Egypt hikes electricity prices to tackle energy crisis

• Egypt raises electricity prices and implements austerity measures as economic pressures mount amid regional conflicts.

Egypt has raised electricity prices as the country grapples with mounting economic pressures amid regional conflicts, according to government announcements.

The move is part of broader austerity measures aimed at easing the strain on public finances.

Private sector activity hits lowest point

Recent data from Standard & Poor’s Global indicated that Egypt’s non-oil private sector contracted in March at the fastest pace in nearly two years.

Key indicators of the slowdown include:

• Purchasing Managers’ Index (PMI): Dropped to 48.0 in April, below the 50-point threshold separating growth from contraction.
• Declining orders: New orders fell sharply due to weakened purchasing power among customers.
• Business sentiment: For the first time, company expectations for the coming year entered negative territory, reflecting uncertainties caused by the Iran conflict.

Rising costs and currency pressures

Executives reported soaring production costs driven by several factors:

• Fuel prices: Global oil and gas prices surged due to regional tensions.
• Exchange rates: The Egyptian pound has depreciated 14% against the U.S. dollar since the conflict began, increasing the cost of imported raw materials.
• Inflation: Companies have been forced to raise prices at the fastest rate in 10 months, signaling a new wave of inflation.

Electricity price hike and rationing measures

The Ministry of Electricity announced new tariffs effective in early April to address the “acute energy crisis”:

• Residential consumption: Average increase of 16% for households consuming over 2,000 kWh per month.
  Commercial consumption: Prices raised by an average of 20% across different commercial categories.
  Austerity plan: Measures include closing shops by 9 p.m., raising public transport fees, and slowing some national projects to ease budgetary pressures.
  Prime Minister Mustafa Madbouly comments on financial challenges
  Prime Minister Mustafa Madbouly noted that energy import costs have doubled following U.S.-Israeli strikes on Iran, leaving Egypt’s trade balance in significant deficit. The crises come as debt servicing consumes nearly half of government spending and inflation remains above 10%, forcing policymakers to make difficult economic decisions.