The Clap:
Egypt’s Ministry of Petroleum and Mineral Resources reduced natural gas supplies to fertilizer manufacturing companies by a 20- 30% margin, officials familiar with the state strategy told Al Arabiya Business.
Timeline:
The Egyptian Natural Gas Holding Company informed domestic fertilizer companies on Monday of cabinet’s decision to reduce gas supplies.
Claps class:
Nitrogen, the primary component of fertilizer enabling high agricultural yields, must be produced using natural gas. Natural gas provides between 70 and 80 percent of the energy needed to make essential fertilizers.
Impact:
Two fertilizer companies said they will have to shutter the doors to a third of their three factories, while noting their remaining facilities would receive about 80% of their natural gas demands in coming days.
Remember:
In response to a decline in gas supply brought on by the conflict in Gaza, the government last reduced gas supplies to energy-intensive industries by up to 30% in November, mostly affecting fertilizer, iron, and aluminum companies.
This comes as cabinet works to slash energy spending:
Axing spending on gas comes as the country wrestles with its domestic energy supply after becoming a net importer of LNG in recent months following a fall in domestic gas production.
Why this matters:
Ending energy spending is one of the IMF’s demands to unlock the USD 8 billion loan program. The IMF called on the government to control unaffordable energy subsidies and fuel prices in compliance with the prices mandated by the automatic fuel pricing committee, and channel spending instead toward social support programs.
