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Egypt to end electricity, water subsidies

May 1, 2020 at 12:22 pm

Egyptians wait in line for clean water, 2 February 2017 [Badaweee/Wikipedia]

The Egyptian government is considering a bill aimed at raising the rates of electricity and water in the new fiscal year which starts in July, Al-Araby Al-Jadeed reported citing government and parliamentary sources.

The bill was drafted by the Ministry of Electricity and the Ministry of Housing, Utilities and Urban Communities, and it is pending approval by the Cabinet Council, the news website added.

The increases are expected to range between 15-33 per cent and they would coincide with the complete lifting of electricity subsidies.

Electricity subsidies currently stand at four billion Egyptian pounds ($245 million). Similarly, water subsidies, which stood at one billion Egyptian pounds ($63 million) in the current budget will be abolished, according to Al-Araby Al-Jadeed.

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The increase will take effect on 1 August, the news website added, citing sources that it did not name.

In January, the Ministry of Electricity said the government had intended to cut electricity subsidies over a period of five years so as to eliminate them completely by the end of the 2018-2019 fiscal year, but it increased the time span of the cuts by two more years “based on directions from the political leadership”.

The ministry added that “there is no room for [further] delaying the new increase in electricity rates starting in the next fiscal year.”

The Egyptian government has raised charges for electricity six times since July 2014 and increased water charges four times during the same period.

According to a World Bank report released last year, 60 per cent of Egyptians are either poor or belong to the poorest groups.

The report pointed out that economic decisions, such as lifting subsidies and others, have affected the middle class, which is suffering from the increasing cost of living.

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This has been exacerbated by the spread of the coronavirus over the past few months which has led to a curfew being imposed and businesses being forced to close, pushing more people into poverty.

The government has said it will take a 20 per cent pay cut and give workers 500 Egyptian pounds ($32) a month to help them through this time, but many say they have not seen this money whilst others have no idea how to apply to the online scheme.

A third of Egyptians live below the poverty line and survive on less than $2 a day. In the coming months, it’s thought that their conditions will worsen and many more will slide into poverty.