A worker holds steel rods at a factory belonging to Ezz Steel, Egypt's largest steel producer, at an industrial complex in Sadat City, 94 km (58 miles) north of Cairo, April 17, 2013. REUTERS/Amr Abdallah Dalsh
CAIRO (Reuters) - Egypt will reduce the price it offers natural gas to steel and iron factories to $4.5 per one million thermal units from $7, Minister of Industry Tarek Kabil told a news conference on Wednesday.
The reduction brings gas prices for the industries back to their 2014 levels, before prices were hiked as part of a broader government plan to cut subsidies, including those to heavy industry. At the time the government increased gas prices by 30-75 percent.
Egypt in December relaxed a commitment made by the previous government to abolish subsidies on gasoline, diesel and natural gas, and said lower global oil prices and the discovery of a massive offshore gas field meant it could move slower on the pledge.
Kabil said on Wednesday that high gas prices have led to factories operating at only 20 percent of their production capacity, and that the new reduced price will only be offered to those that operate at full capacity.
Natural gas shortages have forced state-owned EGAS to ration gas supplies to industry during months of peak consumption, crippling production and hampering Egypt's economic recovery.
In November Kabil said that production at steel firms had been halted for four months due to gas shortages. President Abdel Fattah al-Sisi pledged at the time that factories would no longer face shortages.
Egypt's falling oil and gas production coupled with rising consumption have forced the country, which was once an energy exporter, to divert supplies to the domestic market. It is now a net energy importer.
(Writing by Eric Knecht, editing by David Evans and Elaine Hardcastle)