By Nehal Mounir
Electricity and Energy Minister Ahmed Imam has said in a series of statements made to officials over the last few days that the Ministry will cut back on the supply of electricity this coming summer. The cut backs will occur twice a day with each period lasting four hours.
Imam also said on Sunday that the Ministry would cut electricity to a number of the country’s larger factories during non-peak hours. The Ministry also stated that it would make attempts to change and amend its factory maintenance programme.
Egypt’s industrial sector currently consumes roughly 42% of the country’s electricity.
Tariq Tawfiq, member of the Board of Directors for the Food Industries Chamber at the Federation of Egyptian Industries (FEI), warned that cutting electricity to factories would cause a “disaster”, adding that such factories would have to cut back on their energy output, thus “threatening future plans for expansion”.
“Many factories have already cut back on production,” he said. “They will therefore need to learn how to adapt in the event of further cutbacks on electricity flows.”
Tawfiq also pointed out that factories serving large export markets would be most affected by the decision.
The country’s energy crisis has so far led to a number of other crises, fueled by constant energy shortages and worsening exchange rates.
Many in Egypt’s industrial sector have called for the country to move back to daylight savings time, allowing for one extra hour of consumption per day, as a simple way to avoid having to cut off electricity to factories.
Mohamed Al-Shabrawi, vice president of the Chamber of Wood Working and Furniture Industries, pointed out the need for Egypt to return to operating on daylight savings time, and for the state to limit the amount of hours in which it provides public transportation to residents, suggesting that they stop doing so after midnight.
He added that cutting back electricity to factories would decrease the energy output of textile factories by 10% at a time when such factories are already operating at only 35% energy capacity as a result of the country’s struggling economy.
Tawfiq said that a number of companies and factories have already taken steps to use alternative energy sources to cope with the expected increases in energy prices. He pointed out, however, that this would require increased funding from banks.
Mohamed Al-Haby, another member of the Board of Director’s for the FEI, pointed to the need to take immediate steps to distribute energy and import natural gas from abroad.
“A number of large-scale factories, such as those producing steel, will be particularly affected by the cutbacks due to their reliance on ovens and furnaces which require long periods of time to activate,” he said. “Cutting back the flow of electricity will decrease the production at these factories, and will shorten worker shifts, which will eventually lead to the laying-off of a number of employees.”
He added that the country’s repeated crises would hurt local production and force domestic merchants to search for other products to sell and distribute.
Haby went on to say that converting Egypt’s factories to alternative energy would require efforts from the state, not just factory owners and individuals. The conversion process, he said, would have to be implemented over a long period of time, and would require high levels of investment. “The ball is in the government’s court,” he said.
(Photo: Courtesy of Facebook Fan Page Wadi Al-Qammar)
Sayed Al-Bruhumtushi, vice president of the 10th of Ramadan City Investors Association, stated that Egypt’s Ministry of Electricity and Energy had not yet informed them of the decision to cut electricity to factories. He said that this policy would damage factory machines and facilities.
He added that regions with high levels of damaged facilities would be those most affected by this decision. “In such areas energy cutbacks should be limited to once a week,” he said.
He said that it was necessary for the state to distribute an adequate amount of petroleum resources to electricity-producing factories to avoid these factories suffering losses. “Energy generators will not be enough to serve as a substitute for cutbacks in the amount of energy flowing through the country’s national grid,” he said.
Mohamed al-Morshidi, president of the Obour City Investors Association, and president of the country’s Chamber of Textile Industries within the FEI, also said his organisation had not been informed of the government’s decision. “I expect the effects of such a policy to be limited to lampposts and similar facilities in residential neighbourhoods, to avoid cutting electricity for factories,” he said.
Hamada Al-Qalyubi, president of the Al-Mahala Investors Assocation, said that cutting electricity for four hours a day would consume half a shift’s worth of work in the nation’s textile factories, reducing the energy output of such factories by 33%. This, he said, would lead to increases in final production prices, creating huge losses for factories.
He added that Egypt’s factories should begin seeking out alternative energy sources to operate their facilities, even if converting to alternative sources would not bring benefits in the short term. He added that factories that had not yet converted to natural gas would face serious problems in the future, including severe fuel shortages that would make it difficult for them to operate electricity generators.
Ossama Rostom, a member of the Pharmaceuticals Chamber at the FEI, expected factories relying on a constant energy flow for multiple shifts per day would suffer the worst losses, decreasing their profitability and pushing management to lay off workers. He added that for such factories, electricity generators would not be enough to meet their needs.
Bahgat Al-Dash, president of the Electrical Appliances Division of the Chamber of Engineering Industries at the FEI, also said that so far his organisation had not been informed by the Energy and Electricity Ministry of its decision to cut back electrical output. He warned against the government cutting back the flow of electricity during the morning, as this would have a particularly negative effect on energy output for factories. He said that consumers’ purchasing capacity would also be affected by energy cuts.
Osama Hafila, president of the Domietta Investors Association, said that cutting back the flow of electricity for a period of four hours a day during peak hours would decrease the energy output of factories in the city by 50%.
He added that doing so would damage factory machines and facilities used to produce goods, further saying that replacing electricity flows with generators would not be a solution because the country is also experiencing a diesel crisis. He stated that any additional costs would place a huge burden on factory owners, saying that such increases would most likely result in higher prices paid by consumers.
Mohsen Al-Gabali, president of the Beni Suef Investors Association, stated that his organisation had also not been informed of the Ministry’s decision. He added that such a move would result in work operations being shut down for an average of half a shift per day in many factories, decreasing energy output by 40% and forcing a number of factories to close down or lay off workers. He went on to say that producers already faced a number of difficulties in selling and marketing their goods and products due to constant security lapses and fuel crises throughout the country. He added that the use of fuel generators, particularly in Upper Egypt, would be difficult and would not serve as an appropriate substitute for electricity acquired from Egypt’s national grid.
Mohamed Al-Sayed, President of the Energy Committee for Egypt’s Federation of Industries, and President of the Sheikh Zayed Investors Association, stated that such a move would lead to huge losses in the industrial sector in addition to the overall deterioration or destruction of a number of factory machines and facilities. This would lead to falls in employee wages at a time when many companies are looking to expand.
He added that it was now clear that Egypt’s factories should convert to new and renewable energy sources, in particular solar and wind power. He went on to say that in order to do so, a concerted effort on the part of the government and investors to provide funding to cover the cost of the project for a period of 10 years would be required. Although these costs sometimes totalled billions of pounds, after their completion the government would be able to eliminate energy subsidies entirely. This, he said, would free up money for the state to spend on other sectors. The time had come, he said, for Egypt to begin taking steps to avoid suffering further losses in the future that would have additional negative effects on the economy.
Al-Sayed added that if Egypt’s Energy and Electricity Ministry does in fact cut back the flow of electricity throughout the country for four hours per day, the country’s factories could expect to face a series of difficulties this coming summer. Many factories, he said, were simply too large to make up for cutbacks in energy supply with fuel generators.
