CAIRO: Egypt will face a severe energy crisis in the coming years, which will require the government to search for alternatives, a number of experts recently reported. “The government plans to eliminate subsidies at all Egyptian factories in a gradual manner,” said Egyptian Minister of Planning and International Cooperation Fayza Aboul Naga. The government has decided to create a timeline to help plants convert to natural gas instead of diesel and petrol, she added. A recent report was also revealed showing that the General Authority for Petroleum is facing a cash liquidity crisis and is struggling to pay dues to banks and other creditors. The continued high bill to support energy of nearly 99 billion EGP (U.S. $16.59 billion) in the general budget is worrying, particularly considering the continued growth of consumption, both industrial and domestic, which is roughly 15 percent a year, said economic expert Abd al-Muttalib Abdul-Hamid. This makes alternatives increasingly expensive unless new projects to produce both conventional energy and renewable energy are undertaken. The government is looking for financing for alternative energy projects, as there is a need to expand the use of renewable energies by 20 percent by 2020, he added. He also appealed to the Egyptian Ministry of Finance to immediately begin reviewing their support of the energy sector and consider using savings in the education and health sectors. It is necessary to reduce the budget deficit by removing subsidies on petroleum products and switching to imported gas to meet Egypt's energy needs for the next 20 years, said Head of the Research National Bank Salwa al-Antari. He also urged the construction of more nuclear power plants. The main problem facing this sector is the imbalance between the cost and pricing, said Omnia Helmy, a professor of economics at Cairo University. Since the state is committed to supporting energy it must address this imbalance to create development both for industry and personal use. Resorting to commercial banks to finance energy projects raises the costs, due to high interest rates, she added. “These are long term projects, which require financing that is affordable,” she said. “ The state budget cannot afford to make large investments in this sector when it is facing the increasing deficit.”
