CAIRO, Egypt — In a strategic move to address its escalating energy crisis, Egypt has increased natural gas prices for major industries, effective May 2026. This adjustment, part of a broader International Monetary Fund (IMF)-backed reform initiative, reflects a critical shift in the nation’s energy policy, strained by falling domestic production and rising import costs.
The price hike, averaging approximately $2 per million British thermal units (MBtu), primarily affects sectors such as cement, iron and steel, fertilizers, and petrochemicals. This increase is not extended to household consumers, who are shielded by existing contractual formulas.
The rationale for this adjustment is to reduce costly energy subsidies, aligning them with international market levels.
The surge in natural gas prices is a direct response to soaring import costs, exacerbated by regional instability and geopolitical tensions, including the ongoing conflict between the United States and Israel with Iran. Egypt’s transformation from a gas exporter to an importer has been accelerated by the decline in domestic gas output, notably from key fields like the Zohr gas field. This shift has necessitated a reliance on more expensive liquefied natural gas (LNG) cargoes and regional suppliers, tightening supply and pushing up prices.
The energy costs for Egypt have more than doubled in recent months, with monthly spending on gas imports nearly tripling.
The currency weakness, compounded by a series of devaluations since 2022, has made dollar-denominated energy imports significantly more expensive, increasing pressure on public finances and foreign reserves.
The government had previously raised domestic fuel prices by up to 17% in March, signaling a broader shift towards cost-reflective energy pricing. While these reforms may burden businesses and consumers in the short term, investors consider them essential for restoring fiscal stability and rebuilding confidence in one of the Middle East and Africa’s largest economies.
The new decree, issued by Prime Minister Mostafa Madbouly, sets a minimum selling price of no less than $6. 50 per million British thermal units (MMBtu) for energy-intensive industries. This move comes as Egypt transitions from a significant gas exporter to a major importer, a shift exacerbated by falling domestic output.
The international community, including the IMF, is watching closely as Egypt implements these reforms, which are part of a broader strategy to bolster the country’s economic prospects.
The outcomes of these reforms will be scrutinized both domestically and internationally, as Egypt navigates the complexities of balancing economic reforms with the immediate needs of its population and businesses.
*Additional reporting by ImNews | Sources consulted: 5*
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This original article was produced by the ImNews editorial team
Source: Africa.businessinsider
Source: Ayodeji Adegboyega
