The Ministry of Electricity and Renewable Energy plans to achieve an annual saving in household consumption of electricity estimated at EGP 4.1bn in the next fiscal year (FY) 2018/2019.
These estimates are based on the ministry’s expectations of energy consumption, taking into consideration the new pricing plan set to be applied in July within the tariff restructuring programme.
Sources at the ministry pointed out that electricity prices will increase by 10% which is expected to decrease household demand by 1.5%.
The household electricity consumption accounts for 47% of total consumption in Egypt. The ministry also expects a decline of 1% in the average annual increase in demand for electricity.
The sources added that it is difficult to calculate the possible decline in non-household sectors.
On the other hand, the increase in electricity prices for commercial sectors will be the burden of the receiving customers, so it depends on the flexibility of the price of goods and services provided by each sector.
According to a ministerial report, obtained by Daily News Egypt, the government expects an increase of 4-5% in the demand for electricity in the next FY 2018/2019, equivalent to 218,700 GWh.
The report noted that the electricity production costs 73 piastres per kWh, with annual savings of EGP 4.1bn.
The report further expected that the FY 2019/2020 will witness an increase of 4-6% in the demand for electricity, equivalent to 238.7 GWh, with expected savings of 7,977 GWh.
The report added that the average cost of electricity production will reach 81 piastres per kWh, with annual savings of EGP 6.5bn.
The sources said that the ministry set nine criteria to calculate the increase in electricity tariff rates.
The sources explained that the calculation of annual increase in consumption is determined by the decline rate of electricity subsidy, exchange rate, gas price, operating quality and waste reduction.
The report also included the annual increase of electricity load and demand, the marginal rate of household consumption, the state subsidy for the neediest people, and the transformation into the competitive market.