Egypt eyes rising electricity prices as potential cure for..

[DJKeefy]

Egypt eyes rising electricity prices as potential cure for summer power cuts.

As Egypt struggles to import enough fuel to meet energy needs, officials hope increases in electricity prices will take some pressure off the power grid this summer.

Egypt is expected to experience numerous power cuts this summer due to ongoing shortages of fuel, including natural gas and the low-quality diesel fuel mazut.

Over recent weeks, several news reports have claimed that Egyptians might see blackouts twice a day due to a Ministry of Electricity plan to conserve electricity during the hottest months from May to August.


Hoping for a mild summer

Speaking to Ahram Online, Hafez El-Salmawi, head of the Egyptian Electric Utility and Consumer Protection Regulatory Agency, said that the coming summer might not be as bad as expected, and may even be better than last year in terms of electricity service.

He said that Egyptian households might not suffer frequent power outages, as the government had raised household electricity prices to reduce consumption.

"Egyptians will try to save electricity to avoid paying higher bills, especially after prices were raised for the first time since 2008," El-Salmawi said.

Egypt's government has recently moved to reduce subsidies on electricity and natural gas, which account for as much as 5 percent of the country's total LE145 billion subsidy bill.

Prices for consumers increase with consumption, with tariffs on monthly consumption of up to 200 kilowatts per hour increasing by 4.4 percent to LE0.12. Taking into account a previous increase, prices have risen by ten percent since November of last year.

The other two highest consumption categories saw an increase of more than 17 percent each.

El-Salmawi said that electricity consumption during the summer was expected to rise to 29,500 megawatts per day, exacerbated by the hot weather and the Islamic holy month of Ramadan in July. Egypt's daily capacity for generating electricity currently stands at around 27,000 megawatts.

"The national electricity grid will be overloaded by around 2,500 megawatts on rush days and on days that see heat waves, which should be dealt with through household conservation," El-Salmawi stated. "Otherwise, the government will have to cut power during these overloaded days in some areas."

El-Salmawi said that, if every consumer turned off one 40-watt light bulb, for example, about 1,500 megawatts could be saved.

Over the last ten years, electricity consumption has jumped by 29.5 percent, according to official data, with prices largely static until the recent hikes.


Fuel shortage concerns

"There are 220 power units generating electricity nationwide and consuming roughly 90 million cubic metres of fuel," said electricity ministry spokesperson Aktham Abu El-Ela.

Abu El-Ela explained that power stations consume either natural gas or low-quality diesel fuel. With Egypt's current fuel shortage, he added, a number of power plants have seen their supplies disrupted, shrinking their capacity and leading to repeated power failures in some areas.

Egypt is completely dependent on fossil fuels for producing electricity, with a mere ten percent of the country's total generated electricity coming from wind turbines and hydroelectric plants, such as the Aswan High Dam, Naga Hammadi's barrages and the Aswan reservoir.

While the 2,500 megawatts represent an overload on the electricity grid, the power-generating gap is likely to be larger depending on the availability of fuel.

Electricity Minister Ahmed Emam said on Sunday that the country's power-generating gap during the summer would be revealed by the end of the current month, after the amounts of fuel to be supplied by the petroleum ministry are announced.

"The problem is related to the Ministry of Petroleum, which should save fuel quantities for electricity power plants," Abu El-Ela said.

El-Salmaw, for his part, asserted: "The cash-strapped government faces trouble obtaining fuel imports. Also, the Ministry of Petroleum owes foreign oil companies around $6 billion, which have halted a part of the oil supply until the ministry pays up."

Electricity troubles are not new to Egypt, but the problem has been exacerbated in recent years.

Under the former regime, Egypt's government had enough foreign currency liquidity to pay for fuel imports, and it had the trust of suppliers due to its sizable net international reserves (NIR), Mohamed Abu Basha, an economist at Egypt's largest investment bank EFG-Hermes, told Ahram Online.

"The current situation is different; the government faces a vast shortfall in foreign currency, along with its haemorrhaging NIR and political turmoil, so a negative impact on fuel imports is expected," Abu Basha commented.

Around 60 percent of domestic natural gas consumption was allotted to electricity generation, compared to only 56 percent in 2011.

Egypt produced 45.8 million tonnes of natural gas in 2012, a 0.85 percent drop from the previous year's 46.1 million tonnes, the state-run Information and Decision Support Centre (IDSC) has reported. Egypt is signatory to a number of gas-export agreements, and production has not yet reached the levels required to meet domestic consumption needs as well.

In March, Iraq announced plans to sell 4 million barrels of crude oil to Egypt beginning in April.

Source: http://english.ahram.org.eg/News/68716.aspx

[Bullet Magnet]

Egypt is completely dependent on fossil fuels for producing electricity, with a mere ten percent of the country's total generated electricity coming from wind turbines and hydroelectric plants, such as the Aswan High Dam, Naga Hammadi's barrages and the Aswan reservoir.

Insane !!! All that sun, and the cost of solar panels could easily be offset by the cost of the Fuel, ( Gas and Diesel ) they are currently paying for..

Who says there is a conspiracy to keep us using fossil fuels for the benefit of the Oil Industry... ???

Tesla suffered the same problem after Rockerfella pulled his funding because his Oil Baron mates banked with him..
Cars and domestic appliances running off wireless electricity that isn't being created from Oil.. We cant have that !!! We have Governments to buy.... . .

[Zooropa]

So let me make sure ive got this right. The authorities are saying that blackouts wont be as bad as feared this summer because prices have now increased to encourage less use.

So the result is the lights will still be off but not because of blackouts but because people will be priced out of switching them on.

Have I read that right!?!?!?!?

[biosceptic]

if the electricity companies expended money on removing all non-authorised connections and charged a fine for each hey might get rid of some demand and at the same time raise some cash to cover the cost of the checks. With a little work they may even manage to make the network safer

[Dusak]

All they have to do is what they did here in Karnak four years ago, place all the electricity under ground. Each pole used to be spaghetti junction with all the illegal connections, now non.

[Chocolate Eclair]

I do not think there are any inspectors checking for illegal connections, and if they are you can bet that 50le in the back pocket will stop them reporting it, due to the fact everyone is looking for money to feed their families.

I think all inspectors would need to be brought in from other Cities, because they would be able to sort it out better, at the moment everyone knows everyone and therefore the system is corrupt.

What about the street lights on the West Bank? wired straight from the main system, not protected by trips or fuses, just around a small area 5-6 kilowatt hours could be saved every day. These are extremely dangerous, the mains cables are capable of carrying over 100A before failing, the cables to these street lights are rated at 10A maximum, So if a fault occurs, the street lights will virtually explode in a fire ball.

[biosceptic]

Ohh but that's what the inspectors of inspectors are for. Particularly
if they are from other cities and result in the sack for Dodgy inspectors - how much is a back hander worth if it costs you a decent job!

[LivinginLuxor]

Egypt seems to be the most profligate user of power in Africa!



If the price rises reduce the wastage - which they might, the nightime picture of Africa might look a little different!

[Bullet Magnet]

The price rise just forces the poor to use less electricity . . .
Clearly the infrastucture is not up to scratch and cannot cope with the demand, which as I stated earlier is ludicrous in a place like Egypt. Blame the Poor and put the prices up !!!

did you know, that if just 0.02% of the Sahara had solar panels installed there, They could meet the demands of all of Europe...
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is the penny STILL dropping...

That will do until mankind still tries to work out what the Ancients used for power.....

[Dusak]

Egypt seems to be the most profligate user of power in Africa!



If the price rises reduce the wastage - which they might, the nightime picture of Africa might look a little different!

Those bright bits are all the police stations and Christian churches on fire.

[Stevepj]

Egypt seems to be the most profligate user of power in Africa!



If the price rises reduce the wastage - which they might, the nightime picture of Africa might look a little different!

Surely that bright line in the desert has little to do with profligacy and much more to do with the extraordinary population density in the Nile valley.

[Hafiz]

The poor infrastructure (wires and poles) means lots of lost current and there is no government money to improve it.

Old style domestic appliances mean higher consumption but most households aren't going to be able to buy more energy efficient ones any time soon

The natural gas situation is beyond understanding, as others have said, but overseas explorers won't invest more to expand local production because of the political situation. Therefore some (impossible to find out how much) domestic gas production will continue to be exported rather than used for Egyptian electricity. Even if the political situation improved new exploration will take years to find pay dirt.

The turbines are old style and inefficient and there is no money to replace them.

The subsidy system includes many well off and excludes many poor which means that the subsidy doesn't get to those that need it and that those who can afford to pay don't add to the electric company's revenues for infrastructure improvement. Rorting helps no one long term but removing it is a difficult political problem.

Any major move to solar and wind would take years (maybe decades), require huge capital, a stable government and investment environment and involve major international firms that don't have a lot of community support. Importing the expensive hardware whilst the currency reserves are low would be disastrous and any new generation would be wasted by being attached to a shambolic wires and poles system, wasteful appliances and a rorted subsidy system. The huge new investment would need to be paid for but how could this be done given that the current system doesn't seem to produce enough profit to maintain it.

Its difficult to find out, but seems true. that many industries receive the electricity subsidy. This gives them little incentive to save power but removing it quickly will affect employment.

Its an impossible situation made worse by the lack or currency to buy overseas gas and diesel and a timid government frightened of public opinion but needing to take tough decisions. Short term there aren't too many options other than raising prices and better targeting of subsidies to the poor.