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Privatizing Power

Egypt - Winne.com

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Of all areas of public-sector enterprise earmarked for privatization, Egypt's 15,000-megawatt power sector has arguably received the most consideration--highlighted by the announcement last April that the Egyptian Electricity Authority (EEA) is being transformed into a limited company. This was a welcome sign that the privatization process was going in tandem with efforts to rise electricity prices closer to international levels, and to keep pace with rising demand at 7 percent to 8 percent a year.

Another major development in the power sector was the privatization of the country's seven regional generation and distribution operations. The Egyptian People's Assembly has approved the sale of up to 49 percent of the Cairo, Alexandria and Canal Electric Companies.

According to Electricity and Energy Minister Ali Fahmy Al-Saedy , Egypt's electricity is easily handling domestic demand, and has connected with its neighbors in a growing regional electricity grid. "We have a comfortable excess, meaning that we cover any unforeseen outage of a large power station unit," says Saedy. He adds that existing connections with Jordan will be supplemented with links to Syria, Lebanon and Turkey to the east, while Tunisia and Morocco are now connected via Egypt's links with Libya in the west.
Key to the sector's success has been increased investment in training engineers abroad to keep the sector in line with international standards. "The reason for sending and training people abroad is not only to absorb the knowledge, but also to be able to communicate and comprehend other cultures," says Asem El-Gawhary , general manager of the Power Generation Engineering and Services Company (PGESCo) .

International involvement in building Egypt's power stations has played a key role in the sector's development. One project involves a $500 million addition of two 340-megawatt (MW) units to the Sidi Krier power station west of Alexandria by the American company InterGen, due to be completed in 2001. The government's enthusiasm for greater international investment was due in part to InterGen's prices--just $.026 per kilowatt-hour.

Other projects include the construction of two 650-MW plants at Suez and East Port Said by Electricité de France (EDF). The group has won the concession after a low bid of $0.0237 per kilowatt-hour, due in part to cheap gas provided by Gasco (LE0.14 per cubic meter). A single 650-MW power station is also to be built in Sharm El-Sheikh.

According to Minister El-Saedy, BOOT projects help the government achieve its overall development goals of attracting foreign investment and transferring the latest technology to Egypt. "Thanks to its location and international relations, Egypt is receiving some interesting loans that should be efficiently utilized so as not to burden investors," says Saedy. "We utilize available resources and keep the machinery we have, as well as the expertise to design, manage and head such plants."



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© World INvestment NEws, 2000.
This is the electronic edition of the special country report on Egypt published in Forbes Global Magazine.
August 7th 2000 Issue.
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