Consumers likely won’t see a hike in electricity bills until at least the end of the fiscal year in June, a senior government source tells EnterpriseAM. While the Electricity Ministry has finalized several scenarios for tariff increases based on rising operational burdens, the cabinet is opting to hold rates steady to keep a lid on inflation, our source tells us.

Why it matters: By keeping energy costs flat, and in turn making sure inflationary pressures are kept in check, the Central Bank of Egypt is given more breathing room and confidence to continue its monetary easing cycle from an aggressive standpoint. For the state, savings from lower domestic debt servicing likely outweigh the EGP 75 bn price tag for this fiscal year’s electricity subsidies — up from just EGP 2.5 bn the year before.

Any increase in electricity tariffs is now expected to be delayed until the final quarter of the current fiscal year, or more likely implemented at the start of the new budget cycle in July, our source tells us. Tariffs have been frozen since the last adjustment in August 2024.

As for the complete eradication of electricity subsidies? That will likely only happen after FY 2029-30, we’re told.

The expected decision comes after 2025 became the most fuel-consuming year for the electricity sector, up 40% over the 12 months despite some 2 GW of renewable capacity being added to the grid, our source tells us. Increasing fuel use to power electricity generation was simply a reaction to an uptick in demand, which continued to pile up the electricity sector’s dues to the Egyptian General Petroleum Corp. (EGPC).

Don’t expect a fight with the Fund just yet. A source familiar with the IMF negotiations tells us the Fund is increasingly focused on the social impact of reforms. As long as the EGPC can manage its USD obligations to foreign partners, the Fund appears willing to let Cairo move the goalposts on electricity subsidies to protect consumers and support more aggressive interest rate cuts.

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