Dispute Between "EGAS" and Fertilizer Companies Over Natural Gas Price Increase

SadaNews - The increase of one dollar to the natural gas price for fertilizer factories in Egypt starting from last October has sparked a dispute between four companies (Abu Qir, Helwan, Kima, Alexandria) and the Egyptian Natural Gas Holding Company "EGAS", regarding the application of the price equation for invoices, according to four officials from the companies.

In mid-September, the Egyptian Cabinet issued Decision No. 3285 to increase the price of natural gas for fertilizer factories by one dollar, bringing the price to 5.5 dollars per million thermal units as a minimum compared to 4.5 dollars, in addition to maintaining the pricing equation that considers the rising and falling fertilizer prices in the global and local markets when determining the gas price for companies in the monthly invoice.

The pricing equation for natural gas applied to fertilizer companies is directly based on the selling price of a ton of urea fertilizer supplied to the Egyptian government and its export price as well, a mechanism approved by the Egyptian government in 2022.

An official in one of the fertilizer companies told "Al-Sharq" that "EGAS" sent high invoices for gas consumption for the second half of September 2025 with a one dollar increase, as the pricing equation justifies the increase in the gas consumption value to reach 6.2 dollars per million thermal units. This has led companies to request a review or to pay the normal invoice until the dispute over pricing is resolved.

The official added in his conversation with "Al-Sharq" that the Egyptian Natural Gas Holding Company "EGAS" interprets the Cabinet's decision to raise the price to become 5.5 dollars as a minimum by an additional dollar while applying the pricing equation due to the increase in export quantities to 63% compared to supplying 37% to the local market.

No Additional Increase in Gas Prices in Egypt

In contrast, fertilizer companies believe that the Cabinet's decision stipulates raising the gas price only without any additional increase while applying the pricing equation, indicating that the addition of a dollar from EGAS to the gas price increases production costs for companies and imposes additional financial burdens that are not legal.

Egypt has decided to keep subsidized fertilizer prices unchanged at 4,500 pounds per ton, to avoid increasing food prices, with the Ministry of Finance bearing an additional financial amount of 1,500 pounds for each ton of subsidized fertilizer, in favor of fertilizer companies and factories, according to statements from government officials and three heads of state-owned companies to "Al-Sharq".

One source told "Al-Sharq" that a government committee agreed with fertilizer factories to reduce the quantities of subsidized fertilizers delivered to the Ministry of Agriculture from 55% to 37% of total produced quantities, aiming to compensate companies for the gas price increase set for the factories, with an announcement of the increase to be made at a later date.

Egypt's Production of Nitrogen Fertilizers

Egypt has seven nitrogen fertilizer factories: "Abu Qir Fertilizers", "Mopco Fertilizers", "Kima Aswan Fertilizers", "Helwan Fertilizers", "Egyptian Fertilizers", "Alexandria Fertilizers", and "Delta Fertilizers". These factories produce about 7.6 million tons of nitrogen fertilizers, about 63% of which are exported and 37% are supplied locally in the government subsidy system.

A government official told "Al-Sharq" that fertilizer companies have been "obliged to supply 2.4 million tons of fertilizers annually, with a quota of 200,000 tons monthly, compared to 3 million tons annually previously, with full commitment to supplying the subsidized quotas on time".

Another source in one of the fertilizer companies stated that the four fertilizer companies insist on publishing the decision to increase gas prices in the official gazette to preserve their rights and take legal steps in the event that "EGAS" insists on increasing the gas price, indicating ongoing negotiations between the companies and government entities to resolve the dispute but no results have been reached yet.

Officials stated that companies with specific contracts for gas supply, such as Egyptian Fertilizers and Mopco, do not suffer from this issue, as they receive gas at specified prices in the supply contracts.

The Cabinet's decision exempted companies that are billed according to pricing equations stated in the gas supply contracts with them, and those companies will continue to be billed according to the same pricing equations in the contracts with them, according to statements from government officials.