Electricity prices in Egypt are among the lowest in the world for both residential units and commercial activities, according to Prime Minister Mustafa Madbouli, with his comments coming immediately after he announced a new increase in electricity prices for residential units, the second this year.

Madbouli’s announcement came after two weeks of speculation about the timing and value of the increase. Press reports quoted anonymous sources to the effect that a rise in electricity prices has been in force since the beginning of August.

According to the website of the Electrical Utility and Consumer Protection Regulatory Agency, the latest electricity tariffs, implemented in January 2024, are set to expire on 31 July, meaning that new ones should be implemented by 1 August.

The tariffs on the website had not been adjusted in line with new prices this week.

Government sources speaking to Reuters said the new increase in electricity prices had been applied starting on 17 August for prepaid meter systems and would be applied to regular meters on 1 October.

The new hikes will hit the industrial sector with a 40 per cent increase, according to Al-Masry Al-Youm. This is the first increase in industrial tariffs in four years.

Talking at the cabinet’s weekly press conference on 22 August, Madbouli said that the increase in electricity prices would be negligible for lower consumption brackets compared to higher ones.

He said that increases for the first three brackets would be 10 to 12 piastres per kilowatt hour (kWh), while the following tier would see a rise of about 25 piastres.

While neither Madbouli nor the minister of electricity announced the tariffs for all the brackets, comparisons made by Al-Ahram Weekly between the new tariffs circulated in news reports and those announced in January showed increases ranging between 10 and 40 per cent for different brackets, with the highest shouldering the largest hike.  

The rate for the first bracket, covering consumers of between 0 and 50 kWh, has increased from LE0.58 to LE0.68 per kWh.

The second tier, covering consumption from 51 to 100 kWh, is now LE0.78 per kWh, up from LE0.68. For the third bracket, when consumption exceeds 100 kWh and covers up to 200 kWh, the rate has risen from LE0.83 to LE0.95.

Once consumption surpasses 200 kWh, it falls into the fourth bracket, which goes up to 350 kWh, with the rate increasing from LE1.25 to LE1.55 per kWh.

The fifth tier, which includes consumption between 351 and 650 kWh, now has a rate of LE1.95 per kWh, up from LE1.4. For the sixth tier, covering consumption from 651 to 1,000 kWh, the rate has risen from LE1.5 to LE2.1 per kWh.

Finally, the seventh bracket, for consumption exceeding 1,000 kWh, now has a rate of LE2.30 per kWh, up from LE1.65.

Madbouli explained that the hikes come as part of plans to rebalance the government’s spending on electricity with what it collects in revenues from it over the coming four years. Even after the plans conclude and a balance is reached, the lower consumption brackets, representing lower-income groups, will continue to be subsidised, but with the subsidies coming from the tariffs paid by higher consumption brackets.

The monthly bill owed by the Electricity Ministry to the Petroleum Ministry for the fuel needed to operate its power stations amounts to LE16 billion, while it only pays LE5 billion, Madbouli said.

The government has implemented a load-shedding programme since the summer of 2023 — which saw rolling power cuts of two hours across neighbourhoods nationwide — to reduce the pressure on the grid.

Increased power consumption, especially amid the ongoing heatwaves of 40°C in Cairo, have increased the amount of mazut and natural gas needed for power generation, according to the government.

In July, it implemented $1.18 billion plans to import the necessary fuel to address the issue.

It also announced that the daily power cuts would be halted from 21 July until mid-September, pledging to solve the issue completely by the end of 2024.

With the recent adjustment in electricity prices, Madbouli said last weekend, the total amount the Electricity Ministry will pay the Petroleum Ministry will rise to LE10 billion, leaving a LE6 billion gap that the state will cover.

He said it would continue to bear the burden of increasing costs in the coming period. “We fully understand the importance of moving slowly to ease the burden on citizens,” he said.

The new electricity price increases are part of recommendations made by the International Monetary Fund (IMF) to release tranches of the extended loan granted to the country, estimated at $8 billion.

The IMF said in a statement announcing the completion of the third review of the loan in July that restoring energy prices to pre-subsidy levels, including fuel prices by December 2025, is crucial for ensuring smooth energy supplies and reducing sector imbalances.

The government has raised electricity prices multiple times over the past decade, with the last increase ranging from 16 to 26 per cent between January and July.

---

* A version of this article appears in print in the 29 August, 2024 edition of Al-Ahram Weekly