Egypt: Ten cement plants, accounting for 70% of Egypt's capacity, have been forced to temporarily halt production after state-run Egyptian Natural Gas Holding Company (EGAS) stopped providing them with natural gas.
"These plants have not yet officially announced that they are shutting down. They initially gave employees 15 days off and have extended the leave by another week, because the agreed-upon daily supply of natural gas was stopped," said an official from the Federation of Egyptian Industries (FEI). He said that the plant owners are holding discussions with the prime minister to review gas prices to ensure that the cement sector can continue to operate. The shutdowns are costing each plant around US$2.14m/day on average.
EGAS supplies nearly 800Mft3/day of gas to the industrial sector at subsidised prices, of which 150Mft3/day is allocated for the cement sector. However, frequent power outages have forced the government to redirect gas supplies from some cement plants to meet the needs of power plants.
The Ministry of Petroleum had initially reduced gas supplies to cement plants by 35% in the first two months of 2014. "The government, represented by the petroleum sector, bears a cost of US$1.4bn from selling natural gas at subsidised prices to cement plants, whereas those plants export their production or offer it in the local market at international prices," said Petroleum minister Sherif Ismail.
Ismail said that the government is considering a new price mechanism for the industrial sector, however, any changes would be implemented gradually because of the difficult economic situation in Egypt 'which cannot withstand a sudden spike in prices.'