CAIRO: The Egyptian Cabinet decided Monday to lift the prices of natural gas pumped into homes and commercial activities, according to the state-run MENA.
The decision will be put in place as of May 1 and the new prices are set according to the monthly consumption rate.
Under the new pricing structure, households and commercial users that are consuming less than 25 cubic meters of gas per month will be charged EGP 0.40 (U.S. $0.06) per cubic meter.
Those who consume 25 to 50 cubic meters per month will be charged 1 EGP ($0.13) per cubic meter while those who consume over 50 cubic meters will be charged 1.5 EGP ($0.20).
The current price of gas for households is estimated at 0.20 EGP ($0.03) per cubic meter, according to the Ministry of Petroleum website.
The new prices are expected to save Egypt 1 billion EGP ($143 million) per year, which will be used to finance projects aiming at expanding the natural gas grid nationwide, official source in the petroleum sector told Al-Ahram newspaper on Sunday.
Mohamed Radwan, head of The Egyptian Company for Natural Gas Distribution (Town Gas), said that the price hike does not apply to the bakeries producing bread or the electricity generator sector, according to Youm7.
He added that the new prices are meant to bring the price of natural gas closer to that of butane gas, which is the main type of gas used in households in Egypt.
“70 percent of natural gas users are in the first consumption segment,” he added.
Mahmoud al-Askalany, head of the Citizens Against Price Rises Association, urged Prime Minister Ibrahim Mahlab to reconsider the lift in gas prices that would have a bad economic impact on low income citizens.
“I praise Mahlab’s decision for lifting the gas prices on the consumption of over 25 meters per month but I call on him not to lift the natural gas prices on those who consume less than 25 cubic meters of natural gas per month,” Askalany told The Cairo Post.
“80 percent of energy subsidies reach the rich, so it doesn’t benefit those who are eligible,” said Askalany.
More than two thirds of Egypt’s total subsidy bills are for fuel products, according to a 2012 study published by the Egyptian Center for Economic Studies.
Energy subsidies account for approximately 128 billion EGP, which represents 20 percent of the state’s budget, according to the report.