How Egypt became a leading light of region's electricity sector

Hind Al Soulia - Riyadh - In the space of six years Egypt has gone from facing chronic electricity shortages to becoming a power exporter, in one of the most impressive successes of President Abdel Fattah El Sisi's drive to overhaul the country's infrastructure.

Egyptians had for decades been tormented by power cuts, often during the punishing heat of summer when demand typically outstripped supply. The lengthy outages fed popular disgruntlement with a succession of governments and presidents dating back at least a half century.

That was especially true under the Islamist president Mohamed Morsi of the now-outlawed Muslim Brotherhood, who was removed from power in 2013 by the military, then led by Mr El Sisi, amid a wave of street protests against his divisive, one-year rule.

Fast forward to 2020 and Egypt has more than doubled its power production and is exporting surplus electricity to neighbouring nations and looking into supplying Europe through undersea cables.

The turnaround began in 2015 when Egypt signed a €3.7bn ($4.4bn) contract with Germany’s Siemens AG to build three power stations; in Beni-Suef south of the Egyptian capital, in the New Capital being built in the desert east of Cairo, and in Kafr El Sheikh in the Nile Delta. All three, with a combined output of 14,400 megawatts, were built in just over two years.

President El Sisi has said his government spent 615 billion pounds ($39bn) from 2014-2019 to double the country’s electricity output, which now stands at nearly 60,000MW, of which about 25,000MW is surplus.

But Egypt's revamp of its electricity sector went beyond simply building more power stations. The plan included upgrading the national grid to secure distribution to the estimated 20 million customers, replacing overhead power lines with underground ones and improving the collection of charges. Antiquated transformers were replaced by more efficient ones and penalties were toughened for theft of electricity.

The country of more than 100 million people now exports electricity to Jordan, Libya and the Palestinian territories, with plans to also supply power to Saudi Arabia and Sudan. Last year, Egypt and the Mediterranean island of Cyprus signed a deal to build a 310-kilometre undersea power cable. The project will take 36 months to complete from the commencement of work.

“It’s not just about getting electricity from Egypt at a cheaper cost, these countries are avoiding all kinds of pollution by importing it from us,” an expert with over 30 years of experience in the electricity sector said.

“By keeping production in Egypt, they’re receiving a large amount of what we call ‘clean electric power’,” said the expert, who spoke to The National on condition of anonymity.

Egypt is also taking giant steps in the field of renewable energy, building one of the world’s largest solar energy fields in the south, harnessing wind on the Red Sea shores and planning a nuclear power station on the Mediterranean.

But the plentiful supply of electricity has not come without cost for Egyptian consumers.

Mr El Sisi's government has been gradually lifting state subsidies on electricity as part of reforms to overhaul the economy. Some Egyptians say they now pay up to three times what they used to – after having grown accustomed to paying a fraction of the cost of generating and delivering power to their homes. Under the latest hike in charges that went into effect in August, customers whose monthly consumption exceeds a miserly 650 kilowatt hours have to pay for their electricity at full price.

Electricity Minister Mohammed Shaker, the architect of the pricing policy, recently said the gradual removal of subsidies on power has been extended by three more years to end in 2025, a move designed to cushion the impact of the economic slowdown caused by the coronavirus pandemic.

The economic reform programme adopted by Mr El Sisi’s government in 2016 includes lifting subsidies on a host of other basic consumer items, including fuel, leading to price increases that have hit the poor and middle class the hardest.

Mr El Sisi reminded Egyptians of the improvement in power supply during televised comments last month as he stressed the value of stability in the face of attempts to incite unrest by foreign-based media outlets loyal to the Muslim Brotherhood.

In a regional context, what Egyptians now take for granted – uninterrupted, round-the-clock electricity – is something millions in countries such as Libya, Iraq, Lebanon, Sudan and Yemen can only dream of.

With power to spare, Egypt had looked into exporting electricity to Iraq, Lebanon and Syria, but these plans have been put on hold, according to Ahmed El Sayed, a senior partner in EMC Energy.

“They need electricity right now, but with all the political unrest over there, I don’t know how that’s going to play out,” he said.