By Salah El-Menoufi
The Ministries of Electricity, Petroleum and Finance will convene in the coming days to discuss the effects of a recent rise in price of hydrocarbon being used in power stations.
The Ministry of Electricity’ annual hydrocarbon bill is estimated at EGP 7.2 billion and is expected to rise to EGP 26.9 billion, with the progressive rise in the prices of natural gas and diesel. Of all three ministries, the Ministry of Finance is tasked with paying the most to cover the cost of the rise in oil prices, as stipulated in an agreement signed between the three ministries in 2006.
The meeting between the ministries aims to elicit a guarantee from the Ministry of Finance to cover the difference between old and current oil prices.
According to the 2006 agreement, the Ministry of Electricity would be required to pay EGP 8.4 billion to the Ministry of Petroleum in the event of a rise in oil prices, with the rest being covered by the Ministry of Finance.
Sources pointed out that the Ministry of Electricity is EGP 17 billion in debt to the Ministry of Petroleum. In addition, the cost covered by Ministry of Finance amounts to EGP 32 billion.
These sources confirmed that the price of energy used to supply the Sidi Kerir, Ain Sokhna and East Port Said power stations, under the “Build, Operate, Transfer” schemes, has risen from 2.9 to 4.1 cents per kW. These stations use EGP 180 million worth of oil equivalent annually, a figure that is expected to rise to EGP 700 million after the recent price hikes.
The government had recently increased the price of gas used in power stations from 18 to 44 piastres per cubic metre and raised the price of mazut from EGP 1000 to EGP 2300 per tonne, as well as diesel from 55 piastres to EGP 1.5 per litre.
Natural gas makes up nearly 80 per cent of electrical energy stations’ consumption, with the remaining 20 per cent split between mazut and diesel.