May 21, 2019 / 11:12 AM / 7 months ago

UPDATE 1-Egypt to raise power prices by 14.9% for FY 2019-2020 -minister

(Adds details, background)

CAIRO, May 21 (Reuters) - Egypt will raise electricity prices by an average of 14.9% in the 2019-2020 fiscal year beginning in July, Electricity Minister Mohamed Shaker said on Tuesday.

Egypt has committed to deep cuts to energy subsidies as part of economic reforms linked to a three-year, $12 billion IMF loan programme that is now in its final phase.

The reforms include a commitment to removing subsidies on most fuel products by next month.

They have helped stabilise government finances while causing economic pain for Egyptians who have seen price increases for basic goods and services since the exchange rate was liberalised in late 2016.

The government raised electricity prices by an average of 26% in July 2018, by 40% in July 2017 and by 30% in July 2016.

The latest price rises will come in the middle of the hot summer when electricity consumption rises due to air conditioning use.

The average increase in prices for high-voltage electricity generally used in iron and steel plants will be around 10 percent, while the price for lower voltage power used in homes and commercial enterprises will rise by around 19 percent, Shaker said.

Electricity subsidies will be fully phased out by June 2022, he said.

Electricity generation is expected to shift fully to unsubsidised natural gas from fuel oil in the 2019-2020 financial year, according to the IMF’s latest staff report on Egypt.

The report, published in April, said Egypt was aiming to eliminate electricity subsidies fully by 2020-2021. (Reporting by Ehab Farouk; writing by Aidan Lewis; editing by Jason Neely)

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