Ahmed Kamel – Egypt Daily News
The Egyptian Holding Company for Electricity is preparing to seek a syndicated loan of 100 billion Egyptian pounds, or approximately $1.9 billion, to repay part of the money it owes to the country’s petroleum sector.
The proposed financing would be arranged through a group of banks operating in Egypt and would carry a guarantee from the Ministry of Finance, according to government officials familiar with the discussions. The National Bank of Egypt is reportedly in talks to act as the lead manager and arranger of the banking consortium.
The planned loan reflects the growing financial pressure on Egypt’s electricity sector, where the cost of fuel used to operate power stations has continued to rise while electricity revenues have not kept pace with production expenses.
Government data cited in reports indicate that electricity-sector debt owed to the Egyptian General Petroleum Corporation reached approximately 495 billion pounds at the end of July 2026. The figure increased from about 480 billion pounds at the end of June, showing that the outstanding balance continues to expand despite periodic payments and earlier financing arrangements.
The gap is largely linked to the difference between the value of fuel supplied to power stations and the amount transferred back to the petroleum sector. Electricity authorities reportedly withdraw petroleum products worth around 24 billion pounds each month to operate generation plants, while average monthly payments to the petroleum authorities are closer to 12 billion pounds.
If that pattern continues, the debt could rise even after the proposed loan is completed. The planned borrowing would therefore provide immediate relief and reduce accumulated arrears, but it would not by itself resolve the structural imbalance between fuel costs, electricity prices and government support.
The Egyptian Holding Company for Electricity oversees 16 companies involved in power generation, transmission and distribution. It also manages sector-wide budgets and monitors the operations of the companies responsible for supplying electricity to households, businesses and public institutions.
The proposed financing would be one of the largest banking transactions directed toward Egypt’s electricity sector in recent years. It follows earlier borrowing used to settle obligations owed to the petroleum industry and other suppliers. The electricity company reportedly secured a loan of approximately 50 billion pounds before the end of 2024 for similar purposes.
The latest plan comes as Egypt attempts to stabilize relations between its electricity and petroleum sectors. The petroleum industry relies on timely payments to purchase imported fuel, finance exploration and maintain production. When electricity authorities delay payment, the pressure can spread through the wider energy system, increasing the need for government guarantees or additional borrowing.
The issue is particularly important because Egypt consumes petroleum products worth nearly one trillion pounds each year. About 60 percent of that consumption is used to operate electricity generation plants, making fuel one of the most important components of the country’s energy bill.
Natural gas has traditionally played a central role in Egypt’s electricity system. However, declining domestic gas production and rising demand have forced the country to depend more heavily on imported liquefied natural gas and other fuels. Higher import costs have added pressure to public finances and made it more difficult for electricity authorities to balance their accounts.
Egypt is also facing a wider challenge involving the price of electricity. The government has historically sold power to consumers at rates below the full cost of generation, particularly for households and some public services. This has created a financial gap that must be covered through subsidies, transfers from the state budget or borrowing by public-sector companies.
President Abdel Fattah el-Sisi said earlier this year that the state carries an annual electricity-sector deficit of almost 500 billion pounds because power is sold below its actual production cost. The figure illustrates the scale of the challenge facing policymakers as they attempt to protect consumers while reducing pressure on public finances.
The electricity subsidy allocation for the 2026-2027 financial year has been raised by 33 percent to approximately 100 billion pounds. That compares with a target of 75 billion pounds for the previous financial year, which ended in June 2026. The increase suggests that the government expects continued pressure from fuel prices, exchange-rate movements and the cost of imported energy.
The proposed loan could help the electricity company settle part of its arrears and improve the petroleum sector’s cash flow. It may also reassure fuel suppliers and banks that the government is prepared to support the electricity system during a period of high energy costs.
However, the borrowing will add to the obligations of a state-owned company already facing a large debt burden. Interest payments and repayment schedules will have to be incorporated into future electricity-sector budgets, potentially increasing pressure for tariff adjustments or additional government support.
Egypt has taken steps in recent years to improve its energy finances, including raising electricity prices gradually and clearing debts owed to foreign oil and gas companies. The government’s petroleum ministry announced in June 2026 that it had settled outstanding arrears to international energy companies, a move designed to restore investor confidence and encourage new production.
The difference between clearing foreign energy arrears and managing domestic debts between the electricity and petroleum sectors remains significant. Paying international companies can attract new investment, while settling internal debts improves the ability of state institutions to operate. Neither measure, however, eliminates the underlying need to align electricity prices more closely with production costs.
For now, the 100-billion-pound loan is intended to ease the immediate financial strain. Its long-term effectiveness will depend on whether Egypt can increase domestic fuel production, reduce the cost of electricity generation, improve collection rates and gradually narrow the gap between the price paid by consumers and the cost of supplying power.
