Egypt's power crisis

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With steadily rising electricity consumption and generation by an average seven percent annually over the last decade, Egypt has increasingly faced energy shortages since 2010, as demand has outpaced capacity. Although its electrification rate was about 99.6 percent in 2009, among the highest in Africa, Egypt has experienced nationwide blackouts several times in recent years.[1]

Power shortages are generally attributed to a wider energy crisis, as most of Egypt's electricity is produced with oil and gas and power shortages are largely due to insufficient supply thereof. While the Egyptian government faces difficulties in providing the country with enough fuel to satisfy demand, there is much controversy over the reasons and the extent of the power crisis. On the one side, government officials have blamed the shortage of fuel on remnant corruption from before the 2011 uprising and on a fear-mongering approach in private media that made people hoard petroleum.[2] On the other side, analysts have warned the Egyptian government not to use up big shares of the country's reserves of foreign currency to stabilize the falling Egyptian pound and thereby decreasing the governments ability to import vital petroleum needs.[3] According to the Central Bank of Egypt, foreign currency reserves had fallen to a historic low of US$13.4 billion by early 2013.[4]

With Egypt's longstanding practice of importing petroleum at international market prices and selling locally at subsidized prices, the state oil industry has been operating at loss for some years. Accordingly, around 20 percent of the country's annual expenditures - or almost US$16 billion annually- go towards energy subsidies. As a consequence, some international organisations, most prominently the International Monetary Fund (IMF), have called for these subsidies to be slashed.[5]

Already in 2010, the former Petroleum Minister Sameh Fahmy announced government plans to renegotiate export contracts and that the country will not accept any further agreements about the export of natural gas. According to a government official, this attempt was aiming to increase the country's ability to use its fuel reserves for local demand and thereby overcoming the energy crisis.[6]

References

  1. "EIA Country Profile" US Energy Information Administration, retrieved 21 March 2013.
  2. "Short of Money, Egypt Sees Crisis on Fuel and Food" The New York Times, 30 March 2013.
  3. "As diesel shortages continue, impact becomes broader" Egypt Independent, 24 March 2013.
  4. "Highlights" Central Bank of Egypt, retrieved 4 April 2013.
  5. "Egypt Struggles to Pay Oil Bill" The New York Times, 3 October 2012.
  6. "Egypt considers reducing gas exports to offset local demands" Egypt Independent, 24 August 2010.