It takes more than good intentions to introduce natural gas to one of Egypt's most vibrant industrial zones, reports Sherine Nasr Lack of coordination between the 10th of Ramadan Investors' Association and the Ministry of Petroleum has so far deprived at least 1,250 factories in Egypt's most productive industrial zone from using an environment-friendly type of energy, natural gas. Although the usage of natural gas was developed in the late seventies, it was only introduced to the 10th of Ramadan City four years ago when National Gas, a private sector distributor, took the initiative in 2001 and established a facility capable of servicing 45,000 city apartments. "We can confidently say that natural gas has covered all the urban areas in the city," said Hani Farid, vice president of Natural Gas. More important however, is the application of the facility to industrial purposes. According to Farid, the city's existing infrastructure is fully prepared to accommodate the new facility's productive capacity. Still, the question remains as to who will pay the bill for extending the facility into the factories? "The process is definitely a costly one. In addition to the cost of extending in-house pipelines, it is also necessary to modulate all types of equipment and production units inside factories so as to operate only on natural gas and not any other type of energy. We are taking about a lot of money here," commented Mahmoud Soliman, head of the association. In the meantime, the Ministry of Petroleum believes it is enough to provide the city with the necessary infrastructure while factories planning to utilise the new facility's services should bear a sizable portion of the costs. Unfortunately, for the last two years negotiations between both parties have been at a virtual standstill. Earlier, a protocol between the association and the ministry indicated that the factories would pay 50 per cent of the total cost at the time of signing the contract while the remaining 50 per cent would be paid in instalments over a period of three to five years. At least seven per cent of the factories in the city approved the proposal and are now operating with natural gas. According to Farid, the conversion cost ranged between LE5,000 and LE 20,000, "although in some cases, it can amount to LE150,000 according to the factory capacity and type of production," he added. The high costs seem to have discouraged many factories from switching to natural gas. At present, they are only willing to pay up to 10 per cent of the total cost, while the remaining costs would be added to the natural gas bill for years to come. "In this particular case, cost should be the last thing to be taken into consideration," said Salah Hafez, chairman of the Egyptian Energy Service Business Association and former executive director of the Egyptian Environmental Affairs Agency (EEAA) who added that it is hard to overlook the negative consequences of using other forms of energy, including gas oil and fuel oil on the environment as well as people's health. It is worth indicating that Cairo, for example, has been classified one of the most polluted cities in the world with record high levels of lead, CO2 emissions and suspended particulate matters (SPM) in the atmosphere due to the widespread use of non environment-friendly types of energy. "There is also an economic factor that can hardly be ignored. The government pays LE26 billion annually in subsidy for different types of energy. Isn't it ridiculous to import highly-polluting types of fuel in hard currency while we can easily switch to the environment-friendly natural gas which is found in plentiful amounts and for less cost?" inquired Hafez, adding that beside having the lowest levels of CO2 emissions, natural gas has the highest level of octane compared to other fuels, which makes it the perfect type of energy to use. "Both the association and the ministry should work out a mechanism to fully introduce natural gas for industrial purposes in the city. Lack of coordination should not continue as the main obstacle," said Soliman. Ironically, many international donor agencies have allocated millions for the purpose of combating industrial pollution in Egypt. "A USAID LE50 million loans for the same purpose has not been fully utilised," noted Farid who pointed out that businessmen are not willing to apply for loans and pay interest rates for environment-related purposes. In 2006, the World Bank will provide a five-year grant of $72million that will end by 2010 to eliminate industrial pollution. "Egyptian businessmen wishing to export their products must convert to natural gas. They may apply for these grants to introduce the facility into their factories," said Soliman, who added that using an environment-friendly type of energy during production has become one of the main specifications of clean production. Natural gas demand in Egypt has grown rapidly in the urban as well as industrial sectors since the nineties with production more than doubling between 1999 and 2003. Natural gas production in Egypt averaged about 3.3 billion cubic feet per day (bcf/d) in 2003 and is expected to rise to about 5.0 bcf/d by 2007. In light of several new finds, the Egyptian government released a revised estimate of proven natural gas reserves in November 2003, which put the figure at 62 trillion cubic feet (Tcf). Probable reserves are believed to be around 120Tcf. Most of this increase comes as a result of natural gas discoveries along the coast of the Nile Delta and in the Western Desert. "The Nile Delta has emerged as a world-class natural gas basin," proclaimed Hafez. At present, natural gas provides 90 per cent coverage of the total demand of the thermal power plants which account for about 65 per cent of Egypt's total gas consumption. Fertilisers, another fast growing sector, comes second with at least 11 per cent of gas consumption followed by petrochemicals, which is also a rapidly expanding sector of the Egyptian economy. Availability of natural gas to residential customers is also been on a rise not only in the main cities but also in Upper Egypt where the facility is expected to be introduced in Assiut within a few years.
