Egypt hikes gas prices to fertilizer plants by 50%, lifts subsidy obligations
The Egyptian government has raised natural gas prices for fertilizer plants by 50% amid a global surge in energy prices, while temporarily exempting them their obligation to supply the domestic market with an allocated share of subsidized fertilizer. The plants will instead be allowed to direct their entire output toward fulfilling export contracts, according to two sources who spoke to Al Manassa.
The decision comes as fertilizer producers face mounting pressure from cuts to their natural gas supplies. Agriculture Minister Alaa Farouk, meanwhile, said subsidized fertilizer supplies to farmers would remain uninterrupted, with government stocks sufficient to meet demand for two months.
Sherif El-Gebaly, head of the Chemical Industries Chamber at the Federation of Egyptian Industries, believes that global fertilizer prices, currently ranging between $530 and $540 per ton, could help offset the higher gas costs.
Global energy markets have been hit by a wave of price increases, which has intensified since September amid the fallout from the US-Iran war and disruptions to oil and gas supplies. The developments prompted the government to draw up a new plan to rationalize consumption and public spending over the coming months.
The government initially reduced gas supplies to a number of factories by 20%, then deepened the cuts to 33% last week. It has now decided to raise the price of gas supplied to the plants.
Agriculture Minister Alaa Farouk told Al Manassa that government fertilizer stocks stand at around 400,000 tons, enough to meet farmers’ needs for two months. He added that no decision had been taken to raise the prices of subsidized fertilizer.
A board member of one of Egypt’s major fertilizer companies said exports had been disrupted, with between 20% and 25% of quantities contracted for delivery in the final quarter of 2026 affected by continued cuts to natural gas supplies. The reductions have lowered production rates and limited the quantities available for export.
The source, who requested anonymity, told Al Manassa that if gas supplies remain at their current reduced levels, fertilizer companies’ revenues and profits could fall by more than 20% in the fourth quarter as production declines and export volumes shrink.
The source added that the regularity of gas supplies in the coming period would be critical in determining factory operating rates and export volumes and limiting expected losses in companies’ revenues and profits during the final quarter of the year.
A board member of a state-owned fertilizer company said the company had shut down one of its plants, which has a daily production capacity of 2,500 tons of nitrate fertilizer, and begun maintenance work during the shutdown. Its other two plants remain operational at full capacity, producing up to 3,300 tons of urea per day, although they have also been affected by reduced gas supplies.
The second source, who also requested anonymity, told Al Manassa that the price of gas supplied to the company is determined by a formula linked to the global export price of urea. The source expected the latest gas price increase to be temporary, aimed at ensuring factories have enough fuel to continue operating and meet their export commitments.
A source familiar with gas imports at the Ministry of Petroleum had previously told Al Manassa that the estimated cost of natural gas imports in November had surged by around 185% year on year to approximately $2.21 billion. The increase was driven by higher global prices and disruptions to shipping and maritime traffic amid geopolitical tensions.
The move comes after the government’s decision to reduce allocations for petroleum product subsidies in the current fiscal year to approximately 15.8 billion Egyptian pounds ($293 million), down from 75 billion pounds ($1.39 billion) in the previous fiscal year.
Global prices could offset higher costs
Allowing fertilizer plants to direct their entire output toward exports and fulfill existing contracts is important for preserving Egypt’s reputation in international markets and honoring its contractual obligations, while ensuring companies earn adequate returns amid rising production costs, according to El-Gebaly.
He told Al Manassa that export commitments for November were already in effect, while the actual impact of the gas price increase on December export contracts would become clearer in the coming days.
According to an analytical report by Al Ahly Pharos reviewed by Al Manassa, the gas price increase will squeeze fertilizer companies’ operating margins by raising the cost of one of their main production inputs.
Hany Genena, the company’s head of research and a fertilizer sector analyst, expects domestic fertilizer supplies to come under pressure, potentially driving up prices for urea allocated for export as supply and demand dynamics shift.
The report also questioned whether the increase in the minimum gas price was temporary or marked the beginning of a longer-term trend toward higher energy prices for factories. It projected continued upward pressure on gas prices amid an imbalance between domestic production, consumption and import costs.
It warned that persistently higher gas costs would squeeze profit margins for urea producers, which may struggle to pass the full increase on to buyers, particularly because part of their output is committed under export contracts and existing supply agreements.
Egypt’s fertilizer exports reached approximately $2.53 billion between Jan. and Sept. 2026, making fertilizers the leading export product in the chemicals and fertilizers sector, according to data from the Chemical and Fertilizers Export Council.