Cairo –  Companies operating in the production of iron, cement, and fertilisers disclosed to the Egyptian Exchange (EGX) the impact of the government's decision to increase natural gas prices for factories by about 28% on their operations.

Most cement firms said that they will not be affected by the decision as they use coal in power generation instead of gas, while iron firms were mostly hit by the decision.

Egypt's Prime Minister Mostafa Madbouly increased the price of natural gas for iron and steel, cement, fertilisers, and petrochemicals factories to $5.75 per million British thermal units (mmBtu), up from $4.5.

No impact

Misr Fertilizers Production Company (Mopco) said that the decision will have no impact on its operations as the natural gas price is specified in an agreement with the gas supplier, while Misr Beni Suef Cement said that coal is used as its source of fuel.

In addition, Egypt Gas said that it operates as a contractor for natural gas projects and that the price and volume of traded gas will have no impact on its revenues.

Meanwhile, El Dawlia Fertilizers and Chemicals and Samad Misr said that they mainly operate in fertiliser distribution and do not use natural gas.

Misr Cement - Qena said that all cement factories use coal instead of gas as the main source of power.

Higher costs

On the other hand, Al Ezz for Ceramics and Porcelain (GEMMA) expects the price increase of natural gas price to raise the output costs by 0.5% per square metre of its products, while Misr National Steel (Ataqa) expects output costs to increase by EGP 26 per tonne.

In the meantime, South Valley Cement Co is still studying the decision to assess its impact on production and sales plans in the local market, expecting an increase of 30% to 50% in the costs of production.

For its part, Al Ezz Dekheila Steel - Alexandria and Ezz Steel said that production costs will increase, but their industrial design is resilient enough to deal with the hike effectively.

Abu Qir Fertilizers said that it is still studying the impact of the decision on its operations as it is connected with the pricing of fertilisers.

Source: Mubasher

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