The World Bank approved a $500 million loan to help support the Egyptian government’s initiative which aims to provide 1.5 million Egyptian households living in impoverished areas with access to natural gas.

The Egypt Household Natural Gas Connection Project will extend piped gas to 11 governorates, including three governorates (Sohag, Qena and Aswan) located in Upper Egypt, where poverty levels are the highest, replacing household consumption of liquefied petroleum gas (LPG), which is mostly imported, with grid-connected natural gas.

Piped gas is considered a more convenient cooking fuel with higher reliability and better health and safety benefits.

About 52 percent of the neighborhoods targeted by the project have poverty rates higher than Egypt’s national average.

The project will especially benefit those people who have difficulty getting hold of LPG cylinders and transporting them, such as people with disabilities, the elderly and women from vulnerable income groups who often have to stand in line for long periods of time to purchase cooking gas.

According to the World Bank, over 75 percent of Egypt’s households currently buy their LPG cylinders from an informal market and an inefficient distribution network that are characterized by persistent shortages.

The government hopes this initiative will help to increase the number of households connected to the natural gas grid by more than 40 percent to 8.2 million households from 5.8 million households.

“We are pleased to help improve the delivery of energy services to the people of Egypt,” said Hartwig Schafer, World Bank country director for Egypt, Yemen, and Djibouti. 

“Conversion to piped natural gas will help give households access to a safer, more reliable and cheaper supply of gas compared to buying LPG cylinders.” 

Fuel and food subsidies get the largest chunk, about a quarter, of the nation’s budget.
Earlier this month, the Egyptian government announced that it was cutting the nation’s fuel subsidy and other government subsidy programs to stem the country’s budget deficit and rehabilitates its economy.

The price of fuel in Egypt went up by 78 percent, or 22 cents per liter.

Previous Egyptian leaders have eschewed cutting national subsidies due to the fact that most of its citizens, half of them living below poverty, would be affected.

The fuel subsidies cut will reduce energy bills, the government said, and reduce its dependency on Persian Gulf nations’ aid.

The loan from the World Bank will provide the financial support the government needs to “finance the connection charges in disadvantaged areas so that poor households can also connect to the gas grid,” said Husam Mohamed Beides, the project’s task team leader. 

“We are working closely with the European Union and the French Development Agency to ensure that this project is a success,” he said.