Until recently a net exporter of oil products, Egypt is now struggling to keep its industries running and its households lit. Rising oil imports coupled with the economic doldrums of the post-revolutionary years have forced the government to take unpopular action, and its programme to phase out fuel subsidies, carried out over five years, is likely to amplify inflation in the short run. However, if the government takes this opportunity to stimulate investment in alternative sources of energy, many new jobs may be created, experts say. People travelling to Sinai following Israel's withdrawal from the peninsula on 25 April 1981 may recall that almost all the houses built by the Israelis were equipped with solar-powered heaters. However, in Egypt today the use of solar energy remains intermittent at best. European countries with much less sunshine than Egypt, among them Germany, have developed a sophisticated solar power industry. The Chinese are also producing solar panel technology at cut-rate prices, ending objections by those who claim that alternative energy is too expensive. As everyone who lives in Egypt knows, power cuts are becoming a daily reality, not only in summer as has been the case for many years, but also in the winter time. This has prompted the usual round of jokes at the government's expense. One joke has the minister of electricity being asked to explain the power cuts. He replies that Egyptians have such a “shining demeanour” that the government didn't see much need for artificial lighting. As such jokes make the rounds of social media, experts are speaking of renewable energy as the way of the future. Some point out that private business should be more encouraged to invest in renewable energy, but to make the effort worthwhile the prices of energy from fossil fuels must be allowed to increase. In other words, subsidies on fossil fuels were what kept investors from exploring solar, wind and bio-fuel options, which tend to cost more than conventional petroleum-related products, experts say. Jose Maria Magrina, CEO of the Arabian Cement Company, which is partially owned by a Spanish firm, says that the inability of the government to supply the country's factories with natural gas has led to a reduction of 30 per cent or more in production and was one of the reasons that the prices of cement have gone up in the local market. Mohsen Nasser, board chairman of the state-owned Delta Company for Fertilisers and Chemical Industries, says that his factories have had to slash production by 15 per cent or more because of energy shortages, and Musallam Shaltut, professor of solar energy physics at the National Research Institute for Astronomy and Geophysics, says that the depletion of the country's oil and gas reserves has caused a sharp rise in imports. Recent figures show that Egypt imports oil products to the tune of $1.3 billion to meet its consumption of diesel (450,000 tonnes), butane gas (300,000 tonnes) and gasoline (500,000 tonnes) per month.
A UNIFIED ELECTRICITY LAW: In 2008 the government prepared a bill called the Unified Electricity Law with a view to encouraging production of alternative and renewable energy. But the law has not yet been passed, and experts say that it might be better to pass a separate law for alternative energy in order to stimulate investment in this field. Mohamed Salah Al-Sobki, who heads the New and Renewable Energy Research Centre, argues that the low cost of producing electricity from fossil fuels has been what has kept the country from exploring cleaner energy sources. Speaking to Al-Ahram Weekly, Al-Sobki said that the absence of a law to encourage the private sector to invest in the field had been a major obstacle. The country should have a law to regulate the production of electricity from new and renewable resources, he said, adding that this law should remain separate from the Unified Electricity Law. Mohamed Moussa Omran, the deputy minister of electricity, also recently told journalists that the Egyptian electricity sector could be in need of some restructuring. The government was planning to boost the production of renewable energy in the country, but experts had found implementation to be slow, he added. The government hopes to increase the production of renewable energy to 5,000 megawatts by 2027. But experts say that only 500 megawatts have been achieved so far, with another 500 megawatts planned for next year. Renewable energy, for the first time ever, has now received a mention in the country's constitution. Voicing satisfaction with this commitment, experts now say that if Egypt were to dedicate five per cent or so of its land area to wind and solar energy, it might be able to meet 80 per cent of its energy needs from renewable resources. According to Omran, Egypt plans to produce 7,200 megawatts of energy from renewable sources by 2050. But for investors to venture into renewable resources there needs to be reassurance about profitability. For this to happen, the government should envision a price structure that doesn't favour fossil energy over newer and cleaner forms of energy, such as solar and wind, experts say. The government could also ask some industries to use a certain percentage of renewable energy in their operations. For example, the share of new and renewable energy in operations could be set at three per cent per industry. According to Al-Sobki, such a measure would help kick-start much-needed investment in renewable resources. According to media reports, the Ministry of Electricity is prepared to buy electricity from wind farms at 80 piastres per kilowatt and from solar energy producers at 100 piastres per kilowatt, though Hisham Tawfiq, a financial specialist currently setting up a solar energy company, notes that a fair price for solar energy should start from 110 piastres, as investors need to recoup their overheads and not just operational costs. Tawfiq is optimistic about the future of renewable energy in Egypt, saying that “this is the path the whole world is taking.” Al-Sobki is also urging the government to pass a law allowing the private sector to produce electricity and then sell it to the country's power grid. Although the current law doesn't ban private investors, it makes no attempt to offer real incentives, he says. Although Egypt is still lagging behind in renewable energy, some companies have started exploring the potential of the sun and wind. The Sewidi Cables Company is now operating a large wind farm. Al-Sobki, praised the firm, adding, “a large international company such as Sewidi will always find ways of using the electricity it produces.” He said that wind power in Egypt is less convenient, as the wind is steady only in specific locations such as Gabal Al-Zeit, where the government already has a wind farm. By contrast, solar energy is a convenient and accessible source of power all over the country. Al-Sobki added that a mix of fossil and renewable resources could be used to provide energy for the country. “Even if coal continues to be used, it should be kept in mind that Egypt is a poor country and needs to alleviate the pressure of providing for its energy needs. But there should be clear rules and regulations to protect all those involved,” he said.
THE COAL ARGUMENT: Some 60 years ago the government decided to set up several cement factories in Helwan, an area known up to that time for its health spas. The spa business soon collapsed, and residents started complaining about the pollution. Things may now get worse as the foreign companies that bought the cement factories as part of the privatisation programme of the 1990s are now making plans to use coal to power their operations. Laila Iskandar, minister of informal housing and previously minister of the environment, is appalled at the idea of using coal as a substitute for petroleum products. Her views are shared by activists in a group called Egyptians Against Coal. According to Tawfiq, the history of Helwan is reason enough to frown upon the idea of using coal as “such a move will be detrimental to the health of the local population,” he said. Iskandar also recently told journalists that many people were already struggling with health issues and there was no need to add to their list of ailments. According to Iskandar, the use of coal would likely increase the incidence of heart and respiratory diseases and could also increase cases of cancer and mental impairment among children. She said that many countries in Europe were phasing out their production of coal, and Egypt should be following in their footsteps, not ramping up the use of this type of fossil fuel. A clean environment is not a luxury, Iskandar said. Companies and tourists are likely to stay away from Egypt if it shows a disregard for clean energy. “It doesn't make sense to have two revolutions in a row, risk everything, and then opt for coal. This is unacceptable,” Iskandar said. Shaltut shares this sentiment, saying that nearly 30 per cent of people who work and live near polluted industrial zones have respiratory or other ailments. While some believe that the Wadi Al-Maghara coal in Egypt could be used to help solve the country's energy problems, others say that if this were used the resulting emissions of sulphur dioxide would be detrimental to agriculture.
THE BIO-FUEL OPTION: In a country that produces nearly 50 million tonnes of agricultural waste every year, ample opportunities exist to produce bio-fuel, experts say. According to Iskandar, the use of refuse to produce bio-fuels could open up new economic opportunities, as well as create jobs. A programme for household recycling promoted by the ministry will allow urban residents to sort out their garbage into organic and non-organic refuse, thus facilitating the processing and reuse of the organic part for bio-fuels. Cairo alone now has six recycling centres and there are many more in the countryside. Some 60,000 to 80,000 garbage collectors also now work in the collection and recycling business. Yet, while some say that every tonne of garbage can create seven jobs, others are less convinced that recycling is helpful when it comes to energy production. Magrina, who runs the Arabian Cement Company, said that the energy produced by refuse was of limited help in his operations, for example, being too complicated to produce and not always suitable. As a result, while Egyptians Against Coal continue to issue almost daily warnings about the perils of using fossil fuel, the country's cement factories are already installing machinery that burns coal, and it is still unclear which side will have the last word. While Al-Sobki and Shaltut seem to hold opposite views on coal, both agree on the need to control energy consumption, praising the gradual removal of subsidies on energy. They also agree that the long-standing subsidies on oil products made them cheaper to consumers, but also discouraged investors from exploring alternative sources. When the price of fossil fuels is closer to that of renewable energy, production of the latter will be encouraged. In an attempt to balance the budget, the government has decided to slash energy subsidies, completely eliminating them within five years. On July 3, the Ministry of Electricity announced new tariffs for electricity to homes and businesses, with the price increase for this year alone being about 20 per cent. Electricity Minister Mohamed Shaker said that the decision was “tough” but inevitable. Explaining the reasons for the move, he said that the ministry already owed some LE163 billion because it routinely bought fuel at high prices and sold it more cheaply. To produce a kilowatt of energy costs about 34.4 piastres at present, he said, but before the recent measures the ministry sold a kilowatt for only 22.6 piastres. As of next year, the price of a kilowatt will be 35.2 piastres, and with subsequent raises the price will rise to about 50 piastres by 2019. By then the subsidies will have been completely abolished, and only subsidies worth some LE9 billion retained for households, with LE15 remaining for irrigation works. Similar measures have been introduced for natural gas, gasoline and diesel. The price of the natural gas sold to cement and iron factories has increased by more than 30 per cent, and the price of gasoline, diesel and natural gas for motorists will go up by 40 per cent or more. According to a recent Reuters report, these increases will save the government nearly LE42 billion per year. The government will soon be selling 1 million BTU (British Thermal Units) of natural gas at $8 to cement factories, $7 to iron factories, $5 to food factories, $4.5 to the pharmaceutical industries, and $3 to power plants. A tonne of diesel will be sold to cement factories at LE2,250 (an increase of 50 per cent), food industries at LE1,400, power plants at LE2,300, and brick factories at LE1,950. Motorists will have to pay LE1.10 for a cubic metre of natural gas (up 175 per cent) LE2.60 for a litre of gasoline 92 (up 40 per cent), and LE1.50 for a litre of gasoline 80 (up 78 per cent). The price of the high-end gasoline 95, commonly used in luxury cars, will be LE6.25 per litre (up 70 per cent). Diesel will be LE1.80 (up 63 per cent). In the meantime, Al-Sobki said that the cost of producing solar energy fell after China started producing solar panels. Such panels have the advantage of being able to generate larger or smaller amounts of energy as needed, he said, and while solar heaters were currently affordable they would become even more so if manufactured locally. Tawfiq added that many buildings in Egypt could be powered with solar energy. But experts say that a surge in the use of renewable energy will require a law giving incentives to producers and consumers alike.
