Egypt’s grid needs to be in sync with its generation plans, TAQA Arabia CEO says — and direct power sales don’t exist yet

Coffee with Pakinam Kafafi: Egypt’s push to become a regional energy hub runs through its grid and through the private players working alongside the state to expand it. We sat down with TAQA Arabia CEO Pakinam Kafafi (LinkedIn) for a two-part conversation. In part one, she talks us through how the grid is growing to meet new demand, where the private sector fits alongside the state, and how TAQA Arabia plans its gas business as Egypt’s supply mix evolves. Part two, coming in next week, turns to TAQA Arabia’s expansion plans at home and abroad.

EnterpriseAM: Where is the grid actually falling short? From your experience operating distribution networks and developing generation projects, where are the most pressing constraints today?

Pakinam Kafafi: Power infrastructure has three components: generation, the grid, and distribution. Ideally, all three expand at the same pace, but bottlenecks emerge when one outpaces the others. Egypt aims to generate 42% of the energy mix from renewables by 2030, and more than 60%% by 2040. While investment is flowing into generation, the grid, and distribution, progress remains uneven. The priority now is to accelerate grid development, expand capacity where demand is growing, and build a green corridor to accommodate green hydrogen and future demand. The European Bank for Reconstruction and Development and other international partners are backing major energy and grid-related projects in Egypt with financing packages worth hundreds of mns of USD.

EnterpriseAM: What should the private sector’s role in the grid be? TAQA already invests in and operates electricity distribution infrastructure. How much further could that model scale across Egypt?

PK: The government should own and regulate the national grid, while the private sector can make it smarter — improving load monitoring, efficiency, and bottleneck detection — and support construction, operation, and maintenance through models such as BOT. Generation and distribution can be privately run. Public-sector distribution companies should be liberalized and eventually privatized. As one of the first private companies licensed to distribute electricity, we are expanding our network. With data centers, new technologies, and EVs driving demand, distribution networks must evolve significantly to accommodate growth.

EnterpriseAM: How close are we to having a functioning market for direct electricity sales?

PK: The government is making strides. We already have wheeling charges, but so far, they apply between distribution companies and the transmission company. A private-to-private system is being studied, where I can build a solar plant, a wind farm, or any generation asset, connect to the grid, deliver to my client, pay a wheeling fee, and complete a direct transaction. So far, this is not yet applicable, but it’s being studied, and there is a plan to apply it. The only thing that exists is clear pricing for wheeling, a tariff to transmit power across the grid, and it’s between public entities.

EnterpriseAM: There is a lot of talk about building data centers in Egypt. Could TAQA Arabia supply a data center with round-the-clock energy?

PK: Egypt has strong potential to become a regional data center hub, thanks to its geographic location and expandable infrastructure. Electricity and cooling account for around 65% of a data center’s requirements, making reliable, affordable 24/7 power essential to competitiveness. Renewables could help mitigate costs, while a peer-to-peer (P2P) model could meet data centers’ massive electricity needs, an approach we are currently studying.

EnterpriseAM: How do you plan a gas distribution business around supply uncertainty? What has changing domestic gas procurement meant for your industrial customers and your investment decisions?

PK: Gas supply uncertainty is a global challenge, but Egypt benefits from three sources: domestic production, LNG imports, and pipeline imports from neighboring countries, which are more stable than seaborne supplies. Around 60% to 65% of gas consumption goes to power generation, so raising renewables to 42% of the electricity mix by 2028–2030 would unlock gas for industry, agriculture, and other higher-value uses, reducing import dependence. As domestic fields deplete, settling arrears to international oil companies has encouraged renewed exploration. Even smaller discoveries can help offset declining production.

For our customers, that means we don’t rely on gas alone. We offer a full mix of gas, renewables, diesel, and off-grid and on-grid solutions, and we’re studying biogas. We’ve also executed our first pilot with the Egyptian General Petroleum Corporation (EGPC) to capture flare gas and turn it into electricity. New technologies can be expensive, and clients are price-sensitive, so we focus on blending and hybrid systems to bring the overall cost down.

EnterpriseAM: Is your EGP 1.4 bn Greater Cairo fuel depot investment intended to secure supply for your stations and lower transport costs, or to build a storage business serving third parties as well?

PK: All of the above. There’s strong demand for modern storage infrastructure built to the highest efficiency standards. Our five-year plan is to build a network of depots that secure supply for our own stations and for third parties. We locate them near ports and logistics hubs, which makes transport easy and gives us import capability should the market be deregulated. We acquired and upgraded our first depot in Suez to cover the Red Sea, then developed the Amreya depot, which covers Alexandria and the Delta. Greater Cairo is our third: board approval is secured, land is allocated, and studies are underway. The fourth will be in Assiut, on the Nile, so we can move fuel by river barge rather than relying on trucks alone. We build one depot at a time and stabilize operations for a year or two before moving to the next.