beyondbrics

Egyptians got a rude shock this Ramadan season with the return of power cuts – something inhabitants of most parts of the country thought they had put behind them many years ago.

Ramadan this year has come amidst an unusually prolonged heat wave, with temperatures and humidity higher than average. Egyptians performing the fast have found themselves doing so in sweltering heat as air conditioners stopped because of the power shortages. The cuts have also revived a debate about Egypt’s natural gas exports.

Of course, it is still a minority of Egyptians who can afford to run AC units even when there is electricity, but the impact of the blackouts extended beyond the middle classes.

Families across the country that gather in the evenings to watch the new soap operas traditionally aired during the holy month have found themselves plunged into darkness, with each other’s conversation as the only entertainment. In some places the power cuts also led to water shortages as pumping stations stopped.

Not surprisingly the electricity outages and the heat wave could only aggravate a general mood of disgruntlement already fuelled by high food prices in a country where 40 per cent of the people are poor.

The electricity ministry explained that a spike in power consumption as a result of the heat wave and Ramadan had led to peak loads that are almost equal to the country’s installed capacity of 25,000 MW. The outages, it said, were necessary to prevent damage to the network.

But electricity officials also accused the petroleum ministry of reducing the amount of natural gas supplied to power stations. Press reports also suggested that part of the problem maybe that the electricity ministry was behind in its payments to the petroleum ministry for the gas it received.

Sensing the makings of a serious problem, Hosni Mubarak, the president brought the two ministers together earlier to sort out the problems between them. The outages, however, are continuing as the ministry tries to protect the network at peak times by rotating cuts to targeted areas.

The ministry has also announced plans to boost power capacity by 550 MW in the next few weeks.

But that’s not contained a resurgent debate about Egypt’s natural gas exports and whether the country has enough to meet its commitments at home and abroad

Rising local demand for gas had pushed the government in 2008 to block any new gas export contracts until the end of this year when it is due to revise its moratorium. Electricity usage has risen in recent years at an annual 11.5 per cent, according to official figures. The current power cuts are reported to have already affected some intensive industrial users such as steel and cement producers.

The managing director of a big industrial company told beyondbrics:

We are worried about power … The pace at which demand is increasing means we need two big power stations every year. We don’t know if we have enough gas for this, and a power station takes three years to build.

The government puts Egypt’s proven natural gas reserves at 77.2 trillion cubic feet. International experts say gas discoveries are being made, but development has been slow, because companies exploring in deep water wanted an improvement in the terms offered by the government. An agreement signed with BP this summer should eventually supply the national grid with up to 1bn cubic feet per day by 2014.

Samuel Ciszuk, senior Middle East analyst at IHS Energy, says:

The BP contract is groundbreaking … We should now see more [gas finds] developed.

All this, however, is likely to take a few years so it does not solve the immediate problems of those who need more power for industry.

The answer, argues the managing director of the industrial group, is for Egypt to allow the private sector to import LNG and construct a regasification plant. He says:

We need a national plan for this, and we need the legislative support so that the private sector can get involved.

Related reading:
Electricity outages spoil Ramadan celebrations, Los Angeles Times blog