Page 95 - Benaa.Vol01

Report

Controversy the Mineral Industries' Chamber, in action means that the govern- pricing system and on the date to
Putting the new pricing system
Mohamed Hanafy, Manager of
implement it.
is one of those claiming that the
According to Sameer, the new
ment will shoulder LE2.1 billion
benaa Over Gas Prices is government was not planning to annually but will also be saving pricing system will save some $55
$7.1 billion used in exporting
reduce gas prices. According to
per ton which will positively affect
the local market and help steel en-
him, producers have been waiting
scraps and the enterprises will be
terprises strike an edge over the
working in full capacity produc-
imported steel. Egypt steel exports
ing cheaper iron, Hanafy said.
Heating Hanafy says, According to him, steel enter- reached its peak in 2007 when
EXPOT COUNCIL BUILDING, REFRACTORY & METALLURGY INDUSTRIES
marked a billion dollar exports but
prises had almost LE9 billion
Steel Exports
last year the sector's exports
went down from
loans from the local banks to de-
$1 billion to velop the currently operating reached $200 million only. Local
$200 million production lines as a mean to steel production lost its competi-
because of high reach self- sufficiency of iron tive edge once gas prices were
gas prices and steel production. Since raised to $7/MU when internation-
2008, those enterprises have al producers pay $3/MU.
been training new staff and some Gamal Garhy, Head of the
for a ministerial decree of them have had their produc- Mineral Industries Chamber, said
on this issue for more tion in the market but suddenly the implementation of reducing
than three months the government raised the gas gas prices will help most enter-
now. Some producers prices and in some prises work in
have started a new pro- cases there were full capacity.
duction cycle to en- shortage of power Reduced Gas For more than
hance their output in supplies which forced Pricing System ten months
accordance with the many to put their pro- Should be in Place steel compa-
expected new pricing duction on halt or Soon, Noaman nies shoul-
system which has nev- even close down. says dered huge ex-
er materialized. Hana- Moreover, Sameer pense because
fy said when the gov- Noaman, Head of the Iron of the government decision to
ernment raised gas and Steel Committee at the raise gas prices. That decision
prices to $7/ MU, most Export Council of Building Ma- came at a time when those en-
enterprises were forced terials, said the government had terprises were working on ex-
For more than three months, steel and iron producers waited for the issuance of a to reduce the number of produc- not been treating the producers panding and developing their op-
tion lines and laid off a good on equal footing. The iron and eration system, Garhy said.
ministerial decree on a new gas pricing system. As stated by the Prime Minister,
number of their employees who steel producers are currently According to him, producers had
Shereif Ismaeil, the government will reduce the gas prices to steel producers soon.
are not on permanent contracts. paying $7/MU when other pro- to pay high interest rates for the
But so far there is not a clear decision whether the new system will be issued or not What is more frustrating is that ducers pay $4.5 /MU. Although bank loans and huge amount of
which raised controversy over the currently adopted pricing system for steel when gas supplies are available Sameer believes that a decision salaries at a time when produc-
producers. As some believe, the prime minister's statement has not been turned and reasonably priced, factories has been taken to reduce gas tion costs shot up because of an
can easily use cheap raw materi- prices for steel production and unconstitutional decision, he
into a real action to reduce the costs of gas despite the fact that the ministers of
als to produce iron and steel will be in place by September, added. However, Garhy still be-
petroleum and industry, reiterated the same call. Meantime, other producers which in such case costs $70 per he believes that the statement lieves that the new pricing sys-
stressed the fact that the government was not planning to reduce the gas prices ton. But, the very same scrapes made by the prime minister tem will be in place soon and
and the statement was part of local media consumption. which became in high demand came at a time when the cabinet producers should keep on nego-
currently cost $250 per ton. was still working on the new tiating with the government.
92

93