Egypt Raises Gas Prices by Up to 75 Percent to Promote Economic Reform

Xinhua
2018/7/22 7:17:36

Egypt on Saturday increased the prices of natural gas by up to 75 percent, official news agency MENA reported.

The move aims to meet an International Monetary Fund (IMF) loan deal and push the implementation of economic reform plans, the report said.

Egyptian Prime Minister Mostafa Madbouli issued the decision to raise the prices based on tiered gas pricing system, the report said.

The price for one cubic meter of gas increased from 1 Egyptian pound (about 0.06 U.S. dollars) to 1.75 pounds for those consuming 0 to 30 cubic meters, the report said.

People who consume 30 to 60 cubic meters will pay from 1.75 pounds to 2.50 pounds per cubic meter.

Consumption of over 60 cubic meters will cost from 2.25 pounds to 3 pounds per cubic meters.

The government's decision, published in the official gazette, should come into effect starting August.

"The decision was expected, especially with the recently hike of the fuel prices," Waleed Gab-Allah, professor of financial and economic jurisdictions at Cairo University told Xinhua.

"The rising prices of gas was planned to cover the cost of production, and to continue the policy of shrinking energy subsidy," he said.

He reiterated that the government's recent austerity measures seek to enable the country's economy to be controlled by real prices and market demand, instead of being run by the government.

He urged the government to develop social protection networks that match the speed of liberating the economy.

The move is the latest among tough austerity measures aimed at rebuilding the country's economy battered by years of unrest since the 2011 uprising.

In June, Egypt increased fuel and electricity prices by up to 66.6 percent and 26 percent respectively, also moves described by the IMF to continue the implementation of the country's economic reform program.

Over years of instability due to turmoil, Egypt has suffered economic recession. It started a strict three-year economic reform program based on austerity measures including fuel and energy subsidy cuts and tax hikes.

The IMF supported Egypt's economic reform plan with a 12-billion-dollar loan, two thirds of which has already been delivered.