Progress is being made to obtain a loan from banks operating in Egypt to complete grid support projects in North Sinai, Toshka, and Eastern Al-Owainat areas, according to Minister of Electricity and Renewable Energy Mohamed Shaker.
Speaking to Daily News Egypt, Shaker said the Ministry of Planning has already allocated EGP 5bn for strategic electricity projects item in the fiscal year (FY) 2020/21 budget, as part of an investment plan for four years.
He explained that the total cost the planned projects in FY 2020/21 is EGP 20bn, including power transformer substations, lines, and networks to improve service quality. Contracts have already been signed with private companies, with further contracts still in the offering.
Shaker revealed that his ministry’s plan includes the implementation of 6,238 transformer substations, and electrical lines to secure electrical supply for coastal areas, Eastern Al-Owainat, Toshka, and other national projects.
He added that work is underway to provide electricity for sustainable and comprehensive development projects in Egypt, including industrial parks and land reclamation projects. These require the expansion of the national electricity grid, in addition to strengthening electrical networks with neighbouring countries.
In February, President Abdel Fattah Al-Sisi ratified a EGP 20bn loan for the Ministry of Electricity at 5% interest from the Central Bank of Egypt.
Shaker added that the first quarter of next year will witness the completion of all projects under the 2020/21 strategy.
He said that a study is being prepared to support the electrical network in North Sinai, with a capacity of 500kV. This requires the expansion of the Baghdad, East Ismailia, Oyoun Mousa, and Taba transformer substations, as well as the construction of the Sarw and Kawarir 220/66/22 kV transformer substation. The latter will also be connected to the national grid, and the establishment of the Al Mazar and Al Midan station.
He pointed out that the consolidation also includes the construction of a 150km-long double-circuit overhead line of 500kV linking the Baghdad and East Ismailia transformer substations. This would come in addition to the establishment of a double-circuit line of 500kV from Baghdad to Taba at a length of 180km.
Shaker said that the total estimated cost to support the electricity network in North Sinai is EGP 4.8bn, and all work is expected to be completed by the end of 2021.
He noted that there is no crisis in the electrical network’s capabilities, but there are opportunities that can be exploited. This could occur through cooperation with neighbouring countries via electrical interconnection projects, or in providing electrical current to all regions and national projects across Egypt.
“With an increasing demand for energy, these capabilities will be exploited, so we will work in an organised manner to provide electricity to Egypt,” Shaker stressed.
He added that the development in renewable energy prices and its benefit in reducing emissions and preserving the environment is the main reason for halting coal powered plants.
Shaker noted that projects with a capacity of 1620MW are being studied, and will be awarded at the end of the current year. There are still many tenders for the establishment of renewable energy stations in the West Nile region put forward by the Egyptian Electricity Transmission Company (EETC).
He explained that the decision to increase electricity prices is not new, with the announcement made in 2014 to completely remove subsidies in 2019. This was before the floatation of the Egyptian pound forced the Ministry of Electricity and Renewable Energy to extend the removal of subsidies until 2022, to avoid adding to the burden of citizens.
Shaker said that the decision to increase prices is a must, since electricity is sold at a lower price than its real cost. This adds financial burdens on production companies, particularly if there is a failure to pay consumption bills. As a result, companies achieve losses and cannot fulfil their financial obligations towards institutions and their lenders to implement projects.
Shaker confirmed that the sector has already been affected a lot because of declining consumption and the closure of many shops, institutions, and factories, besides rates of collection of consumption bills have decreased in the past three months.