Egypt Energy Situation

Overview

Arab Republic of Egypt
Capital	Cairo (30°2′N 31°13′E)
Official language(s)	Arabic
Government	-
President	-
Prime Minister	Ahmed Shafik
Total area	1,002,450 km2
Population	79,089,650 (2010 estimate)
GDP (nominal)	$215.845 billion
GDP Per capita (nominal)	$2,758
Currency	Egyptian pound (EGP)
Time zone	EET (UTC+2)
Calling code	+20

Energy Market

Overview Energy Market

The primary energy production in Egypt has been steadily rising and in 2006 reached 62 501 ktoe which translates to 2 617 PJ or 726 887 GWh. While natural gas production is rising steadily and export capacities increase, the production of petroleum products is declining. At the same time, demand for petroleum is further increasing, partly caused by high domestic subsidies. Recently, major natural gas resources have been discovered. For the foreseeable future, natural gas is likely to be the primary growth engine of Egypt’s energy sector.

The primary energy production has developed fast in the past; starting from around 8 000 ktoe in 1971, it developed quite linear to the current level. Main growth has been seen in the oil and gas sectors, whereas coal and peat show a more static development on a low level. Shares of renewable energies have not increased to a significant extent and continue to play a minor role in the energy supply structure. Owing to the vast resource base, the energy sector is important for Egypt’s economy and will continue to play a major role in coming years. Egypt is a net exporter of crude oil and natural gas. In addition, it has a strategic position in oil transfer because of its operation of the Suez Canal and Sumed (Suez-Mediterranean) Pipeline, two major routes for the transfer of Persian Gulf oil. In terms of coal and peat, Egypt is a net importer.

Final energy consumption in 2006 added up to 43 072 ktoe (equal to 500 927 GWh or 1 803 PJ).

The Electricity Grid

In 2007 / 2008, the state-owned carrier grid consisted of 39 552 km. The grid is subdivided into six geographical zones, namely Cairo, Canal, Delta, Alexandria and West Delta, Middle Egypt and Upper Egypt. The country’s entire territory is covered.

Medium and low voltage as well as isolated grids are owned and operated by the respective distribution companies. In June 2008, the distribution grid consisted of 142 983 km of medium voltage and 230 187 km of low voltage lines (not including non-energy use).

Since 1998, efforts have been made to interconnect the Egyptian electricity grid internationally. As a result, the five-country interconnection of Egypt’s system with those of Jordan, Syria, Lybia and Turkey has been completed in 2002. Links to the European electricity market have been established through the sub-marine connection between Morocco and Spain (400 KV) and over the connection Syria –Turkey.

In April 2004, the Arab Maghreb countries agreed to repower the national grids of Egypt and Libya in order to upgrade the interconnection.In the fiscal year 2007 / 2008, the Egyptian Electricity Holding Company (EEHC) faced a challenge meeting the unexpectedly high peak demand, reaching 19 738 MW.

Installed Capacity

Between 2003 and 2008, the total installed capacity increased about 24 %, mainly through the added combined cycle and wind power installed capacity.

In June 2008, the total installed capacity reached 22 583 MW, equivalent to a 2.9 % increase compared to the previous year. Of this, conventional steam power stations accounted for 11 571 MW (51.9 %), combined cycle power plants for 6 449 MW (28.9 %), and hydropower stations for 2 842 MW (12.8 %). Wind power plants provide the remaining 305 MW (1.3 %). Since 2002 / 2003, three private-sector electricity utilities have been contributing 2 048 MW of generating capacity (9 % of overall countrywide capacity in 2008) from three gas-fired steam power plants. According to the Ministry of Energy and Electricity’s five year plan from 2005, the installed capacity is to increase to a total of 32 GW by 2010.

Egypt has 35 decentralised power plants (mostly diesel units) that are not connected to the national grid. The combined installed capacities of these plants added up to 258 84 MW in 2007/2008. Approximately, 350 GWh of electricity were supplied to local users including tourist resorts.

Electricity Generation

Egypt is a net exporter of electricity, importing 208 GWh of electricity in 2006, while exporting 557 GWh. Transmission and distribution losses account for approximately 10 % (12 583 GWh) of total electricity produced.

In 2005, losses added up to 16 % of total electricity supply. The main consumer of electricity in Egypt is the residential sector which accounts for 37 % of the total consumption, followed close by the industrial sector (35 %). A future average annual growth in electricity demand of 6.35 % is expected, partly due to rising living standards and very low electricity prices. In order to meet the expected growth in demand, EEHC prepared the 6th five year plan (2008 – 2012). The plan entails adding electricity production capacity of 7 750 MW, while at the same time maximizing the use of combined cycle installations to reach a 37 % share of the total installed capacity in 2011/2012. On 31 January 2009, the government has finalized the follow-up five-year plan from 2012 – 2017 which aims at adding further 10 450 MW generation capacity.

Renewable Energies

In 2006, renewable energy sources reached a share of 12.5 % of total grid-connected electricity production. While 12 925 GWh (12 %) were produced by hydropower installations, wind power contributed another 616 GWh (0.5 %).

Solar Energy

Solar energy use is still in its infancy, however, in 2007, the German company Flagsol GmbH won a tender to build a hybrid solar combined cycle plant with a total gross capacity of 150 MW.7 The solar field is located at Kuraymat and is co-financed by the Global Environmental Facility (GEF) and the Japanese Bank for International Development. Commercial operation is scheduled for mid 2010. Egypt plans to extend the solar capacities with further projects of this kind.

Wind Energy

The current installed wind capacity accounts for 305 MW. Egypt is endowed with abundant wind energy resources, especially in the Suez Gulf zone. After the implementation of several experimental wind farm projects, the Ministry of Electricity and Energy set up an ambitious plan for wind farm development aiming at a total installed capacity of 965 MW in 2011/2012.

Biomass

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Biogas

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Hydro Power

The total installed capacity from hydropower accounted for 2 842 MW in 2008. Hydropower installations include High Dam (2 100 MW), Aswan Dam I (322 MW), Aswan Dam II (270 MW), Esna (86 MW). urrent hydro power projects include the New Hammasi plant with an installed capacity of 4 x 16 MW, which started operations in 2008. For 2014, the commissioning of the New Assuit Barrage hydro electricity plant, with an installed capacity of 32 MW, is projected.

Other renewable Sources

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Electricity Prices

The prices of electricity in Egypt range among the lowest in the world. The prices are fixed by the Egyptian government in a non-transparent manner and apply in equal manner to all regions. Electricity is highly subsidized. Since October 2004, several electricity tariffs were raised, by an average of 8.6 %, for the first time since 1992 and further 5 % increases were set for all electricity customers for each of the following five years. The last increase took place in November 2008. In 2008, the rise summed up to 7.5 %, including an additional 2.5 %-increase caused by high oil prices. While the increase in some segments exceeded 18 %, prices of the first segment of domestic consumption – less than 50 kWh per month, mainly composed of low income families –remained unchanged at 5 Pt (approximately 0.62 €-ct). The highest increase was seen for the residential consumers with a demand of >1000 kWh/ month. The governmental plan was intended to gradually accommodate the electricity prices to the actual cost of the electricity system. However, taking into consideration annual inflation rates exceeding 5 %, these increases may not suffice. The new electricity law is supposed to specify the main principles of price regulation such as the ones mentioned above.

Liberalisation

Article 7 of Law No. 100 dating from 1996 stipulates that local and international investors can obtain concessions for building and operating electricity plants. A new investment law enacted in 1997 includes various incentive mechanisms such as state guarantees for investors. At the time of contract negotiations concerning the supply of electricity from privately built power plants in the late 1990s, an initial public offering of stock in all seven of Egypt’s state-owned monopolistic electricity providers was in preparation for the Egyptian stock exchange. However, due to lack of interest among investors, the plan was never implemented. The last significant step of reform took place in 2000, when the Egyptian Electricity Authority was restructured to become the Egyptian Electricity Holding Company (EEHC). That conversion is regarded as a step towards a more entrepreneurial approach because, for example, EEHC is expected to finance future projects from its own budget without governmental intervention. The conversion also included the break-up of formerly vertically integrated utility companies into individual enterprises each of which is now an independent company with its own, autonomous management and separate accounting. EEHC was created as a new approach to the privatization of its subsidiaries, but no part of any state-owned enterprise has been privatized by now. Via EEHC, the Egyptian government still controls 90 % of all electricity production and is maintaining its monopoly on transmission and distribution. Until today three privately operated power plants with foreign investors have been built according to the build-own-operate (BOO) principle (Sidi Krir, Suez and Port Said), representing approximately 10 % (2 049 MW) of the current
installed generating capacity.

Within the context of the new energy strategy and the ambitious renewable energy targets, recently, there has been some effort to create a more competitive electricity market in order to attract investors from the private
sector. The draft of the new Electricity Law, which is currently in the process of ratification by the People’s Assembly, is supposed to establish a liberalised electricity market, regulated by the Egyptian Electric Utility and Consumer Protection Regulatory Agency EEUCPRA. Article 20 – 22 of the draft law addresses the replacement of the current Single Buyer Model and allows for third party access to the electricity grid. The access to the electricity grids will be based on published tariffs and longterm electricity purchase agreements. Moreover, the government states that it plans to remove all energy subsidies by 2017.

Rural Electrification

Under the Egyptian government rural electrification programme, a countrywide electrification rate of 99 % was achieved through grid extension projects. As assessed in a study by MEDREC in 2004, there have been approximately 121 remote villages and communities which still do not have access to electricity. The Rural Electrification Authority’s target for 2008 was to electrify 327 little settlements, the strengthening of 31 village grids and the refurbishment of 41 further grids.
For the few remaining remote settlements, the decentralized use of renewable energy resources is under consideration as an alternative to actual grid access. Due to the dispersed nature of both houses and rural communities, in addition to their low demand, the extension of the grid is economically unfeasible. The project MEDREP, a joint project being conducted by NREA, the governorate of North Sinai, the Egyptian environmental authorities, the Rural Electrification Agency (REA) and initiated by the Italian Ministry of Environment in 2004, aims at supplying electricity through photovoltaic to these remote rural communities as well as the utilization of solar thermal energy for heating and cooling purposes in tourist resorts and new villages.

Key problems of the energy sector

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Policy framework, laws and regulations

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General Energy policy, Energy strategy

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Important Laws and regulations

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Specific strategies (Biomass, renewable energies, rural electrification, energy access strategy etc.)

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Institutional set up in the energy sector

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Governmental institutions Private sector (enterprises, NGOs)

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Activities of other donors, activities of NGOs

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Existing Projects

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Publications

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External links

• Egypt's Government Services Portal
  
• Egypt's entry at The World Factbook