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Government raises its energy subsidies forecast to EGP 225bn in the upcoming year Petroleum products material subsidies amounts to EGP 145bn, electricity subsidies reaches EGP 80bn: Prime Minister
The prime minister Sherif Isamil stated that the petroleum products may exceed EGP 145bn ($7.98bn) in the upcoming fiscal year 2017/2018, while the electricity subsidies might reach EGP 80bn. In a press release obtained by Daily News Egypt, Ismail noted that the subsidies allowances in the new public budget might reach EGP 330bn including all kinds of subsidies, such as food commodities. This goes also beyond what was announced in March, when the government stated that the subsidies of petroleum materials will reach EGP 110.1bn in 2017/2018, compared to EGP 101.2bn expected in 2016/2017. The government expected the electricity subsidy to reach EGP 30bn, down from 35.07bn. Egypt raised the petroleum products prices in November as part of a plan to cancel subsidies permanently by 2018/2019 according to its agreement with the International Monterey Fund (IMF), under which Cairo receives tranches of a loan amounting to $12bn. Nevertheless, Tarek El Molla the minister of petroleum stated in March that Egypt is not willing to cut the energy subsidies completely, but instead to decrease it in the upcoming three years. But, does the increase in the allocation of energy subsidy in the next fiscal year budget reflect a government trend to postpone the expected increase in the prices of fuel and electricity in July? A government official refused to comment on whether the government is going to postpone the resolution of increasing energy prices in order to avoid the additional inflationary pressures on the citizens. A lot of news has been spread lately upon postponing of the increase in energy prices and also the expected increase in electricity prices in July to avoid the increase in the inflationary pressures. According to some members of budget and planning committee in the parliament, they intend to meet the Minister of Petroleum Tarek El Molla to try and postpone the energy prices hike. In a related context, the cabinet's stance on increasing water prices is still unclear. Chairman of the Holding Company for Water and Waste Water Mamdouh Raslan said that he presented the cabinet with a suggested plan to increase water prices over the coming five years. The cabinet has not responded yet. Egypt seeks to implement reform measures such as launching a smart card system for the distribution of fuel to consumers, as well as LPG gas to homes on the same ration cards used for buying food at discounted prices. These measures have not been implemented yet.
