CAIRO: Egypt intends to negotiate with the Arab Fund for Economic and Social Development to receive the necessary financing to establish several power plants, the Ministry of Planning and International Cooperation announced Sunday.
Arab States have not yet utilized the Arab Fund, which was established in 2009 in Kuwait with a capital of $1 billion, Minister of Planning Advisor Gamal Bayoumi told Youm7 Sunday.
Egypt suffers from a significant fuel shortage, which has led to daily power cuts nationwide and is dramatically harming the industrial sector. Cement plants have urged the government to allow the use of coal amid growing fuel shortage, despite concerns over the environmental damages coal may cause.
The Egyptian market currently suffers from a significant shortage of diesel fuel, particularly given the economic strain that stems from the rise in global fuel prices and lack of financial resources required for imports. Each ton of fuel carries a government subsidy of 3,000 EGP (U.S. $447), which is a heavy burden on the state budget.
The Cabinet approved the use of coal as long as operations abide by environmental standards, and decided to increase penalties for those who violate regulations in an attempt to contain any potential crisis.
To increase energy production, the Ministry of Electricity announced Monday that it signed a loan agreement worth $190 million with the European Bank for Reconstruction and Development. The loan would finance the Shabab and West Damietta power plants to increase production to 2,250 megawatts.
The lack of fuel is the main reason behind the power outages, head of the Egyptian Electric Utility and Consumer Protection Regulatory Agency Hafez Salmawy told The Cairo Post in March.
This summer will witness “one of the worst fuel and energy shortages” in Egypt’s history, given the decline of energy production as consumption rates increase dramatically, a government source told Youm7 in February.
Financing small and medium projects in Egypt in collaboration with the national agencies is one of the Arab Fund’s priorities, but we have not seen any significant cooperation yet, added Bayoumi.
Additional reporting by Omaima Shokri.