Egypt is expected to use around 75% of the additional revenue from its latest electricity tariff increase, which raised tariffs by an average of about 12% for most residential consumers while leaving the lowest consumption bracket unchanged, to reduce mounting debts owed by the Ministry of Electricity to the Ministry of Petroleum. The move underscores the growing financial strain on the country’s power sector despite successive price increases.
According to government officials cited by Al Arabiya Business, monthly payments to the Petroleum Ministry for natural gas and fuel oil supplied to power stations are expected to increase to EGP11-12 billion from an average of EGP8-9 billion through July. The figures have not been officially confirmed by either ministry.
The move forms part of broader government efforts to strengthen the financial sustainability of the electricity sector, where regulated retail tariffs continue to fall short of production costs, creating a widening funding gap between electricity sales and the cost of fuel used to generate power.
The Ministry of Petroleum supplies natural gas and fuel oil to state-owned power plants, while the Ministry of Electricity sells electricity at government-regulated prices. Because consumer tariffs remain below full cost recovery for most users, the Electricity Ministry has accumulated substantial liabilities to the Petroleum Ministry, creating one of the largest sources of intergovernmental debt within Egypt’s energy sector.
Government officials cited by local media estimate that the Ministry of Electricity’s outstanding obligations reached approximately EGP495 billion by the end of July, up from EGP480 billion a month earlier.
According to the reports, monthly fuel costs for electricity generation have risen to around EGP31 billion, while the latest tariff adjustment is expected to generate roughly EGP40 billion in additional annual revenue, covering only part of the sector’s financing needs.
Separate officials cited by Asharq Bloomberg said the cost of producing one kilowatt-hour of electricity has exceeded EGP3.25, compared with about EGP2.23 following the previous nationwide tariff increase in mid-2024. They attributed the increase to higher imported fuel costs, the depreciation of the Egyptian pound, rising prices for imported spare parts and equipment, and an estimated 10% increase in fuel consumption to meet growing electricity demand. These figures have not been independently confirmed by the government.
Tariff changes remain targeted
The latest tariff adjustment, effective from August, maintained the lowest household consumption bracket (0-50 kWh per month) without any increase, preserving support for the lowest-income consumers.
Consumers using 51-100 kWh, 101-200 kWh, 201-350 kWh, 351-650 kWh, 651-1,000 kWh, and those consuming more than 1,000 kWh per month all face higher tariffs, with most residential categories increasing by an average of about 12%, according to the Ministry of Electricity. Commercial and industrial tariffs were also revised.
The tiered pricing structure reflects the government’s policy of protecting low-income households while gradually moving higher-consumption users closer to the actual cost of electricity generation.
The latest increase is part of Egypt’s broader energy subsidy reform programme, which aims to improve the financial position of state-owned utilities while ensuring reliable fuel supplies during periods of peak summer demand. Authorities have acknowledged that electricity tariffs still remain below the full cost of production for most residential consumers, leaving the state to absorb a substantial annual subsidy burden.
Even after the latest tariff adjustment, however, the additional revenue is expected to offset only a fraction of the sector’s rapidly rising fuel bill, highlighting the challenge facing the government as it seeks to restore the financial sustainability of Egypt’s electricity market without imposing sharper increases on households.
Related news:
Egypt Bets on Battery Storage and Manufacturing to Power Next Energy Phase
Egypt Extends Business Hours Amid Broader Energy Reforms and Cost Pressures
Read also:
Health 2035: Can Egypt Become the Middle East’s Next Healthcare and Food Production Hub?
