(Adds comments, context)
CAIRO, July 6 (Reuters) - Egypt will hike electricity prices by up to 42 percent this fiscal year for households but keep energy subsidies in place three years longer than expected, Electricity Minister Mohamed Shaker said on Thursday.
The government has been looking to slash the subsidies it uses to keep consumers’ energy prices down and raise taxes in a bid to tighten up government finances. The measures are part of a three-year $12 billion International Monetary Fund loan agreement it hopes will lure back foreign investors who fled after a 2011 political uprising.
It said previously it would phase out electricity subsidies entirely by the end of the 2018-19 fiscal year beginning in July, but Shaker said tough economic conditions brought on by the floating of the pound currency in November means the subsidies will be phased out more gradually, by the end of 2021-22.
“Owing to conditions related to the big increase in the exchange rate, we have extended the period (for subsidies) by three more years,” Shaker told a news conference announcing the new electricity prices.
Inflation has soared in import-dependent Egypt following the currency float, reaching a three-decade high of over 30 percent. Price rises are expected to continue following hikes to the prices of electricity and fuel.
Shaker said Egypt spent 64 billion Egyptian pounds ($3.58 billion) on electricity subsidies during the 2016-17 fiscal year which ended in June, more than twice the 30 billion initially expected in the budget, largely a result of higher import costs for liquefied natural gas (LNG), which supply its power stations, following the float.
The price hikes, which will take effect beginning August 1, will cut subsidy spending to 52.7 billion pounds in the current fiscal year and then to 43.4 billion pounds in the 2018-19 fiscal year, Shaker said.
$1 = 17.8726 Egyptian pounds Reporting by Omar Fahmy; Writing by Eric Knecht; Editing by Toby Chopra