1/ Q. As a result of the Government’s privatization program, the private sector’s role has steadily expanded in key sectors of the economy, such as Electricity and Energy. Does it mean that the government is slowly but surely transferring the power generation industry to the private sector?
You can not exactly call it that way. I will give you a copy of our plans for the future power generation from last year up to the year 2010. This will give you an idea of the capacity of this power station and the voltage of the power lines connected at this unified power network to Egypt. We found that the best way for our economy to start, is by inviting businessmen and investors to come and build power stations in different areas of Egypt. After that they can run and maintain the electricity from the engines of the power stations. We do it internationally now and we have a law that gives us the permission from the Parliament that we can have a private sector power station in Egypt. So, this is the first phase in which we started and which was approved by the government. We started with one power station in Sidi Kraer ( 650 Mega Watt) and now we have two under investigation. One of them is in East Port Said, on the Mediterranean Sea, and the second is on the Gulf of Suez on the Red Sea. The government will no longer build and operate plants. The government still operates the old ones very efficiently but the new ones will be operated only by the private sector.
2/ Q: The 7 Electricity Companies owned by the state are due to be privatized. What is the current situation of those companies?
This information is not 100% correct. You mean the 7 companies that we are going to put into action very soon. Before that we have power stations alone and in each area -we have 7 areas- we have power generation and transmission of high voltage. And in the mean time we have 8 companies for distribution. They are divided. The 8 companies were a part of the Ministry of Public Enterprises which is headed by Dr. Atef Ebeid, and the power generation and transmission, their construction and planning are in the Ministry of Electricity and Energy. But we came to a conclusion by the end of March by a law that these companies will be transferred back for the distribution by the Ministry of Public Enterprises to the Ministry of Electricity and Energy. Accordingly, we found that the most important thing is to use the amalgamation of power generation, transmission and distribution in each area to be one company. This was also approved by the Parliament since May 1998. Now we are preparing the board members. The amalgamation is easy. For instance, we have all the generation in Cairo, all the high voltage network in Cairo for distribution and the distribution companies. One company which is called the Electrical Company of Cairo. Similarly you have the Electrical Company of Alexandria, the Electrical Company of Delta, the Electrical Company of Behera, The Electrical Company of South Egypt, the Electrical Company of North Egypt and the Electrical Company of the canal. These are the 7 companies which we are now forming and we will form them very soon and assign the board of directors. Then, they will start to work and coordinating because we always think that by having this together for energy and electricity, it is more safe than dividing them in pieces because they need to be one body and they coordinate generation, transmission and distribution and this will be under Law
159. I believe the Government is thinking of selling some of the shares. I Think it will start by 10% to the stock market.
3/Q: The Prime Minister announced the sale of 20% of Greater Cairo Electricity Company through the Stock Exchange. When will this occur?
Yes. From 10 to 20%. Why we want to privatize mainly companies in Egypt is because the management was not up to the standard and the situation of these companies was not very comfortable for us. If you have companies working very efficiently, which are known internationally and that we run like a company such as EDF, we must privatize step by step. We merge big generation and transmission companies. Then we have 7 companies in the country and part of it, 10 to 20%, can be actually sold in the stock market. But, the management is still in the hands of very efficient leaders.
3/ Q: In order to tackle Egypt’s lack of electrical power systems manufacturing, the Ministry’s plans calls for the private sector’s involvement in 15 power generating projects over the next 12 years. Could you tell us more?
This is wrong. We started very hard from 1980 to build a very heavy and very important foundation for electrical production. So, in 1980 we started to see how to manufacture all the power lines, conductors insulators and fittings in Egypt. Now 100% is locally manufactured. Also, in terms of steel we have local factories. Then if you go to cables we have the low-tension cable, the medium-tension cable manufactured in 3 private sector companies in Egypt, which are coordinating and competing with each other at the same time. As for transformers, we have low-tension and medium-tension transformers up to 66 kilo Volt that are locally manufactured and all our sub stations are buying our local transformers. If you go to the switch gear, we have the low-tension, medium-tension,
11, 22, 66, 220 are locally manufactured in Egypt from 2 different companies like Siemens, ABB, and other European companies. So, there are 3 manufacturers competing with the French and German. After the power land and cable were finished we started to manufacture half of the wind farms in Egypt. We have 100 Kilo Watt and now we are producing in our local factories 50% of them in our factories. Then we go to the power generation which is very complicated. It comprises generators, condensers and other utilities. We will be able to produce about 40-50% boilers, 650 Mega Watt units which are now under operation and about
40-50% from our two power stations. Sidi Kraer has 325 Mega Watt and in Iun Moussa the same. So, now we produce 60% of our boilers locally in Egypt. Then, we produce part of the turbine in Egypt and may be more than 40 or 50% of the condenser in Egypt. So, if you look at this you will find that the people who told you this are not in the picture at all. I am planning to have a factory for transformers. As soon as we get this transformer locally then the only utility we will have to buy from the outside are mega computers. As for the base (the bed and butter), I think we have been doing a good job.
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4/Q: What about the 15 Power Generator projects in the next 12 years?
Anyone can buy from anyone that they want. But here in Egypt we show them that we can produce this in the name of imported companies with equity for all these things. If they want to buy quality, efficient and better prices from us, I think that they will buy it from Egypt and then they are going to use our engineers, our workers, and foremen. So, I think for the building itself and construction, I am sure that they will choose Egyptian products. So, we are open to them. If they want to buy everything from outside , they can do it. We however set the new power stations to be thermal, gas fired
325 Mega Watt. This is the standard thing coming from all our units and these are the units we are producing in Egypt.
5/Q: You were talking about wind farms. Could you tell us a little bit more about your plans regarding new and renewable energy?
We are known. We do not need any propaganda. I just came from Houston where I gave the Keynote address. They Know what we are doing. Last week I was in Italy to meet the ministers of the North Mediterranean; French, Spanish, Portuguese, Greek and Italian and we had very good agreements together. So, we are now internationally thinking about the interconnection.
6/Q: You have been chosen to oversee the project of building the industrial development in Suez. Could you tell us more about it?
I am not chosen. I am only the head of the group. We are a group of ministers. We were asked to help in finalizing and following up the infrastructure to the investors. Now we have 4 big investors and they are in four industrial parks in the Red Sea area. We succeeded in making many things. We were able to make our network for the sub station. We have water now there as well as sewage and telephones. We have a new railway that will come in the area. We have been able to give them the infrastructure in the main areas and they can do the details themselves.
7/ Q: Since Egypt and the United States agreed on a partnership for economic growth and development. What are the relations between American businessmen community and Egyptian businessmen communities in your sector?
Nothing. The only relation is that these businessmen submit their offers and come and work with us. The American aid is giving us money and we are using their aid in our own projects. We are very happy about this cooperation. I was in the Unites States and I met with the American Minister of Energy. He agreed that we would sign an agreement of cooperation in the field of energy between the two countries and especially on the new energy. He promised to come to Egypt probably at the beginning of next year and when he comes I hope that the both of us will be ready to sign together. Because this is just the agreement and we approved it and now it is going through Parliament and it was approved. Now I would be happy to sign with Mr. Richardson a cooperation between us in the field of energy, especially new energy and mainly solar.
8/ Q: Could you give us an explanation on the BOT and BOOT projects. I do not know the difference between the two projects?
There is no difference between BOT and BOOT but there is a difference, however, between BOT and BOO. BOO refers to Build, Operate & Own. Then it is your power station forever. BOOT refers to Build, Operate, Own and then Transfer to the Government. To transfer is very important because we feel that when we get the national ideas of having BOT’s we went to the Parliament and approved for us the Build, Operate & Transfer for 20 years, for instance. After the 20 years we can have another
20 years because in the Bill of Parliament we said that we can have a 99-year lease, meaning it is open for any investor to continue leasing until the power station is a piece of steel or iron. The reason for this is because the life expectancy of a power station is from 35 to 40 years. So if you put 99 years in front of the investor that means between us that it is a BO. But each time we can, with an agreement between both sides, we try to extend for another 20 years.
9/ Q: Mr. Abaza, Keeping in mind that Forbes magazines reaches more than 4.5 million readers, what will be your message to our readers?
The readers are businessmen. I invite them to come to Egypt and invest in all kinds of industries. We think that we are booming not as much as other countries but we are doing it slowly but surely and I think that President Mubarak is putting all his efforts into the open market economy, his policy. The same also applies for the Cabinet and the Prime Minister. We are welcoming all serious investors to come to Egypt.
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EGYPT
