Egypt Increases Industrial Natural Gas Prices to Cut Subsidies Amid Rising Import Costs and IMF Reform Pressure
Egypt has raised natural gas prices for key industrial sectors as part of a broader effort to reduce energy subsidies and address mounting fiscal pressure caused by higher import costs and declining domestic gas production.
A government decree published on Sunday confirmed that the new pricing structure took effect in May.
The adjustments primarily target energy-intensive industries, including cement, iron and steel, fertilisers, and petrochemicals.
Industrial gas prices increased across key sectors
Under the revised tariff system, gas prices have risen by an average of about $2 per million British thermal units (mmBtu).
Cement manufacturers will now pay $14 per mmBtu. Iron and steel producers, along with non-nitrogen fertiliser and petrochemical companies, will pay $7.75 per mmBtu.
Other industrial users, including plants using ethane and propane gas mixtures, will face prices ranging between $6.50 and $6.75 per mmBtu.
The price changes do not affect households, where gas tariffs remain governed by existing contractual pricing formulas.
Part of IMF-backed economic reform programme
The increase is part of Egypt’s ongoing economic reform programme supported by an $8 billion agreement with the International Monetary Fund (IMF).
The programme requires Cairo to gradually reduce energy subsidies and transition toward cost-reflective, market-based pricing.
Egypt’s energy sector has come under increasing strain over the past two years. The country, once a net exporter of natural gas, has become more reliant on imports as production from major fields such as the Zohr gas field has declined.
To meet domestic demand, Egypt has increased purchases of more expensive liquefied natural gas (LNG) and imports from regional suppliers. This shift has significantly raised overall energy expenditure.
Geopolitical tensions in the Middle East have further tightened global supply conditions, contributing to higher energy prices and increasing Egypt’s import bill.
Monthly spending on gas imports has surged, while total energy costs have more than doubled in recent months.
Currency devaluation adds financial strain
Repeated currency devaluations since 2022 have intensified the pressure on Egypt’s economy.
A weaker Egyptian pound has made dollar-denominated energy imports substantially more expensive, straining public finances and foreign exchange reserves.
The higher gas prices are expected to increase production costs across several major industries.
Cement and steel manufacturers, both central to construction activity, may pass on higher costs, potentially slowing infrastructure and housing development.
Fertiliser producers could also be affected, with potential knock-on effects for agricultural costs and food prices, given their importance in global supply chains.
Earlier this year, the government raised domestic fuel prices by up to 17% in March, reinforcing its broader shift toward aligning domestic energy prices with market levels.
While the reforms are likely to place short-term pressure on businesses and consumers, policymakers and investors view them as a necessary step toward stabilising public finances, improving energy sector sustainability, and restoring investor confidence in one of the region’s largest economies.
