The shift from new and renewable energy in the tourism sector remains unclear, according to a Ministry of Tourism official.
The uncertainty has come about after the Ministry of Finance decreased the budget for new and renewable energy from EGP 1bn to EGP 50m, the official said.
The official added that Tourism Minister Khaled Rami will meet with officials from the Egyptian Hotels Association during the current month to investigate this issue. He added that employees in the sector are concerned about re-increasing energy prices, starting from the next fiscal year (FY) 2015/2016.
The government had previously raised the cost of diesel from 110 piasters to 180 piasters per litre, at the beginning of last July.
According to Adel Rady, Chairman of the Tourism Investors Association (TIA) in Marsa Alam, hotels expect oil substance prices to increase to shift to new and renewable energy. Meanwhile, although a specific price is still undetermined concerning new and renewable energy, this issue does not represent an obstacle for reaching an agreement with the companies.
Rady expressed concern over a crisis coming due to a diesel outage during the current month and parallel to the season of wheat harvest. He added that the TIA is contacting various oil companies to prevent this issue during the current year.
According to a study by Egyptian Tourism Federation, Egypt consumes 12.4m tonnes of diesel annually, while the tourism sector consumes 22% out of the mentioned diesel total amount.
According to Abdul Rahman Anwar, President of the Floating Hotels Investors Association, the major touristic consumer for diesel is Upper Egyptian floating hotels. He added that 260 out the total of 286 floating hotels in Egypt have stopped working.
Anwar believes that, in the tourist sector, floating hotels are the biggest consumer for diesel. Increasing diesel prices will cause a problem concerning the cost of the tourist service, without adding value to the service in order to attract tourism.
Anwar said that negotiations between oil companies and floating hotels are still being held. However, no agreement has yet been reached.
On the other hand, Rady said occupancies in floating hotels do not exceed 15% in 20 working hotels. According to the Vice Chairman of TIA, floating hotels need EGP 1.4bn to shift to using natural gas.
Last year, floating hotels lost $1.5bn, said Anwar. In 2014, tourist income for Egypt reached $7.5bn, compared to $5.9bn the previous year.