The Ministry of Electricity and Renewable Energy will repay EGP 800m to the Ministry of Petroleum to pay off part of its fuel entitlements that the ministry uses for production plants.
Sources at the Ministry of Electricity told Daily News Egypt that the ministry had been committed to paying EGP 500m per month for the fuel needed for plants. After the amount owed to the Ministry of Petroleum increased to roughly EGP 80bn, it was agreed that payments would increase to roughly EGP 800m.
The sources added that the Ministry of Electricity is seeking to increase payments repaid to the Ministry of Petroleum to EGP 1bn per month, especially after connecting gas lines for power plants implemented by Siemens and the increase in bill payments.
The Ministry of Petroleum wishes to collect part of the arrears in order to commit to supplying plants’ needs, especially after the flotation of the Egyptian pound and the implementation of the value-added tax (VAT).
The total value of withdrawals of the Ministry of Electricity from fuel is estimated at more than EGP 3bn per month, and the Ministry of Finance repays 50% of the value of consumption bills on behalf of the Ministry of Electricity.
The sources indicated that the total value of the Ministry of Electricity’s debt amounts to EGP 80bn, and the Ministry of Finance bears almost EGP 30bn of the total debt.
Sources said that the Ministry of Electricity suffers from low collection rates of electricity consumption dues, as well as high debts from governmental agencies, institutions, and sovereign authorities.
The government decided in August to resolve the dispute between the ministries of petroleum and electricity in regards to the debts owed by the ministry of electricity, and bear the cost of gas used to generate electricity, and to price the difference to be collected from the Ministry of Finance directly.
The government raised prices of imported fuel for power plants to EGP 2,500 per tonne, while natural gas reached $3 per million BTUs.