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Sunday, 14 August 2022

Electricity rationing went into effect yesterday across Egypt. Here’s what we know so far.

Here’s how the gov’t hopes to ration the nation’s electricity: Cabinet has approved measures announced by Prime Minister Moustafa Madbouly last week to limit the country’s use of electricity, raise natural gas exports, and increase inflows of foreign currency, according to a statement out Thursday.

Under the rules:

  • All state-affiliated buildings must cut their electricity consumption during working hours, though we don’t yet know if they’ll be asked to cut their use by a specific amount. That means national and local government buildings and agencies, as well as state-owned companies. All indoor and outdoor lighting must be shut off outside of working hours.
  • Authorities have been instructed to keep a closer eye to make sure businesses including restaurants and cafes stick to summer retail hours, meaning they should shut down at 11pm on weekdays.
  • Local administrations and new city authorities are responsible for reducing lighting on the streets and in public squares.
  • A/C in malls cannot be set lower than 25°C. Storefronts must reduce “bright lighting,” though the statement doesn’t say by how much. Local authorities will be responsible for enforcing the changes.
  • Sports facilities (stadiums, clubs, and gyms) should hold events in daylight as far as possible, and must turn off their lights once evening events are over. They’ll also need to reduce overall consumption, though it’s not specified by how much. The Youth and Sports Ministry will oversee this aspect of the cuts.
  • The Supreme Council for Media Regulation (SCMR) will launch a campaign to raise awareness about why we’re doing all this.

The measures came into effect on Saturday, cabinet spokesperson Nader Saad said (watch, runtime: 09:01).

There’s no word yet on the return of daylight saving time, a measure we scrapped in 2016 after changing the clocks four times. Reports last week said cabinet was considering bringing it back as early as next year.

REMEMBER- The government hopes to export around 15% of the gas that is currently allocated to the nation’s power stations, netting itself an extra USD 450 mn a month in revenues. The idea is to bring in some extra FX liquidity by taking advantage of current demand for LNG, particularly in European markets, where countries are looking to plug the gap in their energy mix left by the abrupt exit of Russian gas.

Why do we need FX? The spike in commodities prices, rising interest rates, and a sell-off in emerging markets have caused Egypt’s foreign reserves to decline 20% since March and hit FX liquidity in the banking system. That’s all putting pressure on the EGP, which has slipped almost 22% since March.

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