Ahram Online, by Ahmed Kotb (Excerpt Egypt: A energy dream come true)
Egypt has transformed itself into a natural gas and electricity export hub after struggling for years with energy shortages
The massive Zohr natural gas field placed Egypt as an energy hubEgypt is getting closer to becoming a regional energy hub, exporting its excess production of natural gas and facilitating exports from neighbouring countries. It has also embarked on several projects connecting the electricity grids of Arab, African, and European countries.
The situation was completely different a few years ago, when millions of people were affected by recurring power cuts resulting from the national grid’s inability to meet rising demand due to a lack of maintenance and outdated power plants. The peak was in 2013, when maximum power-generation capacities reached about 30,000 Megawatts (MW), which was not enough to meet local demand.
The problem was augmented by difficulties finding the needed fuel for power plants. The National Centre for Power Control reported in 2013 that the national grid was losing more than 4,000 MW of its capacity as a result of fuel shortages.
Power stations in 2013, according to the Ministry of Petroleum, consumed about 80 per cent of Egypt’s daily needs of natural gas. And natural-gas production was affected because of the failure of the government to pay the arrears of international gas-exploration companies following the 25 January Revolution.
Egypt’s production of natural gas by the end of 2012 was about 80 per cent less than today’s level, and it could not meet local demand. The energy crisis was a major threat to Egypt’s economy and its growth plans.
In 2014, President Abdel-Fattah Al-Sisi and the cabinet prioritised power generation and Egypt started to witness a flow of investment into the energy sector. The government also planned the repayment of arrears to the gas-exploration companies and the phasing out of energy subsidies.
The latter constituted about 10 per cent of Egypt’s GDP at a total cost of about LE130 billion per year. Egypt’s upgrading of petroleum projects since has resulted in slashing imports of oil products by a third and importing 3.5 million tons of oil by the end of 2020 compared to 10 million tons at a total cost of US$4.5 billion in 2016.
After gradually lifting fuel subsidies over five years as part of an economic-reform programme that aimed to trim the budget deficit and was part of a $12 billion loan deal with the International Monetary Fund (IMF), the government decided to implement a quarterly price-indexation mechanism meant to review fuel prices every three months starting from June 2019.
The system is based on global fuel prices, the exchange rate of the Egyptian pound against the US dollar, and other variable factors.
Read on via english.ahram.org.eg
Comments