U.S. News

Egypt to resume energy subsidies phase out -paper


CAIRO, March 21 (Reuters) - Egypt in July will resume its gradual elimination of energy subsidies to industries that are not energy intensive, the daily al-Borsa quoted Egypt's trade and industry minister as saying. The government suspended a plan to reduce the subsidies after the 2008 global economic crisis. "With the start of the new fiscal year, the government will resume the policy it laid down three years ago to eliminate energy subsidies to factories," the paper quoted the minister, Rachid Mohamed Rachid, as saying. Egypt's fiscal year starts July 1. Energy-intensive industries already receive energy at international prices, al-Borsa cited him as saying. "The second half of the current year will witness the first stage of price rises, then annual increases will be implemented to reach world prices," Rachid said. Cement firms obtaining licenses in the coming period will be responsible for providing their own energy, should the Petroleum Ministry decide not to supply them with their needs. They may resort to importing oil and gas if needed, Rachid said. Energy subsidies cost the government 60 billion Egyptian pounds ($10.95 billion) in fiscal year 2007/08, up from 57 billion pounds in fiscal 2006/07. Of this, the government spent 20 billion pounds on gas subsidies to energy-intensive companies. Egypt's budget deficit rose to 65 billion pounds in the seven months to Jan. 31, up from 39 billion pounds in the same period a year earlier, a Finance Ministry report said earlier this month. ($1=5.481 Egyptian Pound) ($1=5.481 Pound) (Writing by Shaimaa Fayed; Editing by Hans Peters) Keywords: ENERGY EGYPT/ (shaimaa.fayed@reuters.com; +20 2 2578 3290; Reuters Messaging: shaimaa.fayed.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved.

The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.