CAIRO: Egypt secured a $300 million loan last week from the European Investment Bank for an energy project geared toward helping the country meet growing electricity needs, according to recent media reports.
The loan will be coupled by supplementary funding from the Egyptian government, the World Bank and the OPEC Fund for International Development, totaling $292.6 million, $600 million and $30 million, respectively.
Reuters quoted Egyptian Prime Minister Ahmed Nazif as saying, "This project is one of Egypt’s priorities in the electricity sector in the 2012-2017 plan needed to expand energy infrastructure for social and economic development."
The plant will produce 1,500 MW of power and will go online in 2014, according to Mohab Hallouda, a Cairo-based senior energy specialist at the World Bank.
The plant, according to a recent Reuters report, fits within the framework of the government’s five-year 2007-2012 energy plan, which seeks to boost capacity by 9,200 MW, as well as construct transformers and extend power lines.
The agency also reported that Egypt intends to spend $100-120 billion to triple capacity by 2027.
Hallouda affirmed that the new Giza plant is indeed a crucial step toward realizing the government’s energy plan. “It is a large project in terms of electricity generation, and it is also close to Cairo and not far from the Delta,” which will allow it to supply electricity to areas with high demand, he said.
The project is a combined-cycle plant, which means that it is higher in efficiency, producing less carbon emissions compared to standard power plants, and thus, “more environmentally friendly.”
Hallouda also indicated that in light of the recent power outages nationwide, “all such energy projects are urgent,” because demand has been outstripping supply during the past days in which temperatures neared a sizzling 40 degrees Celsius.
The Ministry of Electricity had announced a strategy of load shedding to be able to cope with the increase in consumption during the heat of August and the peak hours of Ramadan (7 pm to 10 pm). The ministry also called on citizens to ration their consumption and claimed that excessive and wasteful use of electricity was one the reasons behind the power cuts.
“Electricity consumption loads are increasing at a higher rate, especially during peak hours,” Hallouda said. “An increase in capacity is needed to cover the hike in consumption.”
A World Bank document on the Giza project highlights that in Egypt, the “need for new investments in power generation, transmission and distribution are very large and pressing… Peak demand is expected to grow by more than 50 percent by 2017 relative to 2008.”
The rate of consumption this summer, Hallouda added, has been higher than expected, at around 10 percent of peak value.
The spike in consumption, he pointed out, is directly related to the increasing use of air conditioning units, for instance, and especially the ongoing development of heavy industries throughout the country.
Asked whether the government’s plans are sufficient to meet the countries needs, he replied, “There are lots of projects in the pipeline, but so far this year, it has not been the case.”
He further underscored that power generation projects take between three to four years before joining the electricity network. “The cycle for building to joining the network is slow in general,” Hallouda added.
“It is hard to synchronize the cycle for power plants to ensure that they will be ready before the summer season begins,” he continued. “If the summer peaks cannot be covered, then shedding of supply results.”
