Egypt hikes natural gas prices for homes by 34% in IMF-backed scheme

Egypt said on Friday it was raising the price of natural gas for home and commercial use by 20-34 percent, the latest round of fuel subsidy cuts under an IMF-backed austerity programme.

The increases followed hikes to fuel, electricity and public transport prices, a key plank of a three-year, $12 billion reform package signed with the International Monetary Fund in 2016. The deal aims to lure back investors and lift the economy battered by political turmoil that followed its 2011 uprising.

According to a government statement published in the official Gazette, effective July 5, the price for consuming up to 30 cubic metres of gas had been increased by 34.3 percent to 2.35 Egyptian pounds ($0.14) per cubic metre, up from 1.75 pounds.

The price for consuming between 30 and 60 cubic metres was hiked by 24 percent to 3.10 pounds per cubic metre, up from 2.50 pounds, while consumption of more than 60 cubic metres was surged by 20 percent to 3.60 pounds from 3.00 pounds.

There are currently around 3.9 million gas-run housing units across Egypt under the World Bank-backed gas delivery programme for homes, a Petroleum Ministry report showed last week.

The increases started at 9 a.m. (0700 GMT) on Friday, the price of widely used 92 octane grade petrol rose by 18.5 percent to 8 pounds (48 U.S. cents) a litre, and diesel rose by 22.7 percent to 6.75 pounds.

The price of cooking gas cylinders rose by 30 percent to 65 pounds for domestic use and 130 pounds for commercial use.

Most fuel prices are now in line with their costs, said the government, which is still subsidising fuel for bakeries and power generation.

An Egyptian petrolum ministry official confirmed to Reuters the government would link domestic fuel prices to international market prices in September. It introduced a similar indexing mechanism for 95 octane gasoline in April.

Egypt’s economic reforms since 2016 have included a sharp depreciation of the local currency and the introduction of a value-added tax.

The measures have improved macroeconomic indicators, yet have increased the financial burden for tens of millions of Egyptians, many of whom live in poverty.

The economy has been boosted by investment in the oil and gas sector and a recovery in tourism revenues, but non-oil foreign direct investment has been falling as economists say a lack of structural reforms is hampering broader-based growth.