2:41am , Sunday 2nd October 2022

Egypt spends billions on electricity surplus, yet its people stay in the dark

17 August 2022

Maryam Khalil Yaqoub

Hassan Mohammad lives in a village within the Aswan governorate of southern Egypt, and was unable to regularly turn on the lights, charge his phone, or heat his home from 2014 until the date of this report.

This wasn’t due to a power shortage, the situation was quite the opposite, Egypt’s electricity output exceeded demand yet about two percent of the 133 villages in Aswan were left powerless.

Percentage of homes partially connected to the electricity grid

2.1% of Egypt’s rural homes are partially connected to the grid

icon

Click to view the data

100%0%

المصدر: الجهاز المركزي للتعبئة العامة والإحصاء – المسح الشامل لخصائص الريف المصري

In 2014, the total power generation capacity of the Egyptian Electricity Holding Company stood at approximately 32 gigawatts, while demand was approximately 26 gigawatts.

Despite these numbers, the Egyptian government claimed that it started building more power plants to resolve the crisis of villagers like Mohammad being undersupplied, yet the data says otherwise.

Investigation by Arab Reporters for Investigative Journalism (ARIJ) reveals that the Egyptian government built power plants between 2014 and June 2020 using externally and locally obtained loans, wasting billions of dollars as power plants are constructed but underused.

It added 38 plants to the public electricity network at a cost of 322.8 billion Egyptian pounds, or $17.5 billion, without solving the problem for its constituents and building an additive loss.

The difference between the added capabilities on the grid and the maximum load

2020 represents the highest electricity surplus in Egypt

Capacity in megawatts

Yxears

Source: Egyptian Electricity Holding Company (EEHC)’s annual reports for 2014-2020
The electricity surplus is calculated by measuring the difference between the capacity and the maximum load, and then subtracting the result from the reserve margin.

The government doubled its power production capacity within seven years to reach approximately 59.5 gigawatts by mid-June 2020 although the maximum load during the same period did not exceed 31 gigawatts, producing a 24-gigawatt surplus.

“The stations operate usually to supply the needed capacity of electricity of the day. This renders the remaining generation hubs idle despite the fact that their turbines continue to run and consume quantities of fuel or gas without supplying any electricity which eventually reduces those turbines’ lifespan,” said Abla Jado, a professor of electrical engineering at Menofia University and a former general manager of studies and development at the South Delta Electricity Distribution Company.

An official from the Egyptian Electricity Holding Company spoke to ARIJ on the condition of anonymity, stating that the number of generating stations were stopped due to the surplus.

Yet the annual report of the Egyptian Electricity Holding Company during 2015 and 2020 showed that 51 out of 91 plants connected to the grid were operating at half their capacity, whereas in 2015, it was only 19.

Shuttered stations

StationCompanyStation TypeOperation Year
Wadi HoffCairoGaseous1985
HeliopolisCairoGaseous2016
El BasateenCairoGaseous2016
Sharm El-SheikhEast DeltaGaseous1997
Al-Masaeed GasEast DeltaGaseous2018
Al Mahmoudia Aljadedamiddle DeltaGaseous2016
Kafr El DawarWest Deltasteamy1986
Damanhour steamWest Deltasteamy1969
Damanhour CompoundWest DeltaCombined cycle1995
Abu Qir Al GhaziWest DeltaGaseous1983

Power stations that are partially operational

stations

years

Source: Egyptian Electricity Holding Company (EEHC)’s annual reports for 2010-2020

Losing power

An approximate calculation of the cost of unused electricity surplus over the seven years could have been sold for a profit of approximately 3 million Egyptian pounds, or around $163,000 in 2020.

Lost profits due to unutilized surplus

icon

Click on the year to view the details

201520162017201820192020


Electricity surplus in kilowatts

3002000


Average prices of the seven bands

38 piasters


Lost profits in EGP

One million

Note: Lost profits were calculated by multiplying the average price of the seven bands of electricity prices by the amount of annual electricity surplus; these are estimated figures.

This predicted profit could have helped pay off the interest on loans that the Egyptian Electricity Holding Company borrowed to construct these new power plants.

The analysis of the financial statements issued between 2014 and 2020 by the Egyptian Electricity Holding Company shows that its borrowing rate has increased by 242%.

The total sum of loans in 2014 amounted to about 82 billion Egyptian pounds or $4.5 billion, and in 2020, this sum reached 282 billion Egyptian pounds, or $15.3 billion.

Loan credit rates and financing burdens

In billion pounds

Yeras

Source: Holding Company (EEHC)’s annual reports for 2015-2020

This resulted in a 231 percent increase in financing burdens due to interest rate payment commitment during the same period. In 2014, the loans incurred 15 billion Egyptian pounds or $816 million in interest compared to 51 billion Egyptian pounds, or $2.8 billion in 2020.

Overshooting market demands for electricity is a costly investment since loans were secured initially to pay for those plants that currently have no economic return, explained Amr Adily, a professor of political economy at the American University in Cairo.

New electrical stations added after 2014

icon

Click to view the data

https://flo.uri.sh/visualisation/10936894/embed
Made with Flourish

Source: Holding Company (EEHC)’s annual reports for 2015-2020

The volume of power generated compared to power output

Total generated power (GWh) Total exported power (GWh)

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

 Static policy

All the surplus electricity generating capacity fails to provide houses with power on a hot or a cold day in the life of Mohsin Shalabi who is an inhabitant at Bahtit village in Abu Hammad Center in Sharqia Governorate.

“Sometimes in the summer, the electrical power is cut for nearly ten hours a day,” said Shalabi.

He attributes the poor electricity supply and the recurrent outages to the insufficient number of transformers available in his village as the electricity company failed to install enough to meet the needs of the village.

Others such as Hafiz Salmawi believe that as the government builds more plants, it fails to coordinate it with the expansion of its electric transmission networks to reach constituents.

The number of transformers increased by an inadequate 21% percent between 2014 and 2020 while the total capacity produced by the power plants in that same period went up by 85 percent.

The rates of increase in electrical capacity compared to the rates of increase in electrical transducers

Rate of increase in electrical capacities The rate of increase in transformershttps://flo.uri.sh/visualisation/10936897/embed

Made with Flourish

Source: Holding Company (EEHC)’s annual reports for 2014-2020

Rate of power sold relative to the number of subscribers

Yeras

Source: Holding Company (EEHC)’s annual reports for 2020

These figures are not swaying Egypt’s momentum to build more plants as the 2020 Electricity Holding Company report indicates that the government plans to add 4.760 megawatts between 2022 and 2027, bringing its total capacity to 70.000 megawatts.

The Egyptian Ministry of Electricity and Renewable Energy did not respond to ARIJ’s emails requesting clarification of the policy to build more power plants despite the surplus available by the time the report was published.

Meanwhile, people like 45-year-old Mohammad in his village of Nagaa Gubran in Aswan continue to search for other ways to endure the dark without electricity.