Government revenues to be generated from an increase in natural gas prices will be used to finance the delivery of natural gas to homes, a Tuesday statement from the cabinet said.
Starting from May, the prices of natural gas will be increased as per a Sunday governmental decree which stated that users of less than 25 cubic metres will pay EGP 0.40 per cubic metre, users who consume between 25 and 50 cubic metres will pay EGP 1 and above 50 cubic metres users will be requested to pay EGP 1.5.
The decree exempts local bread bakeries from the increase.
Before the decree, the price of a cubic metre of natural gas to homes was valued at EGP 0.20, according to figures from Ministry of Petroleum.
During Tuesday’s meeting of the economic ministerial group, which includes ministers of Finance, Social Solidarity, Petroleum, Transportation, Industry, Foreign Trade and Investment, Agriculture, Supply and Planning, the attendees agreed that the new decision took into account needs of low-income citizens.
In December, natural gas delivery to homes reached its highest level in 30 years at 80,000 residential units. The government planned to deliver natural gas to 800,000 homes within 2013/2014 fiscal year.
Taher Abdel Reheem, chairman of Egyptian Natural Gas Holding Company (EGAS), in December attributed this hike to the increased accessibility to funds needed for implementing the ministry’s plan.
With regard to the cost of the project, a total amount of EGP 1.5bn will be borne by the government, while an additional EGP 1,500 to be charged to each customer to access this service, whether through cash or monthly installments.
According to the ministry, replacing cooking gas cylinders in homes with natural gas will reduce the subsidies allocated by the government to butane gas cylinders. Reducing butane gas subsidies saved the country EGP 8bn, according to Minister of Petroleum Sherif Ismail.
To continue delivering natural gas to households, the Ministry of Finance allocated in December EGP 225m to the petroleum ministry.
The total number of residential units connected to natural gas systems reached 5.8 million nationwide at the end of 2013.