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Economic Brief - Reforming Energy Subsidies in Egypt

02-Apr-2012

Energy subsidies in Egypt have existed for a long time and have been formally justified as a means of ensuring affordable energy services to lower income households. However, the sustainability of these subsidies has been questioned in the recent years due to the limitations on the domestic production of oil and gas, the sharp jump in the cost of energy supply, and the government’s expanding budget deficit. Due to these concerns, the Government launched an energy subsidy reform program in 2004. The program encompassed a sharp increase in the price of gasoline and diesel oil, and a gradual increase in the price of electricity at the rate of 5% per annum that took effect from 2005 to 20082. Also in 2008 the Government increased substantially the price of natural gas and electricity to energy intensive industries.

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