Egypt is set to increase household electricity prices by up to 50%, according to two government sources, marking a significant step in the country’s effort to phase out energy subsidies as part of its agreement with the International Monetary Fund (IMF).
The new rates, which were initially scheduled for earlier this summer but delayed due to power shortages, are now being implemented.
As of Saturday, the new electricity prices have been applied to households with prepaid meters. For those with regular meters, the increase will come into effect on October 1. The adjustments in electricity tariffs range from 14.45% to 50%, reflecting a substantial rise in costs for Egyptian consumers.
The decision to raise prices comes in response to the country’s ongoing energy crisis, exacerbated by a high demand for cooling during the hot summer months. Egypt has been struggling with power shortages, leading to frequent load-shedding to manage the electricity grid. In a bid to mitigate these issues, Egypt has had to import around $1.18 billion worth of natural gas and mazut fuel oil.
The petroleum ministry disclosed that Egypt had received five out of the 21 contracted cargoes of liquefied natural gas (LNG), totaling 155,000 cubic meters. Prime Minister Mostafa Madbouly announced last month that the power cuts affecting the country would come to an end for the remainder of the summer, thanks to these imports and improvements in energy supply.
The move to increase electricity prices aligns with Egypt’s commitment to reducing energy subsidies, a key condition for expanding its loan programme with the IMF. The IMF’s $8 billion loan agreement, finalized in March, is part of Egypt’s broader strategy to stabilize its economy and address its fiscal challenges.
Despite the agreement, the country has faced repeated delays in implementing electricity price hikes due to economic pressures and the need to manage public discontent.
In recent years, Egypt’s government has grappled with balancing economic reforms and public welfare. The substantial increase in electricity prices is expected to impact households significantly, as the country continues to navigate its economic restructuring efforts amid persistent energy supply challenges.
The phased reduction of energy subsidies is part of Egypt’s broader economic reform agenda aimed at addressing fiscal imbalances and securing international financial support. However, these measures come with the risk of exacerbating the financial strain on ordinary citizens, who are already dealing with rising costs of living.
As Egypt continues to implement its economic reform program, the government faces the challenge of ensuring that these changes do not unduly burden its citizens while striving to achieve the financial stability necessary for long-term growth and development.