 Egypt’s crumbling gas infrastructure requires $5 billion of investment to bring it up to standard, according to news agency Reuters.
Energy is a politically explosive issue in Egypt, where power cuts have become commonplace even in the capital Cairo. Blackouts deepened discontent with Islamist President Mohamed Mursi before his ouster last July.
While gas shortages have been blamed for the crisis, senior electricity ministry official Sabah Mohamed Mashaly said modernizing the grid should be a priority.
“We don’t have any (capacity) reserves, we just cover the load demand,” Mashaly said in an interview.
She said additional power capacity was needed to fill sudden production falls caused by accidents and maintenance work at Egypt’s 51, mainly gas-fired, power stations, of which about a quarter are more than 20 years old.
Mashaly said renovating these and building new ones would carry a price tag for cash-strapped Egypt of “no less than $4 or $5 billion” plus several billion more to boost the generation capacity of the system.
Energy officials say a lack of reforms to the wasteful fuel subsidy system is keeping away private investors who could finance modernization and boost gas output.
No one wants to build capacity to generate electricity that will be sold at less than it costs to produce. And the artificially low prices provide little incentive for Egyptians to curb consumption.
Egyptians pay the equivalent of between 1 to 7 U.S. cents per kilowatt hour for electricity in their homes. By contrast, U.S. householders pay between 8 and 37 U.S. cents, according to U.S. Energy Information Administration data.
Mashaly says private investment is needed for renovation of the grid. But she cautioned that this will not happen until the government eases the fuel subsidies, which drain more than 20 percent of the state budget.
“Once the subsidies are removed, companies will come right away,” said Mashaly.
