Back to the complete issue
Wednesday, 14 December 2022

In its search for FX, Egypt is burning more mazut

Egypt’s use of mazut fuel oil in power stations has soared to a five-year high as the country works to increase natural gas exports, according to data seen by Reuters. Figures from the Egyptian Electric Utility and Consumer Protection Regulatory Agency (Egyptera) showed that mazut accounted for almost 21% of all fuel used by power stations in October, the highest since September 2017 when it registered 22.8%.

That’s not all: Data from the Joint Organisations Data Initiative shows that demand for mazut rose to 135k barrels per day in September, the highest since June 2018.

Why are we burning more mazut? To help ease a shortage of foreign currency. Egypt had significantly reduced its use of mazut in recent years but has increased consumption following a decision in August to begin rationing the amount of natural gas used in local power plants. The government wants to make more natural gas available for export, which will bring more hard currency into the country as officials wrestle with the country’s external position.

Cheap… Burning mazut is four times less expensive than burning natural gas priced at the European TTF benchmark, Eugene Lindell, head of refined products at energy consultancy FGE, told the newswire. Refinitiv data shows that Egypt has significantly upped its purchase of discounted Russian fuel oil, enabling it to make “massive” savings, he said.

…but environmentally-costly: Mazut is a low-quality, high-sulfur fuel oil that generates more air pollution when burned than other types of oil.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2022 Enterprise Ventures LLC.

Enterprise is available without charge thanks to the generous support of HSBC Egypt (tax ID: 204-901-715), the leading corporate and retail lender in Egypt; EFG Hermes (tax ID: 200-178-385), the leading financial services corporation in frontier emerging markets; SODIC (tax ID: 212-168-002), a leading Egyptian real estate developer; SomaBay (tax ID: 204-903-300), our Red Sea holiday partner; Infinity (tax ID: 474-939-359), the ultimate way to power cities, industries, and homes directly from nature right here in Egypt; CIRA (tax ID: 200-069-608), the leading providers of K-12 and higher level education in Egypt; Orascom Construction (tax ID: 229-988-806), the leading construction and engineering company building infrastructure in Egypt and abroad; Moharram & Partners (tax ID: 616-112-459), the leading public policy and government affairs partner; Palm Hills Developments (tax ID: 432-737-014), a leading developer of commercial and residential properties; Mashreq (tax ID: 204-898-862), the MENA region’s leading homegrown personal and digital bank; Industrial Development Group (IDG) (tax ID:266-965-253), the leading builder of industrial parks in Egypt; Hassan Allam Properties (tax ID:  553-096-567), one of Egypt’s most prominent and leading builders; and Saleh, Barsoum & Abdel Aziz (tax ID: 220-002-827), the leading audit, tax and accounting firm in Egypt.