Energy Subsidy. Reform in Egypt

Transcription

1 Energy Subsidy Reform in Egypt Egyptian Electric Regulatory Agency September 14 Prepared by: Sherif Zoheir Senior Tariff Specialist

2 S u b s id y C o s t Financial Year 12/13 The Egyptian government has spent on the subsidy the same value that has been spent on education, health and infrastructure combined % 5% 52% % 7%

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4 Electricity Tariff Reform Program

5 C h a n g e s I n T h e E le c t r ic it y T a r if f D u r in g P r e v io u s Y e a r s During the period from 19 to 1993, Egypt has increased electricity In 0 an agreement was signed between the electricity and Petrol and finance prices in three stages in order to achieve at the end of the third stage the ministers (known as the Tripartite Agreement) to increase fuel prices supplied to price per ton of petroleum products to global prices at this time and the electricity by 9% annually and electricity prices by 7.5% (2.5% to cope the price of natural gas and electricity to the marginal cost «economic» increase in fuel prices and 5% for electricity) to be applied during the period from 0 to 13 and the Ministry of Finance will cover the different, this agreement stop after 2 years During the period from 1993 to 05 Egypt passed through stability in current prices, which led to a decline in the real price of electricity by During the years from 0 until 10, several decisions issued concern the 4,9% on average per year and to less than half during the period, as pricing of the gas used to generate electricity in industry, the industry was divided there was an increase in the price of natural gas and heavy fuel oil in into three groups (intensive industries, industries porcelain, ceramics, and other 199 did not offset increase in electricity prices in spite of the increase industries) the electricity holding company will supply the difference between fuel in the cost of all the elements of production prices tripartite agreement and This prices of the industry to the petroleum sector During 05.0 there have been some increases in electricity prices by,7% 5% without an increase in fuel prices for electricity During December 12 the Prime Minister issued decisions concern Standardization gas prices and heavy fuel used to generate electricity for all purposes at 44 Piaster/m3 for gas and 2300 pounds / tons for heavy fuel

6 E le c t r ic it y T a r if f R e s t r ic t in g P r o g r a m Financial and Economic Indicators For Electricity Utility Assessing the Current Electricity Tariff The classification of customers not set due to clear and specific The Following financial and economical indicators has been calculated for criteria Generation and transmission and Distribution activities also for the Holding The multiplicity of subscribers groups ( group in addition to Company : residential and commercial segments. Cross subsidy between customers Limited application of time of use tariff and capacity charge There is a no clear separation between subscribers who are fed capital structure ratios Liquidity ratios Profitability ratios from the medium and low voltage The tariff does not determine on economic basis All those indicators gives us the following facts: Limited application of customer service charge Many blocks in the residential and commercial tariff. High ratio of loans to total investment, especially in the production companies.. Low liquidity ratio Significant decline in the percentage of net profit activity, which reflects the loss

7 E le c t r ic it y T a r if f R e s t r ic t in g P r o g r a m The objectives of Electricity Tariff Type of Subsidy Restructuring Program Direct Subsidy provided by electricity companies as a result for not cover the cost of selling prices the cost of Promote the principles of justice and equality among the participants production, that reach 11 billion EGP Reaching the actual cost of service Reaching to the financial balance of electricity companies which ensures continuity in the performance of its functions The Cross subsidy between companies To take into account the effect of the tariff consumption pattern of groups of subscribers on the system Indirect The subsidy provided by the Government to the Electricity Sector through subsidized fuel prices billion EGP 11/12) ( 17 Protect the Low Income Consumers To be build on economic basis Transparency in calculation and implementation on customers

8 E le c t r ic it y T a r if f R e s t r ic t in g P r o g r a m Criteria of electricity tariff restructuring program The development of tariff structure to take into account the effect of distribution of electricity and customer service within 5 time of use - customer service) years Has to be for 5 years to ensure the commitment and be fully declaring Taking into account the low income customers so that no customers High consumption customers bear the cost of renewable energy Promote the principles of justice and equality among the participants Merging the low voltage customers to residential, commercial and Gradual lifting of the subsidy provided to the private sector fuel prices Merging the residential customers to 4 blocks ( Poor, low income, medium, high consumptions) Increase the financial efficiency of the electricity companies Consumers do not benefit from the electricity tariff for the poor others covering the actual cost of production, transmission and the consumption pattern on cost (Capacity charge - energy charge afford more than 4% of his expenditure due to the CAPMAS statistics Transparency in Calculation and apply them to all subscribers Promote the efficient use of electricity by sending indicator of the true cost of electricity Protect low-income customers

9 Electricity Tariff Based On Fuel Prices Gas 3$/MBTU HFO 2300 L.E/ Ton 4.4% the usage of gas

10 Residential Tariff Blocks 14/ /1 1/17 17/1 1/19 kwh Less Than 100 kwh More Than 100kWh More Than

11 Commercial Tariff Blocks 14/ /1 1/17 17/1 1/19 kwh Less Than 100 kwh More Than 100kWh More Than

12 Customer Service Customers Group 14/ /1 1/17 17/1 1/ To More Than 1000 Zero Reading 3 To More Than 1000 Zero Reading Agri Other E.H.V&H.V&M.V Residential Commercial Other Customers

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