Yesterday, Friday, the Egyptian government raised the prices of electricity for household consumption by an average increase of 12%, for the second time this year, as last April the government approved an increase in the price of commercial consumption at rates ranging from 16% to 20%, in light of a worsening crisis relating to supplies of natural gas, the country’s main source of electricity, in the wake of the Iran-US war.
The new increase covered most household consumption tiers, while the government kept the price of the first tier unchanged, as the tier that benefits most from subsidy and the one allocated to low consumers, in the words of the official statement, while the increase rates in the remaining tiers ranged between about 11% and 12%, as part of the government’s continued implementation of the plan to restructure electricity prices, which aims to gradually reduce the subsidy gap and link selling prices to the cost of production.
Data on the evolution of the tariff reveal that the increases were not equal for all subscribers, as the government gradually moved to reduce the subsidy as consumption rises. While the price of the first tier (0-50 kWh) rose from 48 piastres in 2021 to 68 piastres currently, that is, by about 42%, the cost of electricity almost doubled for high consumers, as the price per kWh for the tier whose consumption exceeds 1,000 kilowatts rose from EGP 1.45 to about EGP 2.89 after the latest increase, an increase of nearly 99%.
The government began implementing the policy of restructuring electricity subsidies in 2014, but it accelerated in recent years in parallel with the economic reform programme and the commitments linked to International Monetary Fund loans. The government says the aim is to reduce the gap between the cost of producing electricity and the price at which it is sold to consumers, while experts believe that the succession of increases adds direct burdens on households, in addition to its reflection on the prices of goods and services as a result of rising production and operating costs.
Why now?
The Ministry of Electricity and Renewable Energy explained, in a statement, that the new increase aims to strike a balance between easing the burdens on citizens and ensuring the sustainability of the system for producing, transmitting and distributing electricity, stressing that the state still bears about EGP 100 billion annually, representing the difference between the actual cost of producing electricity and the price at which it is sold to consumers.
It added that the subsidy directed to electricity decreases gradually as the volume of consumption rises, until it disappears entirely for subscribers whose consumption reaches 2,000 kWh per month, who pay the full actual cost without any government subsidy.
The new increase came just one day after the announcement by the Executive Board of the International Monetary Fund of the completion of the seventh review of the Egyptian economic reform programme, which allowed the disbursement of about $1.8 billion to Egypt, including $1.5 billion under the Extended Fund Facility programme and about $272 million under the Resilience and Sustainability Facility programme.
Although the IMF did not officially link the disbursement of the new tranche to the decision to raise electricity prices, the Fund’s documents indicate that reforming the energy subsidy system and adjusting fuel and electricity prices were among the measures the Egyptian government took to deal with the financial pressures resulting from the war in the Middle East and the rising cost of energy imports, considering that these measures contributed to maintaining macroeconomic stability.
In its statement on the seventh review, the IMF called on the government to continue fiscal and structural reforms, foremost among them strengthening public debt management, reducing financing needs and accelerating the programme of divestment from state-owned assets, along with reducing the state’s role in economic activity and improving the business environment to attract private sector investment. It also stressed the continuation of monetary and fiscal policies aimed at containing inflation, while protecting the most vulnerable groups from the effects of economic reforms.
Parliamentary moves
A number of members of parliament, among them Freddy El-Bayadi, Mohamed Fouad, Irene Saeed, Diaa El-Din Dawoud and others, submitted urgent oversight instruments to the government and the Ministry of Electricity to clarify the reasons for the decision, demanding that the social dimension of such decisions be taken into account, and accusing the government of relying on raising prices as a solution to various economic crises without regard for the impact of those difficult decisions on citizens in light of escalating economic crises.
Freddy El-Bayadi, a member of the House of Representatives and deputy head of the Egyptian Social Democratic Party, says that the latest increase represents the fifth link in a chain of increases in household electricity prices since July 2021, and the fourth since the start of 2024, pointing out that the government approved two increases within only four months in 2026, after adjusting the tariff of the highest-consumption tiers in April and then raising the prices of most tiers again.
He adds to “Zawia3” that presenting the decision as an increase of an average of 12% overlooks the cumulative rises the tariff has seen in recent years, which in some tiers have reached nearly double the prices compared with 2021, warning that the decision comes amid continuing inflationary pressures and rising fuel, transport and goods prices, threatening further erosion of households’ purchasing power and higher living costs.
“El-Bayadi” explains that he submitted a parliamentary question to the government in which he demanded disclosure of the bases on which it relied in calculating the new tariff, including the actual cost of producing, transmitting and distributing electricity, the rates of technical and commercial losses, the volume of uncollected arrears, and the measures it took to reduce operating costs before resorting to raising prices.
He also demanded that the government clarify the alternatives it studied, the number of people actually benefiting from keeping the first tier fixed, the studies it prepared on the social and inflationary impact of the decision, and whether the increase is linked to a temporary rise in the cost of fuel or represents a permanent adjustment of the tariff, calling for the implementation of the decision to be frozen until these data are presented to the House of Representatives and subjected to review.
For his part, MP and economic expert Mohamed Fouad believes that the new increase in electricity prices is due to two main factors; the first is a direct cause, represented by the large rise in the cost of producing electricity as a result of the increased cost of fuel, after Egypt’s natural gas production fell from about 6.9 billion cubic feet per day at the 2022 peak to less than 3.7 billion cubic feet per day currently, which pushed the state to rely more heavily on higher-cost imported gas, which was directly reflected in the cost of generating electricity.
In recent months, Egypt has been forced to increase its imports of liquefied gas to meet the growing demand for electricity, especially during the summer months, which raised the cost of energy production. With the widening gap between the cost of production and the selling price, the government continued the policy of restructuring the tariff with the aim of reducing the subsidy borne by the state budget.
As for the second factor, it is structural and linked to the state’s general fiscal conditions, as Fouad points out that the narrow fiscal space of the budget, with about 64% of total expenditures directed to paying interest and instalments on the public debt, has limited the government’s ability to continue bearing the subsidy for basic services, making price increases the fastest option financially, even if the least fair from the perspective of the distribution of economic burdens.
At the same time, Fouad stresses that any increase in the electricity tariff must be accompanied by a tangible improvement in the quality of service and the level of reliability. In this context, he submitted a parliamentary question to the Prime Minister in which he demanded that the government disclose the internationally approved technical performance indicators for measuring the efficiency of the electricity grid, such as the (SAIDI) indicators for average outage duration, (SAIFI) for average outage frequency, and (CAIDI), and publish their results over the past five years at the level of the various distribution companies.
The MP and economic expert calls for an assessment of the extent to which the huge investments the state has pumped into the electricity sector have been reflected in improving the actual service, and for the issuance of periodic reports enabling parliament and public opinion to follow performance objectively, stressing that transparency in publishing these indicators is the essential entry point for judging the efficiency of the system and the real return on the investments, away from media statements.
From the gas crisis to the electricity bill
The latest increase in electricity prices cannot be separated from the natural gas crisis Egypt has been facing for about two years. Although the country has a surplus in electricity production capacity after the construction of giant power stations, the main challenge has become securing the fuel needed to run those stations. The electricity sector in Egypt relies mainly on natural gas, which means that any decline in local production or rise in the cost of importing it is directly reflected in the cost of producing electricity.
The new increase coincided with the government’s continued reliance on importing liquefied natural gas to meet the needs of power stations, after the decline in production at some main fields, foremost among them the Zohr field, and the rise in local demand, especially during the summer months. This led to an increase in the fuel import bill, amid rising global prices and exchange rate fluctuations, which multiplied the pressures on the electricity sector’s budget.
In the first half of 2026, Egypt’s fuel import bill rose to $12.5 billion, of which $4.7 billion was natural gas imports. Gas imports represent about 37.6% of the total fuel bill during the same period, which reflects the financial pressure linked to securing the local market’s energy needs, especially with the continued high reliance on gas in generating electricity.
In detail, Egypt’s liquefied gas imports saw a clear rise during the first months of the year, with successive monthly increases recorded in the first half of the year. Imports reached 0.85 million tonnes in January, then 0.97 million tonnes in February and 1.10 million tonnes in March, before settling at 0.96 million tonnes in April, then rising to 1.04 million tonnes in May and reaching 1.33 million tonnes in June. These figures reflect the growing reliance of the local market on imports to cover the increasing demand for energy during this period.
Egypt’s electricity generation mix shows the clear dominance of natural gas, which accounted for 82% of total electricity generated, compared with limited shares for the other sources. Hydropower came in at 6.18%, wind power at 2.96% and solar power at 2.42%, while other fossil sources recorded 6.71% and biofuels 0.04%. This confirms that gas remains the main source in the electricity generation system, despite growing but still limited contributions from the other sources.
Gas… from self-sufficiency to crisis
Less than a decade ago, Egypt was being heralded as about to become a rising regional energy power, after the discovery of the giant “Zohr” field in 2015, which was described at the time as a “strategic transformation” in the country’s economic future. With the start of production in late 2017, Cairo moved to export the surpluses, and concluded a series of agreements to liquefy gas for neighbouring countries, including Israel, which saw in Egyptian infrastructure a valuable opportunity to overcome export obstacles.
But this picture began to change gradually with domestic complications and the shifting regional energy equation. By 2023, “Zohr” production had begun to decline, as a result of what technical reports described as a shortfall in pumping and lower rates of new discoveries, against a rise in local demand due to population growth and the growth of energy-intensive industries. Israel, on the other hand, was accelerating its steps to develop its offshore fields, especially “Leviathan” and “Tamar”, which together became the centre of gravity on the Israeli gas map.
With the 2018 agreement between the Israeli company “Delek” and the private Egyptian company “Dolphinus”, Egypt began importing gas from Israel with the aim of re-liquefying it and exporting it to Europe. At the time, the deal was promoted as part of a strategy to turn Egypt into a regional energy hub, but the reality was that some quantities were being used to cover the local deficit, at a time when official discourse focused only on exports and profitability.
Today, with the intensifying energy crisis inside Egypt and the emergence of indications of shrinking export revenues, the latest agreement has refocused attention on a striking paradox: Egypt, which was one of the first countries in the region to discover gas, finds itself forced to rely on Israeli gas to secure its basic needs. Israel, for its part, has turned from a buyer of Egyptian gas in the last decade into its main source now, at the heart of a complex economic relationship that goes beyond the economy to enter deep into the balances of power and politics in the Eastern Mediterranean.
The figures indicate that Israeli natural gas represents the backbone of Israel’s exports to Egypt; exports of petroleum gas alone reached $2.13 billion in 2023, equivalent to 95% of total Israeli exports to Egypt. This proportion is a reflection of Egypt’s growing reliance on Israeli gas, especially in light of the marked decline in local production. Egypt’s gas production fell by 15% between January and July 2024, which pushed Cairo to intensify its imports, which reached 4.84 billion cubic metres during the first half of the current year, compared with 4.24 billion cubic metres in the same period of the previous year.
The volume of Egypt’s gas production currently reaches about 5 billion cubic feet, and it imports about 1 billion cubic feet per day from Israel, while consumption ranges between 6.7 and 6.8 billion cubic feet per day. This reliance, according to observers, goes beyond the economic aspect to reach strategic and security aspects, as the gas deal signed in 2020, worth $15 billion, with companies such as “Delek Drilling” and “Chevron” was not merely an energy deal but part of a wider regional track to strengthen cooperation between Tel Aviv and several Arab capitals.
The country saw a marked decline in its local production of natural gas during the first seven months of 2024, as production fell to about 30.19 billion cubic metres compared with 35.5 billion cubic metres during the same period of 2023, a decline of nearly 15%. This decrease is mainly due to the depletion of major offshore fields such as the “Zohr” field, in addition to the slowdown in exploration for new fields and delays in planned development projects, such as the “Raven” field, which are expected to enter service after 2025.
More detailed data showed an annual decline in gas production of 17%, as it fell from 59.29 billion cubic metres in 2023 to 49.37 billion cubic metres in 2024. The decline in the Mediterranean basin alone, which accounts for 72.8% of Egyptian production, was about 18%, which directly affected Egypt’s ability to meet local demand. The local market needs 6.2 billion cubic feet per day, while production does not exceed 4.6 billion. This led to Egypt becoming a net importer of liquefied gas for the first time since 2018, as it imported 2.8 million tonnes during 2024, while its exports of liquefied gas fell by 84% to 0.54 million tonnes.
This decline contributed to worsening the crisis of recurring power cuts, given that 60% of the Egyptian electricity mix relies on natural gas. To make up for the shortfall, Egypt increased its reliance on Israeli imports, as the quantities imported from Israel reached about 1 billion cubic feet per day, with expectations of their rising to 1.07 billion cubic feet per day by January 2025. This trend is expected to continue until 2027, according to current plans to bridge the gap between supply and demand.
Does the government have alternative solutions?
Freddy El-Bayadi says that the government could have resorted to other alternatives before approving the increase in electricity prices, but it chose “the solution that is easiest administratively and most costly socially”, by making citizens bear a larger share of the electricity bill. Among the alternatives that could have been implemented before raising prices are reducing technical and commercial losses in the electricity grid and collecting the arrears owed by government bodies and major subscribers, along with reconsidering the cost of financing and debt, accelerating the expansion of renewable energy projects, as well as subjecting the cost of producing a kWh to an independent and public review.
He points out that even if the increase was justified by the rising cost of fuel or an emergency crisis in gas supplies, it could have been temporary and coupled with a clear timetable for its end, with an automatic mechanism to lower prices if the cost of production fell. He also criticises the method of targeting subsidies, considering that linking it to the volume of consumption alone does not necessarily reflect a household’s income level or its ability to bear the burdens.
On the timing of the decision, El-Bayadi says that it cannot be asserted that the International Monetary Fund requested raising electricity prices by the rate the government approved, as there is no official document proving this, but he considers that the decision cannot be separated from the general framework of the economic reform programme agreed with the Fund, which includes reforming energy subsidies and reducing the gap between the cost of production and the selling price.
He adds that the completion of the seventh review of the Fund’s programme on 30 July, followed by the government’s announcement of an increase in electricity prices the next day, makes the link between the two events “worth pausing at”, even if there is nothing to prove that the rate of the increase or its timing were a direct condition for the disbursement of the new tranche of the loan.
El-Bayadi stresses that the final responsibility for the decision lies with the government, explaining that the IMF sets a general framework for reforms, but does not determine the value of the electricity tariff or the tiers to which the increase applies, nor does it choose the timing of its implementation. He adds that the government is responsible for determining the economic alternatives and the level of social protection accompanying the reforms, noting that the Fund itself stresses in its documents the need to protect the most vulnerable groups.
El-Bayadi continues: “The IMF may demand a reduction in energy subsidies, but it does not impose that the citizen’s pocket be the only source of financing this reform. The government had many alternatives, but it chose the easiest path for itself, and the most costly for the citizen.” He adds that economic crises or fiscal pressures should not turn into a permanent justification for transferring the burdens of reform to citizens without adopting parallel measures that address the shortcomings within the sector itself.
The latest increase comes as part of a continuous series of decisions restructuring the electricity tariff that began years ago and accelerated in recent years. Since 2021, the government has approved five main waves of increases in household electricity prices, the latest of which was the July 2026 decision, which covered most consumption tiers with an average increase of 12%, while keeping the price of the first tier unchanged.
In conclusion, the latest increase in electricity prices does not appear to be an isolated decision; rather, it comes in the context of a prolonged energy crisis and growing financial pressures facing the state, with declining natural gas production and the rising cost of imports, in parallel with the commitments of the economic reform programme, while the citizen alone remains the one who pays the bill for the economic pressures.
