicals.
Al-Hilal fears the repercussions of price rises on diesel fuel for basic commodities, but expects the market to gradually absorb the increases, as long as the government steps in to resolve logistical issues related to transportation and storage, which have caused losses accounting for 30% of price rises.
He said that the government intends to allow steel companies, like cement factories, to use coal as an energy source. This will reduce dependency on the government's subsidised natural gas, and reduce the possibility of higher prices on final goods if the price on gas for factories is raised.

"The government should use savings from reduced subsidies to reform the education system and strengthen social safety nets in regard to health insurance and retirement pensions, and provide cash support to the poorest families, which will decrease the anger on the street in the event of price increases due to the changing prices of diesel and gasoline," said Al-Hilal.
However, the new budget stated that half of what was provided in subsidies for petroleum products would be allocated to subsidize electricity, and will constitute up to EGP 33.492bn, an increase of 85.6% in subsidies from the current fiscal year, after repeated blackouts because of the shortage in fuel supplies to power stations.
Hilal considers steps like cutting energy subsidies, increasing fuel efficiency, expanding the use of smart cards for fuel distribution, rationing consumption and developing new and renewable energy sources (especially solar energy) vital measures in respect to reforming the economy, which is suffering from a weak currency, climbing unemployment, and a worsening budget deficit.
In a governmental move aimed at reducing the impact of cutting energy subsidies on the poor, the government increased the amount allocated to social welfare programs by 200% in the new budget.


Clic here to read the story from its source.