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Egypt sets pace for Nigeria with electricity tariff hike

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Egypt’s Minister of Electricity Mohamed Shaker announced in a press conference on Tuesday new electricity prices for businesses and consumers, that will see costs rise 25 percent for households and 42 percent for industrial use.

Slashing subsidies comes as part of Egypt’s economic reform program, which started in 2014 and include cutting subsidies and imposing new taxes.

It is also part of a three-year $12 billion International Monetary Fund (IMF) loan agreement, which Egypt clinched in 2016.

Electricity prices went up last year, with price increases ranging between 15-36 percent depending on the consumption bracket.

Phasing out subsidies will continue to take place every year until they are completely eliminated by the end of fiscal year 2021/22. The new prices will take effect in July.

“Both Egypt and Nigeria have fuel subsidies. Both countries also need to increase their investment to GDP ratio, which is 15% of GDP or less in Egypt and Nigeria,” Charles Robertson, chief economist at Moscow-based investment bank, Renaissance Capital, said in an emailed response to Business Day.”It needs to be 25% of GDP.  Egypt is cutting its fuel subsidy so that it can spend more on investment.  This will help Egypt in the long-term. Nigeria will struggle to increase government investment when so much money is spent on the fuel subsidy,” Robertson added.

The post Egypt sets pace for Nigeria with electricity tariff hike appeared first on BusinessDay : News you can trust.

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