Egypt’s energy import bill more than doubles as global prices surge

CAIRO, March 18 (Reuters) - Egypt's energy import bill has more than doubled since the outbreak of the U.S.-Israeli war with Iran, Prime Minister Mostafa Madbouly said on Wednesday, underscoring mounting pressure on the country's finances as global fuel prices rise.

Madbouly during a press conference said Egypt's energy import costs had increased by between two and two-and-a-half times compared with pre-war levels.

He said the country's monthly natural gas import bill had nearly tripled, rising from about $560 million before the conflict to roughly $1.65 billion for the same volumes today.

“To keep factories operating and producing, this is the cost of gas alone,” he said.

Global oil prices have surged during the conflict, adding to Egypt's import burden. Madbouly said crude prices had climbed from $69 a barrel before the war to about $108.50 currently, while diesel – a key fuel across transport and industry – rose from $665 per tonne to $1,604 per tonne.

Liquefied petroleum gas prices increased from $510 per tonne to $730 per tonne, he added.

HEAVILY RELIANT ON IMPORTS

Egypt remains heavily reliant on fuel imports, specifically natural gas, which has seen production fall steadily since peaking in 2021, leaving its economy particularly exposed to global price shocks and supply disruptions.

According to a recent note by the Institute of International Finance, the additional cost of oil could lead to an increase in expenditures between 0.2% and 0.55% of the country's GDP.

Egypt raised prices on a wide range of fuel products this month in a bid to lower burdens on its budget that has already felt the shock of the conflict, which has disrupted Middle East oil output with Iran's closure of the vital Strait of Hormuz.

The most populous Arab country was already grappling with high debt – interest payments alone have eaten up about half of government spending this fiscal year – and inflation stuck in the double digits after peaking at 38% in September 2023.

Madbouly said the government was taking steps to rationalise energy consumption, including earlier closing hours for commercial venues. Shops, malls, cafes and restaurants will close at 9 p.m. local time starting March 28 for at least one month, he said.

He added that the government was also studying a plan to enforce remote working by one or two days per week in both the public and private sectors to help ease energy demand.