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Tuesday, 16 July 2019

Egypt needs to invest additional USD 30 bn into electrical grid by 2023 -Apicorp

Egypt needs to invest USD 30 bn into electrical grid by 2023 -Apicorp: Egypt needs to invest an additional USD 20 bn in power generation and USD 10 bn in transmission and distribution (T&D)to increase capacity to 63 GW by 2023, the Arab Petroleum Investments Corporation (Apicorp) says in its newly-released MENA Power Investment Outlook report (pdf). Increasing urbanization, population growth and higher levels of cooling requirements will continue to place greater stress on Egypt’s electricity needs, despite significant investments over previous years leading to a current electricity surplus.

Egypt isn’t short on investments in its electrical grid: Investment in current projects stands at USD 24 bn, with that figure rising to USD 59 bn when accounting for projects that are still in the pipeline. In fact, the current electricity surplus has pushed the Egyptian Electricity Holding Company (EEHC) to postpone an agreement with the UAE’s Al Nowais to build a USD 4 bn “clean coal” power station in Oyoun Mousa, Electricity Ministry sources told the local press. Egypt’s power reserves currently stand at 20 GW per day and are expected to increase to 22 GW by the end of 2019 due to new renewable energy projects in the Gulf of Suez and Benban, the sources said.

The growth of medium-term demand is expected to accelerate, but will slow over the long term as the lifting of electricity subsidies hits household wallets and company balance sheets. Apicorp estimates that demand will grow at a compound annual rate of 5.1% by 2023, having risen by 4.6% between 2015 and 2017.

The MENA region needs USD 209 bn of investment in power to generate 88 GW by 2023, the report says.Apicorp has cut these projections by a fifth since last year’s outlook due to lower medium-term growth forecasts, falling population growth rates and higher electricity prices.

Investments in the MENA energy sector could reach USD 1 tn, with the power sector comprising a 36% market share, driven by growing demand for electricity and renewable energy. Egypt, Saudi Arabia and the UAE alone account for half the expected investments in the power sector. In the case of both Egypt and Saudi Arabia, the majority of planned or existing power generation projects are focused on gas-fired capacity. Renewable energy is expected to account for 34% of total power investments, although technical and regulatory issues are expected to keep many countries below their renewable generation targets.

Sector reforms are essential for increased private sector involvement: With the total share of regional government investments in the sector at 78%, the report calls for greater private sector involvement in both power generation and distribution, using traditional business models including the Single-Buyer Model.

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