Ahmed Kamel – Egypt Daily News
Egypt Holds Electricity Prices for Low-Income Households While Raising Commercial Tariffs Amid Mounting Energy Costs
Egypt has decided to keep electricity prices unchanged for lower-income residential consumers while introducing significant increases for commercial users and high-consumption households, as part of broader efforts to address a widening financial gap in the energy sector.
According to an official document, the government has maintained tariffs for the first six residential consumption tiers, aiming to shield lower- and middle-income households from additional financial pressure. However, electricity prices for higher consumption brackets have been raised by between 16% and 28%, while commercial tariffs have seen sharper hikes ranging from 20% to as much as 91%.
The new pricing structure came into effect in April, with consumers expected to see the impact reflected in billing cycles starting in early May.
Under the revised system, households consuming up to 1,000 kilowatt-hours per month will continue to pay existing rates, while those exceeding that threshold will face higher charges. Meanwhile, commercial users have been hit with substantial increases, particularly in the lowest consumption bracket, where tariffs have nearly doubled.
Government officials say the price adjustments are part of a targeted approach designed to balance fiscal pressures without imposing broad-based increases across all consumer segments. A senior government source said that Egypt aims to generate between 2 billion and 2.5 billion Egyptian pounds in additional revenue during the final quarter of the 2025–2026 fiscal year, which ends in June. However, the official noted that revenues could fall short if ongoing energy-saving measures, such as reduced operating hours for shops continue to dampen consumption.
The move highlights the deep structural challenges facing Egypt’s electricity sector. President Abdel Fattah El-Sisi recently stated that the country incurs an annual deficit of nearly 500 billion Egyptian pounds, equivalent to around 10 billion US dollars, due to selling electricity at prices significantly below production cost.
Energy consumption patterns further complicate the situation. Egypt spends close to 1 trillion Egyptian pounds annually roughly 20 billion dollars, on petroleum products, with approximately 60% of that total used to fuel electricity generation. This has resulted in electricity being sold at roughly 25% of its actual cost, underscoring the scale of state subsidies embedded in the system.
The imbalance is particularly evident in the relationship between the electricity and petroleum sectors. The Ministry of Electricity reportedly pays around 100 billion pounds annually for fuel used in power generation, while the actual cost reaches approximately 600 billion pounds. The resulting shortfall estimated at 500 billion pounds is effectively absorbed by the Ministry of Petroleum, placing additional strain on public finances.
In response to these pressures, the government significantly increased electricity subsidy allocations in the current fiscal year, raising them by nearly 2,900% year-on-year to reach 75 billion pounds. It remains unclear whether subsidy levels will rise further or be scaled back in the upcoming budget.
The latest electricity price adjustments come shortly after Egypt implemented fuel and gas price increases of between 14% and 30%, marking the third such hike within a year. These increases affected all fuel types, with gasoline and diesel prices rising by 3 pounds per liter.
The pricing reforms also coincide with a broader energy conservation strategy adopted by the government in response to regional instability and supply concerns linked to tensions involving Iran. Measures introduced in late March include partial remote work for public employees and mandatory early closure of retail shops and restaurants at 9 p.m. on weekdays for a temporary period.
Officials have indicated that these emergency measures could be lifted if regional conditions stabilize and energy supply pressures ease.
Despite the latest increases, authorities have signaled caution regarding further tariff adjustments. Electricity Minister Mahmoud Essmat stated recently that the government remains committed to limiting price hikes that directly impact citizens, emphasizing that no increases had been implemented for two years prior to the current adjustments and that future decisions would prioritize sectors with minimal impact on daily life.
The latest policy shift reflects Egypt’s ongoing effort to strike a delicate balance between fiscal sustainability and social protection, as it navigates rising energy costs, external pressures, and the need for long-term structural reform in its power sector.
