The government is set to raise the tariffs for gas transmitted through the national network in July, according to two energy sector sources who spoke to Mada Masr on condition of anonymity.
One of the sources said that current fees could be hiked by as much as 25 percent.
Mada Masr reached out to the Petroleum and Mineral Resources Ministry spokesperson for comment but received no response as of the time of writing.
The service cost is being revised alongside a raft of price hikes affecting everything from drugs to diesel, pushing up the cost of living for households across the country.
If the 25 percent increase is implemented, the fee will surge to US$0.46.25 cents per million British thermal unit (MMBTU), the highest level in five years. Rates in 2019 stood at 29 cents per MMBTU, rising steadily to 41 in 2022 and dropping in 2023 to its current rate of 37 cents.
The additional costs will affect all end consumers of gas, including stations using gas to generate electricity, and the commercial, industrial and household sectors, said the first two sources, as well as a third source within the energy sector who spoke to Mada Masr on condition of anonymity.
Industries consuming large amounts of natural gas are set to be most affected by the fee hike, with petrochemicals at the forefront, especially fertilizers, for which natural gas is the main input, said a financial analyst speaking to Mada Masr on condition of anonymity.
Sherif al-Gabaly, head of the Egyptian Chamber for Chemical Industries, echoed the same concerns.
The impact is likely to reverberate in the domestic market, with potential ripple effects on the degree of availability of fertilizers in Egypt, said Cairo University Economics Professor Medhat Nafea. He noted that exports can generate greater profits than domestic sales, helping industries absorb the increase in gas transmission fees.
Since 2017, the Gas Regulatory Authority, headed by Petroleum and Mineral Resources Minister Tarek al-Molla, has been tasked with determining the gas transmission system usage tariff annually. Normally, tariffs are revised in the first quarter of the calendar year, but the authority is yet to set rates for 2024.
The Egyptian Natural Gas Company (GASCO), which owns the national network, collects fees from gas producers as part of the investment cost for field development, as well as from power plants and main gas distribution stations serving residential, industrial and commercial sectors, said the third source within the energy sector, speaking to Mada Masr on condition of anonymity.
Nafea explained that in practice, however, several private sector companies are contracted to operate the national gas transmission network under GASCO, which acts more like a regulator.
One of the energy sector sources attributed the fee hike to rising operational and management costs, pointing to grid expansions to bring new wells or fields into the network or to distribute gas to new areas for household consumption. The source also noted that network efficiency has been heightened to better position the sector as a site for potential investments in the future.
Read More: Govt set to hike national gas transmission fees by up to 25% in July