Complex Made Simple

Egypt pulling safety net from under its citizens for the greater good

The end justifies the means.

In Egypt’s case, gas independence and becoming a net producer are the objectives. The means are to burden citizens with additional tariffs, and piling up the pressures on costs of living.

Gas strategy

Egypt has “inverted” the petrostate model, the Wall Street Journal (WSJ) writes, as reported by

Unlike Saudi and other oil-producing countries, where oil production funds a generous social safety net, Egypt has done something of the reverse.

Graph courtesy of

“Egyptians are paying elevated prices to international oil and gas companies in order to attract their investment. The Egyptian government has set high domestic prices for oil and natural gas, making Egypt attractive to outside companies,” said

Royal Dutch Shell, BP and have poured billions into the country.

“Egypt could soon be a net exporter of gas and even has dreams of setting up an Eastern Mediterranean gas hub. But if it does so, it will be financed by ordinary Egyptians,” said the site.

Great, but at what cost?

Related VIDEO: Could Egypt have solved all its economic woes to attract big FDI?

Pressure cooker

WSJ said President Abdel Fattah Al Sisi’s government has coaxed some big oil companies back to Egypt in part by paying foreign companies more for natural gas and by raising the price of electricity and gas for consumers.

These consumers also face rising costs in transportation, water, and other basic goods.

In June, electricity prices rose 26% overnight while natural-gas prices rose for households and businesses by between 33.3% and 75%.

Fuel prices have been raised three times in the country since 2016, increasing 260%

Read: Is Mohamed Salah the hero Egypt needs?

Renewable energy and gas plans

Last year, the leading economies in renewable energy investment growth were not to be found in North America or even Europe.

The leaders in growth were countries often described as developing, such as China, Brazil, Egypt, the United Arab Emirates, according to Sustainable Brands.

According to the 2018 Global Trends In Renewable Energy Investment Report from Bloomberg New Energy Finance and the United Nations Environment Programme (UNEP),  investment in Egypt lept nearly sixfold to $2.6 billion, and that in the UAE 29-fold to $2.2 billion.

In Egypt, some 1.3GW of solar projects from the second phase of the country’s feed-in tariff program reached financial close by the deadline in October, with many of these around the 50MW mark. But the biggest single project to clinch investment in 2017 was in wind – the 263MW Gulf of Suez project, at $400 million.

Egypt grew renewables investments by 495%, while the UAE reached 2,815%, and Jordan by 26%.

Read: Would you buy an Egyptian passport for $400,000? You now can

According to, the world’s largest solar energy farm, the $2.8-billion Benban complex, is set to open in 2019, 400 miles south of Cairo in Egypt’s Western Desert, part of a multinational effort to overhaul Egypt’s dilapidated electricity system with renewable energy projects.

It is expected to generate 1.8-gigawatts of electricity, enough to power more than 1 million homes.

“With international help, the Egyptian government has set an ambitious goal of producing 42% of its electricity using renewable sources by 2025, according to Yale.

Egypt currently generates more than 90% of its electricity from coal and natural gas.