- The Egyptian government plans a 25 per cent gas tariff hike in July, raising the fee to $0.4625 per MMBtu.
- Higher gas costs will impact commercial, industrial, and household electricity generation.
- Petrochemical and fertiliser industries will face significant effects, with concerns about shortages and exports.
According to two anonymous energy sector sources, the Egyptian government plans to raise tariffs for gas transmitted through the national network by up to 25 per cent in July.
The fee will jump to $0.4625 per million British thermal units (MMBTU), the highest level in five years. Current rates stand at 37 cents per MMBtu, up from 29 cents in 2019 and 41 cents in 2022 before falling in 2023.
The Ministry of Petroleum and Mineral Resources did not respond to requests for comment.
This increase accompanies rising prices for essentials like drugs and diesel, adding to household financial burdens. The higher costs will impact all gas consumers, including electricity generation stations and commercial, industrial, and household sectors.
Industries that use significant amounts of natural gas, especially petrochemicals and fertilisers, will face the most important effects. “Natural gas is crucial for fertiliser production,” said a financial analyst who requested anonymity.
Sherif al-Gabaly, head of the Egyptian Chamber for Chemical Industries, echoed these concerns. Medhat Nafea, an economics professor at Cairo University, warned about potential fertiliser shortages, though exports could mitigate some impacts.
The Gas Regulatory Authority, led by Petroleum and Mineral Resources Minister Tarek al-Molla, sets the gas transmission tariff annually. The authority usually revises tariffs in the first quarter but has not yet set 2024 rates.
The Egyptian Natural Gas Company (GASCO) owns the national network and collects fees from gas producers and power plants. These fees cover field development and gas distribution costs. However, private companies operate the network under contracts with GASCO, which acts as a regulator.
One source attributed the fee hike to rising operational costs, citing grid expansions and efforts to improve network efficiency to attract future investments.