(AFP Photo)
The actions of the current Egyptian administration have cushioned the energy shortage crisis suffered by Egypt over the past few years, according to Mohamed Shoeib, Managing Director of Qalaa Holdings’ Energy Division. He added that the crisis has caused frequent outages of electricity in homes and factories.
Shoeib noted Egypt is on the right track in reforming the energy file, which the government started with the serious restructuring of subsidies in the state budget. He added that the government also opened the door for the private sector to produce energy.
Egypt has suffered from the worst energy shortage since 2011, which sparked anger among people because of repeated blackouts last summer, the slow production of foreign oil companies, and over-consumption, added Shoeib.
Shoeib estimated Egypt’s energy requirements at about 25,000 MW to meet the growing needs. He also said that Egypt urgently needs to generate energy of 100,000 MW, reaching 120,000 MW at peak hour by the year 2029, with investments estimated at over $90m.
Shoeib further said that the decisions of the Egyptian administration during Al-Sisi’s first year in office are bold in reforming the energy file, but await seriousness in application to guarantee positive results. He explained that Egypt requires 120m tonnes of oil equivalent, which proves solar and wind energy to be indispensible solutions.
Egypt needs $1.1m per month to purchase the amount of fuel necessary for the operation of power plants, and any defect in the provision of these material credits results in poor service.
The government has opened the door for the private sector to produce energy, after years of limiting energy production to the government only, and it has also allowed the industrial private sector to import gas to secure its needs. The government also started importing gas to ensure that there are no blackouts this summer.
About 90% of the energy generating plants in Egypt depends on gas in generating electricity. “The local iron industry is in danger of collapse due to gas shortage and the factories are operating at a quarter of production capacity,” said Suez Steel head Gamal Al-Garhy.
Al-Garhy mentioned that most of the factories operate at a quarter of their production capacity, which means that 75% of production is wasted. The shortage of gas supply to factories disrupts development efforts.
Despite criticising the government for the shortage in energy needed for steel and cement factories’ production, Al-Garhy sees that over the past few years, Egypt has been suffering from an acute energy crisis, due to the unstable situation, which led to a decline in production and an increase in consumption.
Al-Garhy said: “Al-Sisi’s government made bold decisions, including, opening the door for private sector to produce and import gas as well as restructuring subsidisation, no one can deny that.”
However, he said: “We, as manufacturers, are waiting for this crisis to be resolved to benefit our industry. When the gas price was only $1, we all established factories. Unfortunately, prices were raised to $3, then $7, so any other price increase would lead to the closure of many factories.”
The government set a gradual plan to discontinue subsidisation within the next five years. The plan aims at delivering subsidisation to those who need it, through implementing a smart-card system and tightening control over distribution. The plan also aims to enforce social safety nets through the “Takafol” and “Karama” programmes to guarantee that subsidisation is delivered to those who deserve it.
