Egypt hikes electricity prices

Wednesday, 3 Jan 2024

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Today at a glance

Economy

Gov’t is repricing services as it aims to meet IMF loan conditions, senior official says.

Energy

Electricity Ministry hikes electricity prices by up to 26%.

LEGISLATION WATCH

House greenlights green hydrogen incentives.

ALSO ON OUR RADAR

EIB, EU extend EUR 165 mn to green our industrial sector.

What We're Tracking Today

Suspected Israeli drone strike on senior Hamas leader in Beirut sparks fears of regional escalation.

PLANET FINANCE

Could 2024 be the year when the world completes its transition into a new era of expensive money?

HARDHAT

Power cuts to resume until at least 2Q 2024.

What We're Tracking Today

The price hikes keep on coming

Good morning, wonderful people, and welcome to a packed issue in which we have the inside track on the Madbouly government’s move to raise prices for government services and other areas of the economy from which it derives revenue.

The price hikes are all part of a package that a senior official tells us is designed with the IMF in mind. Talks are now in the endgame, the official said, and the state is also close to wrapping up to very welcome contracts to sell stakes in state-owned banks.

^^ We have the rundown on both stories at the top of this morning’s news well, below.

But first:

PSA #1- Rolling blackouts will be limited to between 11am and 5pm effective as of today,in response to requests from MPs and citizens to time planned outages so that it doesn’t interfere with kids studying for mid-year exams, according to a cabinet readout.

** We have more on the rolling blackouts and electricity price hikes in this morning’s HardHat.

PSA #2- Watch out for fog as you drive to work this morning. The Egyptian Meteorological Authority is forecasting foggy skies today and tomorrow morning. We’re also in for a cold couple of days paired with some moderate rainfall in different areas of the country. Expect daytime highs not exceeding 22°C from today until Sunday and lows of 13-14°C.

PSA #3- There’s a long weekend just around the corner: Sunday, 7 January, will be a public holiday for both the public and private sectors in observance of Coptic Christmas, Prime Minister Moustafa Madbouly said in a statement on Sunday. You can expect the central bank and the EGX to follow suit.

** Enterprise AM will also be taking a break from your inbox. But worry not, we will be back bright and early on Monday 8 January with all the latest business news from the long weekend.

IN THE HOUSE TODAY-

#1- MPs are meeting today to vote and discuss amendments to the law regulating ownership of desert land, which if passed would allow foreign nationals ownership of desert areas for investment purposes. It would also allow foreigners up to 51% ownership in companies that invest in desert land developments.

#2- The House will also vote on an agreement with the European Bank for Reconstruction and Development, which would see interest rate benchmarks used in agreements with the EBRD shifting to the Secured Overnight Financing Rate (SOFR), instead of the London Interbank Offered Rate (LIBOR).

#3- The House Economic Affairs committee is also set to vote on a USD 500 mn with Abu Dhabi Exports Office (ADEX) to finance our wheat imports, and on a EUR 56.7 mn grant from the French Agency for Development to expand our wheat silos capacity.

LOOKING AHEAD-

Here are the key news triggers on which to your eyes on during the first few weeks of January as we ring in the new year:

PMI: S&P Global will publish Egypt’s PMI figures for December tomorrow.
Inflation: Capmas and the CBE will publish the latest inflation data on Wednesday, 10 January.
Foreign reserves: The central bank should release December’s foreign reserves figures sometime this week.
Quarterly fuel prices review: The government’s fuel pricing committee is scheduled to meet this month to set prices for the first quarter of 2024.

** The CBE’s Monetary Policy Committee will not be meeting this month, with its first meeting of the year scheduled for 1 February.

MORNING MUST READ-

No way back from the destruction in Gaza? In a harrowing narrative, the Financial Times lays out the impact of the destruction and material loss in Gaza, and how it is damaging the livelihoods and ambitions of the city’s inhabitants — potentially irrevocably.

DATA POINT-

GAFI ups annual FDI target for FY 2023-2024: The General Authority for Investments (GAFI) is looking to double the pace of FDI growth for the ongoing FY 2023-2024 to attract USD 12 bn — a 20% y-o-y increase — GAFI head Hossam Heiba told Al Arabiya in an interview (watch, runtime: 8:50). Heiba was previously targeting a 10% annual growth of FDI this fiscal year.

RED SEA WATCH

Deployment of Iranian destroyer to the Red Sea opens up possibility of US-Iran confrontation: Tehran has dispatched its Alborz destroyer warship to the Bab Al Mandab strait following a clash between the US navy and the Iran-backed Houthis on Sunday that killed 10 militants, Iran’s state news agency IRNA reported.

THE BIG STORIES ABROAD-

Suspected Israeli drone strike on senior Hamas leader in Beirut sparks fears of regional escalation: Six people including Hamas deputy leader Saleh Al-Arouri and two leaders of the group’s armed wing were killed yesterday in an Israeli drone strike in the southern suburbs of Lebanon’s capital, Lebanese and Palestinian sources told Reuters. Hezbollah responded to the attack with a warning on Telegram that the “resistance has its finger on the trigger” and that the strike will not go “without a response or punishment,” while Lebanese PM Najib Mikati denounced the “new Israeli crime” and said the country will file a complaint to the UN Security Council. (New York Times | Washington Post | Financial Times | Wall Street Journal | Reuters | BBC)

ICJ showdown — Israel vs. South Africa: Israel is preparing to challenge South Africa’s genocide accusation at the International Court of Justice. (Reuters | BBC | Associated Press | Times of Israel)

A Japan Airlines plane carrying hundreds of passengers collided with a coast guard aircraft and then burst into flames on landing yesterday at Tokyo’s Haneda airport. All passengers onboard the plane were safely evacuated, but five crew members of the coast guard plane were killed. (CNN | Wall Street Journal | BBC | New York Times | Reuters | Guardian)

THE BIG BUSINESS STORY this morning: BYD overtakes Tesla as world’s topEV seller: Tesla lost its spot as the world’s top-selling electric vehicle manufacturer to the Chinese automaker BYD in 4Q 2023 for the first time, the Financial Times reported. BYD sold 526k battery-only cars during the quarter compared to Tesla’s 484k — both record sales for the companies.

*** It’s Hardhat day — your weekly briefing of all things infrastructure in Egypt: Enterprise’s industry vertical focuses each Wednesday on infrastructure, covering everything from energy, water, transportation, and urban development, as well as social infrastructure such as health and education.

In today’s issue: We take a look at the wave of power cuts that have been turning off the lights since July and investigate why they are happening and when we can expect to see them come to an end.

Tags:

electricity WHAT WE’RE TRACKING TODAY

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Price hikes for state services are part of a reform package designed with the IMF inmind: The Madbouly government rang in the new year with a long list of price hikes for services and utilities ranging from the Cairo Metro and train fares to car registration fees. It is now raising electricity prices (see below) and is approving price hikes for industries from which it derives fees, tax income, or has ownership stakes. Among them: Telecommunications, where internet and mobile phone bills will rise after the National Telecom Regulatory Authority said it would allow mobile telecom operators to raise the prices of mobile and internet services by up to 16%.

It’s smart policy: The price hikes are part of cabinet’s bid to shore up finances and bridge the budget deficit, a senior Finance Ministry source told Enterprise.

All with the IMF in mind: Discussions with the IMF are in their “last phase” and they have been mainly centered around the Madbouly government’s revenue targets, ways to reduce the budget deficit, and address the exchange rate, our source told us, without elaborating further on any of the points. The two sides are expected to reach an agreement during the first quarter of the year. Egypt has been working to meet the conditions of a USD 3 bn IMF loan and potentially unlock a larger package that could be worth up to USD USD 10-12 bn bn, according to unconfirmed reports.

New social support measures incoming? The government is expected to increase social support measures in efforts to alleviate the impact of soaring inflation on vulnerable households, the source said, adding that the FinMin is expecting inflation to accelerate at a slower pace this year.

Remember: Egypt’s budget deficit almost doubled y-o-y in the first quarter of the current fiscal year as rising borrowing costs squeezed public finances. The deficit widened to 3.9% of GDP in 1Q FY 2023-24 from 2.1% a year earlier, largely due to the government’s spiraling interest bill.

What’s on the privatization agenda for 2024? “The privatization program will see a strong boost this year … the government is currently working on an updated list of companies earmarked for privatization and is on the lookout to add even more companies,” the source said. The Madbouly government, with assistance from the International Finance Corporation (IFC), has been looking into 50 state-owned companies not currently in the program to determine which sectors would be more attractive and lucrative for investors. The IFC has previously been said to see potential in airports, communications, ins., and banking, among other sectors.

The state could soon offload stakes in two banks: The government is expected to finalize stake sales in two state-owned banks soon, the source said. The agreements are currently in their “last stages” and we should hear more next month.

We have a number of banks in mind: The government was at one time looking to offload stakes in Banque du Caire (long an IPO prospect) and United Bank (where it could sell up to 100% to a strategic investor) before the new year. The European Bank for Reconstruction and Development has expressed interest in taking positions in both banks. Two months ago, the Central Bank of Egypt (CBE) and Kuwait Investment Authority (KIA) were said to have agreed to offload a 20% stake each in AAIB in 2024. The government is also working to offload its 20% stake in Alexbank.

AND- We’re taking steps towards our first India bond issuance: Egypt is looking to tap the Indian debt market with a USD 500 mn bond issuance earmarked for this year, Finance Minister Mohamed Maait said last month. “We have requested the necessary approvals from the relevant Indian authorities and we will start working on fulfilling the necessary requirements as soon as we’re granted those approvals,” our source said. The bond would be denominated in INR and mark the first time Egypt has issued debt in India.

But there’s no rush: “We have reached our [financing] goal for the first half of the current fiscal year,” our source said. The government in the past few months wrapped up two local-currency issuances in China and Japan, which raised the equivalent of USD 980 mn in CNY- and JPY-denominated debt. “We may issue new debt instruments in international markets, but that will depend on Egypt’s credit rating improving and indicators that global interest rates will inch lower,” he said.

WHAT DOES THE IMF THINK?

The prerequisites for our economic recovery: Egypt’s recovery depends on tacklinginflation and creating conditions that allow and encourage production and investments, IMF executive director Mahmoud Mohieldin told Al Arabiya this week (watch, runtime: 3:22).

Tags:

Yourelectricity bill just went up: The Electricity Ministry is finally out with its long-expected electricity price hikes for households and businesses that will see prices rise by 16-26%. The new price ranges came into effect on Monday and will be in place until June 2024, according to an Electricity Ministry official that spoke to Enterprise.

The new price tags per KWh for households:

The first 0-50 KWh/month will be charged EGP 0.58, up 20.8% from EGP 0.48;
The next 51-100 KWh/month at EGP 0.68, up 17.2% from EGP 0.58;
The next 101-200 KWh/month at EGP 0.83, up 7.8% from EGP 0.77;
The next 201-350 KWh/month at EGP 1.25, up 17.9% from EGP 1.06;
The next 351-650 KWh/month at EGP 1.4, up 9.4% from EGP 1.28;
Those consuming more that 1,000 KWh per month will pay EGP 1.65, up 13.8% from EGP 1.45.

**You can find the full price list for commercial and industrial buyers here.

The hikes were originally due in July 2023, but the Madbouly government decided to freeze electricity prices last year to ease the pressure on the public, as directed by President Abdel Fattah El Sisi. Our source told us that the state had to cough off about EGP 8 bn to be able to push back electricity price hikes. The last approved hike was in June 2021, which saw residential electricity bills jumping as much as 26%.

Electricity subsidies are on the way out: The Madbouly government in 2020 laid out a roadmap to phase out subsidies by 2025 — pushing back an existing July 2022 deadline that was already an extension of a 2019 deadline penciled in way back in 2014.

The hike comes hot on the heels of a series of price hikes for several public and private services and utilities announced earlier this week after the state greenlit the price rises. Mobile phone plans, internet packages, Cairo Metro and train tickets, and vehicle registration fees all increased in the New Year.

NO PETROL PRICE HIKES?

Worry not petrol heads, we aren’t expecting any fuel price hikes anytime soon: The government apparently has no intentions of reviewing fuel prices for 3Q of the fiscal year since the last price move was passed less than three months ago, a government official involved in the petroleum industry told Enterprise.

Tags:

electricity Electricity Ministry energy inflation subsidies

LEGISLATION WATCH

Egypt’s House of Representatives approves green hydrogen incentives

MPs greenlight green hydrogen incentives:The House gave final approval to a cabinet-drafted decision putting forward a package of incentives for Egypt’s green hydrogen industry, granting a series of tax breaks and non-tax incentives to companies implementing green hydrogen projects within five years and deriving a certain percentage of their funding from foreign investors. The incentives were greenlit by the cabinet in May, approved by the House Energy and Environment Committee last month, andare now only awaiting ratification from President Abdel Fattah El Sisi after getting the go-ahead from the House.

The incentives in question: Following the decision’s ratification, companies operating in the green hydrogen sector will be eligible to receive tax breaks of between 33-50% on income earned from the plants. They will also be exempted from real estate taxes, stamp taxes, and VAT on raw materials and machinery purchased for the projects. Projects will also receive a number of non-tax incentives like licensing facilities and extended grace periods on payments.

** We dive into the full package of incentives and the eligibility requirements in ourcoverage of the story last month.

Egypt is going all-in on green hydrogen: Egypt has set a target of providing 5-8% of the world’s hydrogen by 2040, creating some 100k jobs and adding USD 10-18 bn to its GDP in the process. The government has also signed MoUs with 23 developers and framework agreements with nine international power companies to develop green hydrogen projects. The Madbouly cabinet last week greenlit Belgian dredging and offshore energy contractor DEME’s USD 3.1 bn project to produce green hydrogen and its derivatives near the Gargoub Port.

Still to come: We’re still waiting on the government to unveil its green hydrogen strategy — currently in its final stages — after it received approval from the National Green Hydrogen Council in November.

ALSO- North Abu Qir for Agricultural Nutrients goes green: State-owned Abu Qir Fertilizers, ABB Group, MPS Infrastructure, and Petrojet inked an MoU yesterday to supply North Abu Qir for Agricultural Nutrients with the green hydrogen and renewable energy needed to produce green ammonia.

ALSO FROM THE HOUSE-

MPs also approved an amendment that will expand the scope of a 2021 medical emergency fund to include spending for the treatment of hereditary diseases. The amendment will allow the fund to launch initiatives for the early detection of hereditary diseases and raise young people’s awareness about hereditary diseases.

Tags:

energy green hydrogen Legislation Watch

Three hotels are getting a makeover from our Emirati friends: The Egypt-focussed Abu Dhabi Tourism Investment Company (ADTIC) that is 84% owned by the government of Abu Dhabi’s Abu Dhabi Fund for Development (ADFD) plans to invest over USD 170 mn — equal to EGP 5.3 bn — into the renovation of three hotels in Hurghada, Sharm El Sheikh, and Giza, ADTIC CEO Yahya Qutb told Al Mal in an interview.

The breakdown:

In Sharm: More than EGP 1.6 bn — roughly USD 52 mn — is earmarked to renovate the Accor-managed Mövenpick Resort Sharm El Sheikh.
InHurghada: Up to USD 40 mn — which is currently equal to EGP 1.2 bn — is expected to be invested into renovating the Mercure Hurghada Resort, which will start in April and take up to 15 months to complete.
In Giza: Some USD 80 mn — equivalent to around EGP 2.4 bn — has been allocated to build a new hotel under the brand Sofitel Legend, which will replace the now-demolished Mercure hotel in the Giza Pyramids area. Construction will kick off before mid-2024 and is scheduled to be completed in two years at most. The project was first announced in July.

Tags:

Abu Dhabi Fund for Development Abu Dhabi Tourism Investment Company hospitality Hurghada investment watch Sharm El Sheikh tourism

LAST NIGHT’S TALK SHOWS

Price hikes and a suspected Israeli drone strike in Beirut dominated the airwaves

The recent wave of price hikes and the suspected Israeli drone strike in Beirut that killed a senior Hamas official gave our nation’s talking heads a lot to talk about last night.

The price hikes rallied up the pundits: Kelma Akhira’s Lamees El Hadidi questioned why the hikes came without any warning and pointed to how this led to “fights in front of ticket counters” at train stations across the country. House Budget Committee Secretariat Abdelmoneim Emam took a more combative tone on Yahduth Fi Masr, telling viewers that the government’s methods to curb soaring prices have repeatedly failed, and asked “when will these hikes stop?” (Kelma Akhira | watch, runtime: 6:02 | 2:03) (Yahduth Fi Misr | watch, runtime: 5:56 | 5:01 | 4:24) (Ala Masouleety | watch, runtime: 1:09:50)

Our nation’s talking heads gave us all the latest updates — and opinions — on the assassination of Hamas’ deputy leader in a suspected Israeli drone strike in Beirut. A correspondent Al Qaherah News confirmed to Lamees El Hadidi that Israeli reconnaissance aircrafts were spotted in the southern suburb of Beirut, “surveilling the area weeks before the attack.” Sherif Amer emphasized that the attack follows “a comprehensive Israeli strategy” that they have been using since 1972 to take out their opponents using assassinations. (Kelma Akhira | watch, runtime: 2:33 | 7:14) (Ala Masouleety | watch, runtime: 3:48) (Yahduth Fi Misr | watch, runtime: 7:14)

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LAST NIGHT’S TALK SHOWS Middle East politics

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EGYPT IN THE NEWS

Between economic stability and peace in Gaza, here’s what Egyptians are wishing for in 2024

The conversation on Egypt in the international press is all over the place this morning: China’s Xinhua is out with a feature looking at what the people of Egypt are wishing for walking into the new year — peace in Gaza and economic stability. Meanwhile, imprisoned activist Alaa Abdel Fattah is back in the press, with his family claiming that the UK government has not taken effective action to secure his release, The Guardian reports.

Tags:

Alaa Abdel Fattah

ALSO ON OUR RADAR

EIB, EU extend EUR 165 mn to green our industrial sector. PLUS: Jinbei’s buys Brilliance stake, GUPCO, data centers, steel price rises, sugar tenders

DEVELOPMENT FINANCE-

EIB, EU extend EUR 165 mn to green our industrial sector: The European Investment Bank (EIB) is extending EUR 135 million in soft financing to the Environment Ministry, topped off with a EUR 30 mn grant from the EU, under agreements inked with the International Cooperation Ministry, a statement from the ministry said. The funds will help finance the Sustainable Green Industry project, which seeks to combat industrial pollution. The project — which will be managed by the Egyptian Environmental Affairs Agency (EEAA) and executed by the National Bank of Egypt (NBE) — will see the government dole out funds to private and public sector manufacturers to stimulate investment in initiatives that mitigate industrial pollution, according to the State Information Services.

AUTOMOTIVE-

Local auto firm acquires stake in Brilliance Auto: The country’s sole agent for Jinbei products Jinbei Royal Egypt has acquired the Bavarian Auto Group’s (BAG) stake in Brilliance Bavarian Auto Company — a JV between China’s Brilliance vehicles and BAG — Jenbei’s managing director Khaled Saad told Al Borsa earlier this week. Brilliance Auto is gearing up to bring Brilliance’s V3 and V6 models to the Egyptian market by mid-February, he added.

ENERGY-

GUPCO’s first oil well in North Safa field comes online: The Gulf of Suez Petroleum Company (GUPCO) has started production from the first oil well in the North Safa field in the Gulf of Suez at 2.5k barrels per day (bpd), according to a statement from the Oil Ministry.

TELECOMS-

More data centers in the pipeline? Six local and international companies — includinglocal IT infrastructure firm Benya Group — have reportedly filed for licenses to set up data centers in Egypt with the National Telecom Regulatory Authority (NTRA), sources with knowledge of the matter told Al Mal.

COMMODITIES-

Ezz Steel raised the price of local rebar by EGP 3.5k to EGP 42k per ton — inclusive of 14% VAT — a source at the company told Enterprise. Several steel producers have hiked prices to catch up with the rising raw material costs, leaving steel prices at anywhere between EGP 41.5k and EGP 43k a tonne, Al Shorouk reported.

GASC has launched a tender for 50k tons of raw sugar and / or 50k tons of refined white sugar on behalf of the Egyptian Sugar and Integrated Industries Company, for delivery between mid-Febraury and mid-March (Reuters)

TRANSPORT-

The second phase of the metro line 3has begun trial operations. (Cairo Metro statement)

The Abu Qir train routewill gradually start halting operations starting Friday as the ministry starts working on the Alexandria metro project. Authorities will soon announce alternative routes. (Transport Ministry statement)

Tags:

ALSO ON OUR RADAR automotive Bavarian Auto Group CIT commodities Data Centers development finance energy EU European Investment Bank GASC GUPCO International Cooperation Ministry Oil Ministry Sugar

PLANET FINANCE

Are you ready for the new economic order?

Could 2024 be the year when the world completes its transition into a new era of expensive money? While investors are convinced that most of the world’s major central banks have ended the cycle of rate hikes — a sentiment that has led global stock and bond markets to rally in recent weeks — the implications of a “new economic order” where interest rates are generally higher are likely to become more evident in 2024, Reuters writes. Investors are betting that the US Federal Reserve could trim rates by around 1.5% to 4% by the end of the year.

Business and consumers are going to face fresh challenges: Everyone, from individual consumers to countries, will have to figure out how to readjust to a high interest rate environment, the newswire writes. While consumers will earn more on their savings, they will have to cope with borrowing rates that could be more than twice as high and some companies will have to restructure their debt.

ALSO WORTH NOTING:

Argentina and the International Monetary Fund are reportedly close to reaching an agreement — which could come as soon as this month — over the delayed seventh review of the country’s USD 44 bn loan program. An IMF delegation is set to arrive in Buenos Aires on Thursday to continue negotiations. (Reuters | Bloomberg)
Norway's largest pension fund KLP has excluded Saudi Aramco along with six Gulf telecom and five real estate companies from its portfolio over human rights and climate concerns, the fund said (pdf) on Thursday. The move saw KLP offload some USD 15 mn worth of assets, Reuters reports.
BTC nears 2-year high:The cryptocurrency surpassed USD 45k for the first time in nearly 2 years. BTC has risen over 20% since the start of December. (Bloomberg)

EGX30	25,502	+2.4% (YTD: +2.4%)
USD (CBE)	Buy 30.82	Sell 30.96
USD at CIB	Buy 30.85	Sell 30.95
Interest rates CBE	19.25% deposit	20.25% lending
Tadawul	12,123	+0.7% (YTD: +1.3%)
ADX	9,588	+0.1% (YTD: +0.1%)
DFM	4,091	+0.8% (YTD: +0.8%)
S&P 500	4,743	-0.6% (YTD: -0.6%)
FTSE 100	7,722	-0.2% (YTD: -0.2%)
Euro Stoxx 50	4,513	-0.2% (YTD: -0.2%)
Brent crude	USD 75.89	-1.5%
Natural gas (Nymex)	USD 2.57	+2.4%
Gold	USD 2,067.40	-0.2%
BTC	USD 45,106.91	+3.3% (YTD: +6.3%)

THE CLOSING BELL-

The EGX30 rose 2.4% at yesterday’s close on turnover of EGP 3.3 bn (0.3% below the 90-day average). Foreign investors were net sellers. The index is up 2.4% YTD.

In the green: B Investments (+9.7%), Eastern Company (+9.2%), and Palm Hills Developments (+8.3%).

In the red: ADIB (-2.0%), Mopco (-0.8%), and Abu Qir Fertilizers (-0.7%).

Asian markets are solidly in the red this morning, tracking Wall Street lower in early trading. Stocks of tech players and chipmakers are under particular pressure after Barclays yesterday downgraded Apple, says CNBC. European and North American markets also look set to open in the red later today.

Tags:

Financial Markets Planet Finance

HARDHAT

The blackouts aren’t going anywhere for a while

Power cuts to resume until at least 2Q 2024: The government is expecting to resume rolling blackouts until the end of 1Q 2024 as pressure on our electricity network continues amid the need to boost liquefied natural gas exports, three industry sources told Enterprise.

The good news is that we could see shorter power cuts a month from now. The government is working to reduce power cuts to just one hour, down from the current two hours, after January, our sources told us.

AND- Power cuts will be limited to the hours between 11am and 5pm effective today, the cabinet said in a statement yesterday. This came in response to requests from MPs and citizens to reduce the length of power outages, especially during the midyear exam season, the statement said, adding that new blackout schedules will be published soon.

ALSO- The Electricity Ministry has hiked electricity prices for private and commercial uses by 16-26%, effective this month. The move is part of a bigger plan to completely phase out electricity subsidies by 2025.

Refresher: The ministry began reducing the electrical load in late July to ration the consumption of natural gas production. The power cuts were originally blamed on summer heat waves, but after temperatures have fallen, officials noted that the one-hour cut saves the country some USD 300 mn per month. Our gas supply was dealt another blow in October when Chevron halted shipments of Israeli gas from its Tamar field due to the ongoing war in Gaza.

There are two main reasons why we’re continuing to see power cuts: #1- Electricity consumption has gone up. Our electricity consumption was up some 4.4k MW last year in comparison to the year before due to higher temperatures, our source said. That, coupled with contractual obligations for exports, has added pressure on our gas supply.

So how much fuel do we actually need? The Electricity Ministry needs to secure around 135 mn cubic meters of gas and 10k tons of mazut a day to support current consumption, an official told Asharq Business in July.

Could this let up soon? One unnamed source familiar with the situation told Al Arabiya recently that consumption could fall to 6 bn cf/d in January, down from 7 bn cf/d in the summer months.

#2- Resuming LNG exports = more FX: A large chunk of our gas production goes towards exports, an important FX source, making exports a “priority” for the government, our source told us. The government is looking to reach a target of 1.2 mn tons in LNG exports a month during the winter months, the source added.

REMEMBER- Egypt is set to resume LNG exports this month after half a year with virtually no gas leaving our shores. The government hopes to export as much as 1 bn cubic feet of gas per day from the beginning of this year, according to the official. Egypt is now importing 800 mn cubic feet of Israeli gas per day after Chevron restarted production at the Tamar gas field and reopened the EMG pipeline between Egypt and Israel.

How much were we exporting before? Egypt has exported just 3.38 mn metric tons of LNG towards the end of 2023, down from 7.1 mn tons during the whole of 2022. The country has the capacity to export more than 12 mn tons a year via its two liquefaction plants at Damietta and Idku.

We’ve tried several things — and they haven’t worked: The government recently restored daylight saving time and in 2022 began rationing the use of electricity in moves designed to reduce power consumption. Despite rationing electricity, spending on water and street lighting rose to EGP 2.8 bn in 1Q 2023, compared to just EGP 821 mn the year before, according to a Finance Ministry report seen by Enterprise. This can be attributed to an increase in costs on the back of FX swings, one source said.

One solution we’ve been looking at is ramping up mazut imports — but it’s not sustainable: We’re currently importing more mazut to meet domestic needs, though our source says this is a “temporary” solution. Mazut is a less clean alternative to natural gas that allows us to save more gas for export, but it has side effects both on grid efficiency and on the environment.

Liberalization of the grid is also on the table: Private-sector players have long been asking for the ability to use the state’s electricity grid to transmit electricity to their end clients. The European Bank for Reconstruction and Development (EBRD) is working to advise the Egyptian Electric Utility and Consumer Protection Regulatory Agency (Egyptera) on opening up the market.

A limited number of private producers currently sell their surplus electricity, with some 170 licenses currently active, our source said. There is no clear regulatory framework governing this practice though, the source explained.

Your top infrastructure stories for the week:

A 10-GW solar project could be in the works: China Electric Power Equipment and Technology has signed an MoU with the Madbouly government to begin studies to develop a 10-GW solar project.
Madinet Masr closed EGP 7 bn worth of contracts in 2023, including a EGP 1.7 bn MoU with local construction company El Hazek to construct the final stage of Madinet Masr’s Taj City project and the company’s new HQ.
Tameer secures 956 mn for New Cairo project: Real estate developer Tameer has landed an EGP 956 mn loan from Banque du Caire for its business park project Urban Business Lane in New Cairo.

Tags:

electricity energy Hardhat

CALENDAR

2024

JANUARY

7 January (Sunday): Coptic Christmas (national holiday).

9 January (Tuesday): B Investments’ general assembly (pdf) to look into capital increase ahead of Orascom Financial Holding (OFH) acquisition.

17 January (Wednesday): A delegation of Egyptian companies to visit Istanbul.

25 January (Thursday): Revolution Day / Police Day (national holiday).

FEBRUARY

1 February (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

1 February (Thursday): OPEC+ oil market monitoring online meeting.

11 February (Sunday): Deadline to apply for the Chicago Booth Executive Programin El Gouna.

25 February 2024 (Sunday): Deadline to bid for 23 blocks in an international oil and gas tender.

MARCH

20 March (Wednesday): End of sugar export ban.

28 March (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

APRIL

9 April (Tuesday): Eid El Fitr (TBC) (national holiday).

25 April (Thursday): National holiday in observance of Sinai Liberation Day (TBC) (national holiday).

MAY

1 May (Wednesday): National holiday in observance of Labor Day (TBC) (national holiday).

5 May (Sunday): Coptic Easter.

6 May (Monday): Sham El Nessim (national holiday).

23 May (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

29 May (Wednesday): Virtual launch of Chicago Booth Executive Program.

JUNE

15-19 June (Saturday-Wednesday): Eid El Adha (TBC) (national holiday).

30 June (Sunday): June 30 Revolution Day (national holiday).

JULY

7 July (Sunday): National holiday in observance of Islamic New Year (TBC).

18 July (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

23 July (Tuesday): Revolution Day (national holiday).

SEPTEMBER

2-5 September (Monday-Thursday): Egypt International Airshow, El Alamein International Airport.

5 September (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

15 September (Sunday): National holiday in observance of Prophet Muhammad’s birthday (TBC).

OCTOBER

6 October (Sunday): Armed Forces Day.

17 October (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

NOVEMBER

21 November (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

DECEMBER

26 December (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

EVENTS WITH NO SET DATE

Q1 2024: Opening of the newly developed Pyramids Plateau in Giza.

February-May: The Grand Egyptian Museum could officially open to visitors.

June 2024: Gov’t expects to finalize sale of Beni Suef combined-cycle power plant.

1H 2024: Gov’t expects to finalize sale of four water desalination plants.

2H 2024: Gov’t to launch the Cairo Ring Road BRT buses.

November 2024: Egypt to host the World Urban Forum (WUF12).

End of 2024: The launch of the high-speed train line linking Ain Sokhna with Al Alamein City.

2024: Standard Chartered Bank to open a branch in Egypt.

2025

EVENTS WITH NO SET DATE

2Q 2025: Safaga Terminal 2 to start operations.

2027

EVENTS WITH NO SET DATE

End of 2027: Trial operations at the Dabaa nuclear power plant expected to take place.

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