Written by: Suhaib Shams
The Egyptian state is facing economic challenges resulting from global volatility in energy prices, placing decision-makers before the necessity of dealing precisely with current variables. Prime Minister Dr. Mostafa Madbouly noted that the significant rise in global oil prices, which reached about $110 per barrel compared to the $75 estimated in the general budget, imposes additional burdens that extend beyond fuel prices to include the cost of natural gas used in energy production.
State options to face the energy cost crisis
The paths available to the government consist of three main options; the first is to pass the full increase in costs onto citizens, an approach followed by many countries. The second option relies on the state bearing these increases entirely, which requires providing huge financial resources or resorting to borrowing, which may lead to increasing the burdens of public debt and future interest due. Madbouly warns that borrowing could double financial obligations on future budgets as a result of accumulated interest.
Consequences of supply shortages and the possibility of load shedding
The third option is to commit to the financial allocations specified in the budget and purchase petroleum products according to the new prices within the limits of available resources, which may lead to a shortage of fuel supplies and meeting only part of the citizens' needs. This scenario may lead to taking difficult measures such as electricity load shedding for periods ranging from 6 to 8 hours daily, to ensure the stability of the system and avoid excessive financial burdens on future generations.
Efforts to manage resources and expand renewable energy
The government is making intensive efforts to provide the necessary financial credits to secure energy shipments, as the cost of these shipments has witnessed a significant increase, reaching double the cost they were two years ago. In the context of sustainable solutions, the state is seeking to expand into new and renewable energy projects, as about 200 billion Egyptian pounds have been allocated to develop the necessary grids to reach 45% of the energy mix by 2028, with the goal of reaching 50% by 2030, to enhance the stability of the energy system and reduce reliance on traditional sources.
