Egypt Weighs Three Paths as Oil Nears $110 Against $75 Budget

Egypt's government is weighing three responses to an energy bill that has outrun its budget, Prime Minister Mostafa Madbouly said on Thursday at the Egypt 2026 Forum. President Abdel-Fattah El-Sisi attended the event. Madbouly spoke in a session titled Egypt's Energy Journey: National Achievements and Prospects.

Oil has climbed to about $110 a barrel, against a budget assumption of $75. The budget was built on a much lower price. The gap has raised the cost of imported petroleum products and of natural gas burned in power stations.

The first option would pass the full increase in energy costs to consumers, a route several advanced and emerging economies have taken. The second would have the state absorb the added cost through public resources or borrowing. Madbouly warned that borrowing brings interest charges and future financial obligations onto public debt. A sum borrowed today could roughly double over seven years as interest accumulates, he said.

The third option would keep spending inside existing budget allocations and buy petroleum at market prices with the funds available. That would cover only 50% to 60% of domestic demand. Fuel shortages at filling stations and six to eight hours of daily electricity load-shedding would follow. El-Sisi referred to those load-shedding and shortage effects when the option was discussed.

Madbouly framed the decision as a balance between protecting citizens now and preserving macroeconomic stability, including the burden placed on future generations. Each option shifts the burden to a different group or to a later year.

Finding foreign exchange and local liquidity for energy shipments is among the economic team's hardest tasks. The government coordinates weekly with the Central Bank of Egypt governor on energy financing. Fiscal authorities and the central bank meet two to three times a week to arrange Egyptian pound and US dollar liquidity.

Imported energy shipments now cost twice what they did two years ago, with rising cargo fees adding to the strain. August figures from the Petroleum Ministry showed that an LNG shipment had doubled in cost to $80 million from $40 million before the regional escalation.

Egypt still aims for oil and gas self-sufficiency by 2030, an objective announced in April. New incentives for foreign investors are meant to support that goal. The country is also accelerating its renewable diversification under presidential directives. The original master plan targeted 42% renewable energy by 2030; the government now targets 45% by 2028 and 50% by 2030. The expansion covers solar, wind, nuclear power and battery storage. The Tahya Misr Fund and the Future of Egypt agency support the program.

Upgrading the grid for the 45% renewable target by 2028 requires about $4.1 billion, or EGP 200 billion. Funding allocations for the upgrade have been secured. In May, El-Sisi reviewed pipelines covering more than 7,000 MW of solar, wind and storage capacity. Egypt targets a 144% increase in solar capacity and a 400% increase in wind capacity by 2029.

The government continues to absorb part of the cost of fuel and electricity production to keep consumer prices affordable.

The options assign the same cost to different parties and different points in time. Passing it to households protects the budget; borrowing defers the bill with interest; budget-only purchases protect the treasury but cut supply. The renewable and grid program addresses the structural side, but it cannot close a gap already priced at $110 a barrel.

The immediate choice is how much of that $110 barrel the state can carry before the trade-off moves from subsidy spending to lost supply.