Samer Choucair: Egypt’s £11 Billion Electricity-Theft Recovery Tests the Sustainability of Power-Sector Reform
Investment leader Samer Choucair said the rise in proceeds from electricity-theft violations in Egypt to approximately EGP 11 billion during the 2025–2026 fiscal year, compared with more than EGP 7 billion a year earlier, represents an increase of more than 50% and reflects stronger collection capabilities among electricity distribution companies. However, he cautioned that the increase does not mean the underlying problem has been resolved.
Samer Choucair said the more important indicator for institutional investors is the gap between those recoveries and commercial losses estimated at around EGP 43 billion, within total financial losses at distribution companies of approximately EGP 55 billion. He argued that narrowing this gap is the real test of whether electricity-sector reform can become sustainable.
Choucair noted that factories accounted for electricity-theft violations worth approximately EGP 5 billion, of which around EGP 3.5 billion was collected. Meanwhile, South Cairo Electricity Distribution Company recorded losses equivalent to about 27% of the electricity it received, highlighting substantial differences in the investment opportunity for loss reduction across individual distribution areas.
Subsidies and Tariffs Are Reshaping the Sector
Samer Choucair said these developments are taking place alongside a broader repricing of electricity, with subsidy allocations in Egypt’s 2026–2027 budget rising to approximately EGP 100 billion from an earlier target of roughly EGP 75 billion, while tariffs for some consumption categories have increased and lower-consumption households continue to receive protection.
Choucair said the current model combines higher tariffs, stronger action against electricity theft, and continued government subsidies.
“Every pound recovered from electricity that has actually been consumed reduces pressure on the state budget and the fuel bill,” Choucair said. “But collection alone cannot substitute for reducing structural losses.”
He added that persistently high commercial losses could weaken investment capacity across the electricity network and increase the risk premium attached to financing energy projects. Conversely, sustained reductions in losses would improve the sector’s ability to recover its costs and strengthen its financial position.
Smart Meters Are Creating an Investment Market
Samer Choucair said Egypt’s transition toward coded, smart, and prepaid electricity meters represents a shift away from relying primarily on field enforcement campaigns toward an operating infrastructure driven increasingly by data.
The transformation becomes more significant as meters are connected to central data-management platforms and systems capable of identifying abnormal consumption patterns.
Choucair said the investment opportunities extend beyond the meters themselves. They include domestic meter manufacturing, grid-management software, cybersecurity, energy-efficiency technologies, and financing for electricity infrastructure.
Reducing losses, he added, can effectively release electricity that is already being generated without requiring equivalent capital expenditure on entirely new generation capacity.
“The institutional investor distinguishes between capital expenditure that expands capacity and expenditure that stops leakage,” Choucair said. “The higher marginal return may come from a network that knows who is consuming electricity, how much they are consuming, and whether they are paying for it.”
Saudi Interconnection Raises the Value of Grid Efficiency
Samer Choucair said electricity-network reform also intersects directly with the Egypt-Saudi electricity interconnection project, which is designed to provide exchange capacity of up to 3 gigawatts.
The economic value of regional interconnection, he argued, depends not only on transmission capacity but also on accurate metering, effective collection, and the efficiency of domestic grids.
Choucair said the ability to attract Gulf capital into Egypt’s energy market will continue to depend on whether the sector can convert large and growing electricity demand into predictable and collectible revenues.
Improving that equation could support private generation, renewable-energy investment, transmission and distribution projects, and further regional interconnection opportunities.
The Real Test Comes After Enforcement Campaigns End
Samer Choucair cautioned that rising fines and collections could become a form of exceptional revenue if they are not accompanied by a sustained decline in electricity losses.
The sector also remains exposed to other pressures, including tariff increases, fuel costs, financing conditions, and foreign-currency requirements.
Choucair said the strongest scenario would combine anti-theft enforcement with smart-meter deployment and centralized integration of consumption data. A more moderate scenario would involve stronger collections but only a gradual reduction in losses. The weakest outcome would be one in which penalties continue to rise while the underlying structure of the network remains largely unchanged.
Samer Choucair concluded: “If the commercial-loss gap declines faster than the growth in fines, then we are looking at a reform that changes the cost of capital. If collections alone continue to rise, the market is buying time rather than buying a new structure.”