Over recent years Egypt’s energy sector has witnessed major changes including the discovery of huge natural gas reserves, a growth in renewable energy sources and a gradual lifting of government subsidies on fossil fuels.
Head of parliament’s Energy and Environment Committee Talaat Al-Sewidi commented on some of these changes in an interview with Al-Ahram Weekly.
Have there been developments regarding the Nour Field in the Shorouk Concession of the Mediterranean Sea that is believed to have gas reserves of up to more than three times those of the Zohr Field?
There have indeed been some promising measurements for the Nour Field, but these cannot be confirmed as long as we have not yet started drilling, and any figures announced in this regard may be exaggerated.
The Energy and Environment Committee of parliament approved in a meeting on 16 July a draft law submitted by the government to allow the minister of petroleum and mineral resources to contract the Egyptian Natural Gas Holding Company, the ABOC Production BV, and Al-Tharwa Oil Company to search for and exploit gas and crude oil in the Nour area off northern Sinai.
It also approved five draft laws authorising the minister to contract the Egyptian General Petroleum Corporation and various oil companies to search for and exploit oil in several other areas, including Ras Qattara in the Western Desert, Bakr and Karim in the Eastern Desert, the development region of Sidr, Asaal and Matrma in Sinai, the West Delta deep marine area in the Mediterranean Sea, the development area of North Zaafarana in the Gulf of Suez and parts of the Nile Delta.
The government has been lifting subsidies on fossil fuels, leading to an increase in prices. How will these increases affect overall inflation?
Lifting financial support from the rich and factory owners will not harm the poor, and this policy is in their favour.
Almost all countries have removed subsidies on energy products. These policies are in the interests of the national economy so that we can support only those who need support.
I am not worried about a long-term inflationary trend. We are in a period of transition that will soon end, and the market will then operate according to the laws of supply and demand, reflecting the real cost of goods and services.
The ministry sells gas to the electricity sector at $3 per million British thermal units (BTU), while gas prices for the industrial sector are determined according to industry type. Will these prices continue in the short and medium terms?
We have issued a new law regulating the activities of the gas market in order to open it to shipment, transportation, storage, distribution, supply, marketing and trade in all its forms.
The Gas Regulatory Authority has been established to regulate gas market activities specified in this law and to ensure the availability of gas and the opening of gas networks and facilities to third parties and ensure the quality of services provided.
These things will secure the interests of all the participants in the gas market and protect consumer rights.
The new law aims at attracting and encouraging investment in the gas market, creating the right climate for free competition and access to a competitive field.
The Gas Regulatory Authority aims to avoid monopolistic practices in the field of gas and to provide information and recommendations to consumers and participants in the market to ensure the optimal use of networks and facilities.
One of the most important functions of the authority is establishing mechanisms for calculating tariffs for using networks and facilities, while monitoring their application and taking into account the interests of all participants in the gas market.
It allows the electricity sector to obtain gas at competitive prices that reflect market mechanisms and not at a predetermined price set by the government. It allows the same practice in the industrial sector, but until that happens prices will continue at their present level.
Will the government’s National Energy Strategy that stipulates 20 per cent of renewable energy in the energy mix by 2022 and 37 per cent by 2035 be achieved?
It will be achieved. There are different mechanisms that motivate investors to invest in the production of electricity from renewable energy.
The success we have achieved regarding the establishment of the largest solar power field in Egypt at Benban in Aswan, with a capacity of 1465 MW on an area of 38 square km, is evidence of this.
This field uses photovoltaic technology and is funded by international financing agencies as well as by the private sector in Egypt.
The diversification of energy sources from renewable sources such as the sun, wind, water, nuclear power and waste products, in addition to fossil fuels, can secure our electricity needs such that when one source is depleted we can depend on others.
Small solar stations can also be set up on the roofs of houses, and we can rely on them in remote areas which have no access to the electricity grid.
This will save us billions of pounds in extending the electricity networks to these areas. In order to utilise the capacities generated by renewables, the Ministry of Electricity is currently working on setting up a parallel network and modernising electricity transmission and distribution networks, with investments amounting to LE42 billion and linking all areas to a single electricity network.
This work is being done to avoid possible malfunctions in the grid, building in compensation mechanisms through the unified network.
How do you see the overall greening of the Egyptian economy? How can this be applied to the production of electricity or biogas from waste products?
Greening the economy means reducing carbon emissions and achieving human well-being. That is what renewable energies and nuclear energy do.
They not only produce clean energy, but also open up employment opportunities to thousands of young people. One example is the transportation sector that contributes significantly to air pollution in Cairo and other cities.
The use of electric cars can help to remedy this, which is why custom duties have been reduced on some types of hybrid energy-based technologies.
The committee is concerned with environmental problems that are also a global concern. What bilateral agreements has Egypt signed with other countries?
We are constantly monitoring environmental problems and pollution caused by the malpractices of fertiliser plants, waste recycling, and other industrial factories that impact on people living in neighbouring areas, water resources, and the air and the soil.
Presidential Decree 230/2018 concerning financial agreements between the Egyptian Ministry of the Environment and the Italian Ministry of the Environment, Land and Sea was signed in Cairo on 27 February and recently approved in parliament.
This agreement contributes to capacity-building, the exchange of information, the transfer of technology and the promotion of private-sector participation in the field of environmental protection, energy efficiency promotion, and the promotion of new and renewable sources of energy.
I believe it reflects the two countries’ keenness to strengthen their friendship and enhance mutual cooperation in the field of environmental protection and sustainable development, realising the need to integrate efforts to achieve sustainable development and establish a long-term cooperative relationship on the basis of equality and mutual benefits.
*A version of this article appears in print in the 26 July 2018 edition of Al-Ahram Weekly under the headline: Positive energy changes