Egypt faces steepening gas import bill due to Iran war
- Up from $560m to $1.65bn a month
- Decline in its own gas production
- Largest capital outflows since 2022
Egypt’s gas import bill has increased by $1.1 billion a month since the outbreak of the Iran war, according to the prime minister.
Mostafa Madbouly said on Wednesday that the country’s monthly gas import bill was $560 million before the war started but has now reached $1.65 billion.
Diesel costs have also jumped to $1,604 per tonne from $665, while butane, primarily used for cooking, has risen 34 percent to $730 per tonne since the war started.
Madbouly said that while the monthly bill for energy needs has almost doubled, the government is ready to deal with the crisis, which may continue for several months or until the end of the year.
The North African country has to import gas due to a decline in its own production, a report published this week by the Washington-based Institute of International Finance (IIF) said.
Egypt’s gas output has declined from a 2021 peak due to maturing fields and lack of investment, the IIF added. A concurrent sharp increase in domestic demand has turned the third largest Arab economy into a net hydrocarbon importer. The primary suppliers of gas are Israel and the United States.
At the onset of the war Israel suspended all gas exports to Egypt, accounting for 7 to 10 percent of total energy use in the country.
Though Israeli exports resumed on March 9, these are on a limited basis and are conditional on Israel meeting its domestic energy demands first, it said.
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The IIF warned that Egypt is currently experiencing the largest capital outflows since 2022, citing official data, which showed that in the first two weeks of March Egypt saw net outflows of about EGP 210bn ($4 billion).
“The large participation by foreigners in the domestic treasury market leads to quick outflows during global risk-off episodes,” the IIF said. “Previous such episodes have shown that portfolio flows have been quick to recover as global pessimism subsides.”
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