Business & Economy

Egypt approves energy savings to sell gas to Europe, earn foreign currency

Cairo, Aug 11 (EFE).- Egypt will restrict lighting on streets, in stadiums and public offices and air conditioning in shopping centers, among other measures, to reduce its electricity consumption and obtain surplus natural gas for export to Europe.

The decision, which was approved Thursday by the government of Abdelfatah el Sisi and will come into force next week, is the result of “desperation” to attract foreign currency and “stabilize the finances” of the country amid growing economic uncertainty, analysts told Efe.

The government’s plan to ration electricity will oblige all state departments and local administrations to limit consumption in “all their buildings and facilities” during office hours and “to completely turn off interior and exterior lights” at the end of the working day.

It also obliges them to reduce the lights in streets, squares and avenues, as long as public safety is unaffected.

Shopping centers will also not be allowed to set the air conditioning temperature below 25 degrees Celsius, while stores will have to “reduce” the lights on their facades.

Timothy Kaldas, an analyst at the Tahrir Institute for Middle East Public Policy, told Efe that these efforts are “somewhat genuine, but a desperate way to attract hard currency and try to stabilize finances as much as possible.”

Other analysts agreed that the measure was “desperate”, although “with good judgment, as Egypt’s need to attract or retain foreign currency is imperative”.

The global inflationary crisis driven by the invasion of Ukraine has severely impacted Egypt, which is heavily dependent on food purchases on the international market and has also seen its currency devalued by more than 20% since March.

To maintain stability, Egypt currently depends on large investments made by the Arab economies of the Persian Gulf and has been negotiating for months an agreement with the International Monetary Fund to refinance its multi-million dollar debt with the organization and to request more funds.

The IMF is asking Egypt to take effective reforms to approach a new loan, which would include a total liberalization of the exchange rate of the Egyptian pound, something that the country does not seem willing to accept because of the risk of a further collapse of the currency.

The move comes just weeks after Egypt and the European Union signed an agreement to boost the Arab country’s hydrocarbon exports to the northern Mediterranean, and means, according to Kaldas, that Cairo is looking for diplomatic allies to support it in its negotiations.

“Egypt is seeking that this announcement of gas exports to Europe, at a time when it is most needed, could help it to be seen as a ‘European partner’ and thus reduce pressure from the IMF,” the analyst said. EFE


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