Egypt lowers gas prices to steel manufacturers by 36pct

Egypt lowered gas prices to steel manufacturers by almost 36 percent to $4.5 per million thermal units (mtu) with the hope of cutting the country's import bill, the industry and foreign trade ministry said in a statement on Thursday.

The government had raised gas prices on steel factories to $7 per million thermal units (mtu) from $4 mtu in July 2014 as part of a fiscal reform programme aimed at clenching on a growing budget deficit.

"The government gets to ensure availability of locally produced steel to cater for the upcoming projects, effectively reducing the USD drain by eliminating imports of finished steel and ensuring imports of raw materials are more in the form of the relatively cheaper ore rather than scrap or billets," read a research note by Cairo-based investment bank Beltone Financial.

The decision is estimated to save the country $1.1 billion in foreign currency currently spent on importing billet (steel raw material) and raise production capacity to increase exports by $600 million, said the ministry in the statement.