(AFP Photo)
Systematic subsidy reductions, improved technological expertise and skilled human resource management are necessary to attract both foreign direct investments and private players into the power sector, according to a report from Markaz Kuwait Financial Centre .
“For the country to successfully come out of the Arab Spring and take full advantage of its natural resources, institutional reforms – both economic and political – are required,” Markaz reported.
Egypt has not been fully benefiting from its rich natural resources because of political and economic instability, the report stated. Private players in the power sector have also been struggling to raise loans because of banks’ reluctance to extend finances during a time of turmoil.
The country faces major obstacles such as “problems with existing infrastructure that have caused widespread transmission and distribution problems,” according to the report. Other challenges include declining oil production, natural gas exports, and a lack of the technical expertise needed to scale up the power infrastructure.
In an effort to meet the demands of a growing population without widening the gap between power demand and supply, the country is looking for alternative sources of power generation, particularly wind and solar, and is nurturing nuclear power generation, Markaz reported.
“Presently, more than four-fifths of Egypt’s power is generated through hydrocarbon resources,” the report read.
Last month, during the Future and Investment Opportunities in the New and Renewable Energy Summit, where government authorities met with companies to discuss Egypt’s power challenges, former Electricity and Energy Minister Ahmed Emam said the government plans to produce 20% of the country’s energy through new and renewable sources by 2020.
“Around 12% of the electricity will be generated using wind energy, while the remaining 8% will be produced through other renewable energy sources,” Emam said.
During the same event, Petroleum Minister Sherif Ismail said the absence of “diverse energy resources” is one of the main obstacles the country faces. About 95% of the country’s energy comes from traditional sources.
“Current energy resources are incomplete, uneconomical and don’t achieve visions of medium-long term development,” he said.
