The Egyptian government did not execute the decision to sell natural gas to iron factories at the price of $4.5 per million British thermal units (Btu) until now, according to the head of the Metallurgical Industries Chamber, Gamal Al-Garhy.
“Nowadays, the company is challenged due to the shortage of natural gas. It will stop supplying high-production factories in the summer months, which coincides with high electricity consumption,” Al-Garhy explained.
The Egyptian government announced on Monday that it is reconsidering its decision to sell natural gas to the iron factories at $4.5 per million Btu instead of $7. This is in order to reduce the price of steel for consumers.
Minister of Industry Tareq Qabil decided in March to cut natural gas prices for the iron factories which helped to minimise the iron companies’ losses last year due to high prices.”The prime minister and the minister of industry are studying companies’ potential positions to ensure they can work with the price of $7 per million Btu, so why has the decision not been executed until now?” Al-Garhy asked.
A source at the Egyptian Natural Gas Holding company (EGAS) confirmed to Daily News Egypt that natural gas is sold to iron companies at the price of $7 per million Btu.
”The company did not receive any official notification from the Ministry of Industry to reduce the sale price of natural gas to the iron factories from $7 to $4.5 per million Btu,” the source said.
“Several factories, including Ezz Steel, have not obtained natural gas for seven months as they refuse to buy it at the price of $7 per million Btu,” the source added.
Iron companies have incurred losses of EGP 3bn over the past two years due to the high price of natural gas, the deputy head of the Metallurgical Industries Chamber Mohamed Hanafy said previously.
Ezz Steel company, which comprises 55% of the entire Egyptian steel industry, posted losses of EGP 137m at the end of 2015.