EGYPT - The Power Sector.

Egypt has an installed power generating capacity of about 17 gigawatts (GW), with plans to add 9.3 GW gas-fired by 2010. About 84% of the capacity is thermal, mainly consisting of gas turbines, with the remaining 16% being hydroelectric mostly from the Aswan High Dam. All oil-fired plants have been converted to run on gas in a programme completed in 2000. With demand growing 6-7% annually, Egypt is building several power plants and is considering limited privatisation of the power sector.

The power sector consists of seven regional state-owned production and distribution companies, which were held by the Egyptian Electricity Authority (EEA). In July 2000, the EEA was converted into a holding company, though still owned by the state. Current reform plans call for the separation of generation, transmission, and distribution. Distribution companies will be privatised. The Egyptian Electric Holding Co. (EEHC) will keep having the transmission lines and power generation. New power generation will come mostly from privately funded projects, which will sell their output to EEHC under long-term contracts.

EEHC, under the Energy Ministry, is to add generating capacity through build, own, operate, and transfer (BOOT) schemes. BOOT projects fund large-scale public infrastructure without affecting Egypt's debt profile. Independent power producers (IPPs) are allowed to recover their costs of construction through ownership and operation of the plant for a fixed period before handing it over to the state. The first BOOT project was a gas-fired steam plant with two 325-MW generating units, located at Sidi Kerir. 30 km west of Alexandria, completed in September 2000. The plant cost $450m. Power from the plant is sold at 2.54 cents per kilowatt hour (Kwh). The competitive price stems largely from cheap gas supplied by Gasco. InterGen (a JV of Bechtel and Shell Generating, along with local partners Kato Investment and First Arabian Development and Investment), has the 20-year BOOT contract for Sidi Kerir. The second BOOT project award went to Electricite de France (EdF), for two gas-fired plants to be located near the north and south ends of the Suez Canal. To start up in 2003, each plant will have a capacity of 650 MW, and the project cost will total about $900m. The price for power from the EdF plants is 2.4 cents per Kwh, the lowest yet offered for an IPP.

Planned projects include two 750 MW combined cycle gas turbine (CCGT) units at Nubariya in the western Nile Delta between Cairo and Alexandria which will be a BOOT project, a 750-MW addition to the Cairo North power complex, and smaller hydroelectric projects at Nag Hammadi and Asyut. EEHC is planning a part-solar power plant at Kureimat as a BOOT project which will have 30 MW of solar out of a total capacity of 150 MW. The World Bank will provide a financing package from its Global Environmental Facility which will offset the cost difference between the solar capacity and thermal capacity. A Netherlands-funded project is building 60 MW of wind power units in the Suez Canal area. Egypt has a 22-MW nuclear research reactor at Inshas in the Nile Delta, built by INVAP S.A. of Argentina, which began operation in 1997. EEHC is also to rehabilitate some of the 12,175 MW hydroelectric turbines at the Aswan High Dam built in the 1960s by the Soviets and international consultants made offers at end-July 2001.

On March 14, 2001, President Mubarak and his Syrian counterpart Bashar Al Assad and King Abdullah of Jordan inaugurated a $300m power line linking the grids of the three countries. A $239m link with Jordan was completed in October 1998 and was the first phase of interconnection of Egypt's system with those of Jordan, Syria, and Turkey. Egypt also activated a link to Libya's grid in December 1999. Other interconnections with Egypt's network are being studied, including an Arab East (Egypt, Bahrain, Jordan, Lebanon, Oman, Qatar, Saudi Arabia, Syria, UAE, Yemen) interconnection, as well as one with Israel, Jordan, and the Palestinian Authority. Saudi Arabia and its GCC partners are building their own unified power grid, which they hope to integrate later into the wider Arab network. The Arab Maghreb and the eastern interconnections will help form the Mediterranean Power Pool (MPP), which will link the Middle East, North Africa, and Europe. The anticipated completion date of the MPP is 2015.

The Egyptian Operations & Maintenance Power Co. (PGESCo) was formed in late 1999 to operate and maintain power plants in the country. Capitalised at E5m ($1.5m), of which 40% has been paid in, this is owned 50% by a US-Egyptian partnership, 25% by Bechtel and 25% by Commercial Int'l Bank (Egypt).