As of 28 March, energy-saving measures are set to go into effect for one month in Egypt in response to surging global fuel prices and supply disruptions caused by the US-Israeli war on Iran.
Commercial establishments such as shops, restaurants, and cafes will close at 9 pm during weekdays and will stay open for an extra hour at weekends, streetlighting will be kept to a minimum, and advertisements and billboards will be switched off.
Government offices will close at 6 pm, and remote working for one or two days per week in the public sector is under consideration.
Prime Minister Mustafa Madbouli said the measures were temporary. Speaking at the weekly cabinet briefing, Madbouli said they would be lifted once conditions stabilise.
Egypt’s monthly energy bill has more than doubled as a result of the war, he said, indicating that Egypt’s monthly natural gas import bill has risen from $560 million before the outbreak of the war to $1.65 billion.
The measures are economically justifiable and, in the current context, largely necessary, economist Ahmed Elsayed told Al-Ahram Weekly.
They are demand-management tools aimed at reducing the peak electricity load and avoiding higher-cost options such as additional spot fuel purchases or operating the system at more expensive marginal generation levels, he explained.
“Every reduction in non-essential lighting and operating hours lowers fuel burning and reduces the pressure on foreign currency,” he said.
The measures come in the wake of fuel-price increases earlier in March, ranging from around 15 per cent to 22 per cent on petrol, diesel, and cooking gas cylinders. Madbouli noted that the sharp rise in oil prices makes it impractical to depend only on price increases, highlighting the need for additional measures, especially to reduce consumption.
Local fuel-price increases help narrow the subsidy gap and curb demand, but they do not eliminate external cost shocks when global prices are elevated, Elsayed explained, adding that consumption rationalisation complements pricing and reduces the volume of fuel that must be supplied at a time when each additional unit is more expensive.
Beyond the current measures, Elsayed expects a stronger focus on permanent energy-efficiency upgrades in government buildings and public lighting to be introduced, along with the accelerated deployment of smart meters and load-management systems, and clearer operating standards for outdoor advertising and commercial signage to cut waste without undermining business activity.
Framing these actions as “energy efficiency and system stability” rather than “crisis mode” helps to protect confidence and sectors like tourism and hospitality, he added.
Elsayed said summer-style supply interruptions should remain a last resort because such outages carry high economic and reputational costs. If pressures intensify, a better approach is to target load management, he said, protecting critical services and export-oriented industries, using pre-announced peak-saving schedules, and incentivising large consumers to shift consumption outside peak hours.
Industrial supply constraints are possible in prolonged stress scenarios, but the objective should be to minimise disruption to productive capacity and avoid measures that translate into lower output and higher inflation, Elsayed said.
Earlier in March Madbouli said that there would be no electricity cuts for households or gas cuts for factories.
PAYMENTS: In a move aiming to strengthen confidence and attract the investment needed to increase domestic oil and gas production and reduce the import bill, Egypt is also accelerating the pace of repaying dues to foreign partners.
Karim Badawi, minister of petroleum and mineral resources, said on 21 March that the ministry is working to settle all its outstanding dues to international partners in the oil and gas sector by the end of June.
He said that the Ministry of Petroleum and Mineral Resources has been working to gradually reduce the dues from about $6.1 billion on 30 June 2024 to $1.3 billion currently, with the necessary coordination in place to fully settle them by 30 June this year.
It was in late January that Madbouli said the country plans to bring down its outstanding debts to oil and gas producers to $1.2 billion by the end of June.
A severe decline in domestic gas output in recent years has increased Egypt’s reliance on imported gas and added to external strains. In addition to technical reasons, a significant part of the decline has been caused by the accumulation of large arrears to foreign hydrocarbon companies, such as the Italian company Eni and British Petroleum (BP), which were the primary operators of gas fields in the country and responsible for extraction and production.
This led to their refusal to pump in fresh investment for new exploration.
Since the second half of 2024, the ministry has paid attention to implementing investment-incentive measures, including the gradual settlement of the arrears, in an integrated manner with several other ministries and state institutions, foremost among them the Central Bank of Egypt (CBE) and the Ministry of Finance.
Badawi said new investment commitments have been made by several international partners like Eni, which announced an investment plan of about $8 billion, and BP, which is to pump in $5 billion, and the UAE’s Arcius Energy, which is to invest about $2 billion.
However, the source of the money to repay the arrears is drawing question marks as this year already has a heavy debt-service burden.
The CBE has raised its 2026 external debt-service forecast to $29.18 billion, a $1.3 billion increase from previous estimates, driven by high principal repayments of $23.79 billion and interest payments projected at $5.4 billion.
This kind of payment is typically funded through a mix of available foreign-exchange liquidity management, the reprioritisation of external payments, and official financing flows or planned inflows across the year, Elsayed said.
The key point is not only “where the money comes from”, but why the arrears are being prioritised now, he stressed, noting that clearing arrears is directly linked to maintaining partner confidence, sustaining upstream investment, and protecting production levels.
“In an environment where import costs are high, any support for domestic supply and any reduction in the reliance on expensive spot imports has an outsized payoff. So, prioritising the arrears is best understood as an energy-security and cost-containment decision: it helps stabilise supply, encourages faster investment and development activity, and ultimately reduces the risk of more costly import dependence,” he added.
Greater exploration, if successful, would help to boost Egypt’s domestic production and close the energy trade deficit, according to Capital Economics, a UK-based macroeconomic consultancy, which added that the energy trade balance has deteriorated markedly in recent years, resulting in a deficit equal to 3.8 per cent of GDP.
“If the conflict is short-lived and energy prices fall back, Egypt’s energy deficit would worsen by no more than one per cent of GDP. In an adverse scenario for the conflict, where we would expect Brent crude to average $140 per barrel over the next four quarters, it could deteriorate by close to four per cent of GDP,” it said in a recent note.
Elsayed said that Egypt needs to reduce its exposure to energy shocks rather than simply manage them when they hit. The fastest structural lever is scaling renewable energy, especially solar, given Egypt’s natural advantages in this regard, he suggested.
In parallel, the country should keep raising system efficiency through smart grids, energy-efficient building standards, and targeted pricing that protects vulnerable groups while discouraging waste, he added.
INFLATION: The country’s quick move to increase fuel prices less than two weeks into the conflict to help to contain the energy subsidy bill and encourage households and firms to use energy more efficiently is driving concerns of mounting inflationary pressures in the coming months.
What exacerbates these fears is that the increases in fuel prices are coming in parallel with the pound’s exchange rate to the dollar hovering around LE53 compared to LE46 a month ago.
Experts believe that the combination of the two factors increases the possibility of the CBE hiking interest rates once more at its April meeting.
Sarah Saada, a senior macroeconomic analyst at CI Capital, a local investment bank, told the Weekly that the 17 per cent increase in diesel prices announced by the government would trigger a surge in prices, noting that the initial impact of the decision would appear in higher transportation fares before passing through to food and beverage prices and then to other economic sectors.
Saada expects the decision to add about three percentage points to the monthly inflation rate during March and April.
The February inflation rates, released hours after the decision to hike fuel prices was announced, were already higher than January’s readings. Annual urban consumer inflation rose to 13.4 per cent in February, compared to 11.9 per cent in January, reaching its highest level in seven months, according to data from the Central Agency for Popular Mobilisation and Statistics.
The rise in the value of the dollar to levels approaching LE53 also increases inflationary pressures by raising the cost of imports and raw materials.
These developments place the CBE in a difficult position, as inflationary pressures are mounting at a time that the monetary authorities are trying to support economic growth by lowering interest rates.
The upcoming Monetary Policy Committee (MPC) meeting at the CBE on 2 April is expected to be pivotal in determining the direction of monetary policy in the coming period.
According to CI Capital, the MPC will keep interest rates unchanged during at least the first half of 2026, until the full impact of geopolitical developments and rising energy prices becomes clearer.
* A version of this article appears in print in the 26 March, 2026 edition of Al-Ahram Weekly
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