Tuesday,21 November, 2017
Current issue | Issue 1183, (6 - 12 February 2014)
Tuesday,21 November, 2017
Issue 1183, (6 - 12 February 2014)

Ahram Weekly

A winter in the dark?

The decreased demand for electricity during the winter season does not necessarily mean fewer power outages

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eco3
Al-Ahram Weekly

Hardly a day now passes without power blackouts that range from between one to three hours in duration in different neighbourhoods across Cairo. The problem is even bigger in other governorates, where the blackouts can extend to five hours, reports Sherine Abdel Razek.

The hotels division of the Chamber of Commerce has called upon the ministry of electricity to exclude the Red Sea resorts of Hurghada and Sharm El-Sheikh from the power outages, which have been adding to the ailing tourism industry’s woes.

The lives of patients in state hospitals in poorer areas have also been threatened by the cuts, as these hospitals may not have their own generators.

Power outages became a familiar summer phenomenon over the last five or six years, when the hot weather increased the demand for air-conditioners and electric fans. This in turn overloaded the country’s power stations, which had to work over their designed capacities causing reduced outputs and power cuts.

However, the present round of cuts has had different causes. According to the Egyptian Electric Utility and Regulatory Agency (EgyptERA) the blackouts have been happening despite the network working at a maximum capacity of 22 gigawatts at peak times and 14 gigawatts at dawn when consumption is at its lowest level.

The network is currently working at 85-90 per cent of its full capacity, according to Hafez Al-Salmawy, general director of the EgyptERA.

He said that the problem of the cuts was not due to increased demand on generating capacity, but was instead a result of fuel shortages for the power stations.

More fuel would have to be paid for with new Gulf aid, as Egypt does not have the foreign currency needed to import more gas to fuel the stations, Al-Salmawy told Al-Ahram Weekly.

According to the state-run Al-Ahram daily, half of the latest Saudi aid package of $4 billion that it pledged to extend to Egypt last week is expected to be delivered in the form of fuel shipments. Egypt has received $6 billion of Gulf aid in the form of energy products since the ouster of former president Mohamed Morsi last July.

Egypt’s five-year economic plan ending in 2017 aims to increase power generation by upping the capacity of the country’s power stations, adding 12.5 gigawatts to the current capacity to reach some 40 by 2017.

“The expansion is not only about adding to production capacity. It also includes having the money to import fuel and a plan to rationalise consumption,” Al-Salmawy said.

The energy sector burns through tens of billions of Egyptian pounds in subsidies each year, a main cause of the country’s ballooning budget deficit. Energy subsidies rose to LE80 billion in the last fiscal year, and their inefficiency and social value has been repeatedly questioned.

Meanwhile, a parallel restructuring plan is planned for the sector that will upgrade its efficiency and make it more appealing for investors.

According to Al-Salmawy, Egypt needs to increase its capacity to 60 gigawatts by 2020 to solve its power problems. In order to reach these levels, $50 billion worth of investment is needed and the private sector will need to contribute the bulk of this sum.

“We cannot depend on the state to invest in power projects as such investments are almost equivalent to six per cent of GDP. This is a burden that cannot be met, particularly since the new constitution states that almost 10 per cent of GDP should be allocated to spending on health and education,” he commented.

The government is also trying to encourage foreign companies to expand their exploration and production of the country’s oil and gas resources by paying money that is overdue to these firms.

Such money amounts to some $6 billion, according to estimates.

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