Egypt's cabinet approves law privatising electricity production, transmission

Ahram Online , Wednesday 18 Feb 2015

In wake of recurrent energy shortfalls, Egypt will gradually push energy production, distribution and transmission to the private sector over the coming five years

More than 15 nationwide power stations have halted electricity generation due to shortages of fuel(Photo: Reuters)

Egypt’s cabinet approved Wednesday a law privatising electricity production, distribution and transmission, reported the state-owned news agency MENA.

The law limits the state role in the electricity sector to regulation and supervision and separates activities of production, transmission and distribution to ensure competitiveness in the private sector.

Egypt has been suffering from an acute energy crunch as foreign oil companies suspend extraction works on the back of growing arrears as political turmoil took hold in the aftermath of a popular uprising in 2011. Parts of the national grid are also in need of renovation.

Egypt's government slashed energy and electricity subsidies mid-2014 in a move to reform the country's budgetary imbalance and ultimately eliminate energy subsidies.

"Initially, there will be two markets: one competitive and one in which prices are set by the state. But with the gradual liberalisation of electricity prices over the coming five years, the competitive market will expand to include more consumer segments," Hafez El-Salmawy, head of the Egyptian Electric Utility and Consumer Protection Regulatory Agency (Egyptera) told Ahram Online Tuesday.

Last September, the government set feed-in tariffs at which it would buy electricity generated by the private sector via renewable energy with plans for renewable sources to provide 20 percent of Egyptian energy production by 2020.

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