Power Cuts Return to Egypt After Eid

Power cuts will resume after Eid al-Fitr, causing power outages for up to two hours a day in order to conserve natural gas reserves for the hot summer months and manage rising energy costs, a source in the electricity sector told Enterprise.

An end date for the blackouts in Egypt remains uncertain, the source added. However, there is a plan in place to gradually reduce the amount of time people experience power cuts. Ideally, this will lead to a complete elimination of blackouts as the country’s natural gas supplies increase.

The recent economic situation, especially the devaluation of the Egyptian Pound (EGP), is a major factor behind the blackouts.  Last month’s devaluation of the EGP caused a significant increase in the Ministry of Electricity’s monthly bill for renewable energy sources like wind and solar power. These resources are purchased through agreements priced in US dollars (USD), making them more expensive due to the exchange rate.

In response to rising production costs and the recent devaluation of the Egyptian Pound, fuel prices also increased for the first time in 2024. This decision, announced by the Ministry of Petroleum and Mineral Resources in late March, aims to close the gap between the cost of producing fuel and the price at which it’s sold to consumers.

Egypt recently undertook a series of actions to address its financial challenges. Firstly, the Central Bank implemented the nation’s largest-ever interest rate hike. This significant increase, aimed at curbing inflation and attracting foreign investment, makes borrowing more expensive for businesses and individuals.

Secondly, Egypt allowed its currency, the Egyptian Pound (EGP), to significantly devalue by over 38 percent.

The primary motivation behind these measures is to secure additional financial aid from the International Monetary Fund (IMF) and other lenders. Egypt recently signed an expanded loan program with the IMF, increasing an existing loan program by USD 5 billion.