Egypt has delayed a final decision on reducing energy subsidies for non-intensive industries and is currently considering the speed at which said plans would be executed. Parliament talks regarding the budget last month showed the government's commitment to eliminate energy subsidies for non-intensive industries by the end of this year. This week, however, the Energy Pricing Committee postponed to June 22 its final decision on whether to raise electricity and gas prices for non-energy intensive industries. The new prices were scheduled to take effect starting July 2010, reported the independent Al-Masry Al-Youm newspaper. Negotiations are underway between the committee and industry representatives, with the latter requesting a more gradual implementation of the increase in energy prices, according to a Beltone Financial report. The Economist Intelligence Unit country report for June 2010 expected the government to go through with its decision to remove the subsidies due to deficit pressures. "In the second half of 2010 the government will resume its program of incrementally reducing subsidies on energy prices in a bid to align domestic prices with international prices and minimize the fiscal drain, and it aims to have eliminated all energy subsidies by the end of 2011," the report said. "In light of the potential inflationary impact when the government resumes its program of reducing energy subsidies, we expect the Central Bank of Egypt to starting raising interest rates again in late 2010," the report added.
