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Gas import by private sector raises concerns in industrial community

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The Ministry of Petroleum aspires that the private sector would be capable of importing approximately 500 million cubic feet per day

Today marks the closing date for the bid round issued by the Egyptian Natural Gas Holding Company (EGAS) to sanction the importation of Liquefied Natural Gas (LNG) by the private sector for first time in Egypt.

A high-ranking source from EGAS, who preferred anonymity, told Daily News Egypt that among the companies that withdrew the Request for Proposal (RFP) are British Petroleum, Royal Dutch Shell, the Kuwaiti Kharafi Group and Taqa Arabia, a subsidiary of private equity firm Citadel Capital.

EGAS has placed a minimum price on the private sector’s import of natural gas, which is to commence by June 2013, an EGAS official told Anadolu Agency, who refused to reveal the actual figure.

The usage fee for the national distribution grid has been fixed at $0.68 per million British Thermal Units (BTUs), to be paid to GASCO, the company operating the grid.

The Ministry of Petroleum aspires that the private sector would be capable of importing approximately 500 million cubic feet per day to meet the growing needs of the country’s power plants, Minister of Petroleum Osama Kamal told the Anadolu Agency.

According to a study conducted on gas prices and the cost of generating electricity from natural gas, $4 per million BTUs is the economic price to produce electricity for commercial and industrial consumption, added the source.

The decision to allow the private sector to import natural gas was met with strong criticism from the Egyptian Federation of Industries since it creates a duality in the pricing system. “The government has made it clear that they have no other choice but to allow the private sector to import gas since the bill of subsidising energy is quite hefty. However, the government’s role should be regulatory,” said the head of the energy committee in the Federation of Industries, Tamer Abu Bakr, suggesting the formation of an authority that oversees and regulates the trade of hydrocarbon energy in Egypt.

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