ROME: Although political turmoil in the MENA region has been blamed for hindering development projects, many energy specialists say other factors are actually causing the investment halt.
“The decisive factor to attract investment in the region is creating promising markets with guarantees provided by the governments for energy investors,” Maged Karam, the head of Projects and Technical Affairs of the nonprofit Regional Center for Renewable Energy and Energy Efficiency, told The Cairo Post Tuesday at the fifth Dii Desert Energy Conference in Rome.
He added, “I agree with the message proposed by industry and investment leaders that their presence in markets of a certain state needs political stability, but the presence of promising opportunities for clear strategies and mechanisms for the sake of work continuity is more important.”
Karam spoke on the sidelines of a workshop addressing barriers to renewable energy market access. During the session, economic barriers were discussed, represented in subsidized fossil fuel in MENA and its effects on burdening renewable energy investment.
Khaled Mokni, the acting general director in charge of public projects monitoring in Tunisia, told The Cairo Post, “There is no such thing as absolute stability. Political changes are normal dynamics.”
Mokni added, “We hope investment and funding authorities would have a more holistic and deep insight, as well as a real willingness to real cooperation [in the field of renewable energy].”
“The main problem facing the establishment of a stable renewable energy market in Egypt is the continuity of subsidized fossil fuel, and it, in return, holds back people from paying for solar heaters, for example,” said Mahmoud Atia, the executive chairman of the New and Renewable Energy Authority (NREA) in Egypt.
“But if the consumer started to receive electricity at its exact price [without subsidies], he would use renewable energy,” Atia told The Cairo Post.
He added that there is a government plan so that “within five years, there will not be any subsidies on high-consuming industries.”
Richard Bridle, a project researcher at the International Institute for Sustainable Development (IISD), said in a session on government assistance, “the subsidies for electricity in the region in one year equal the required investments in renewable energy until 2020.”
Subsidies “direct payments by the government to organizations and are a way to protect the poor from high prices,” Bridle said, adding, “It is hard for governments to remove them.”
Some governments, including Egypt and Tunisia, are now applying this strategy of fuel subsidy cuts, which has resulted in considerable mass opposition to the decision, at least in Egypt.
Mokni said in Tunisia the subsidy issue is very “sensitive and complicated,” adding that the Tunisian government did not ultimately cut subsidies, but it is only re-addressing the funds for those who are in need.
For Dana R. Younger, the chief renewable energy specialist for the World Bank Group’s International Finance Corporation (IFC), some policies adopted recently by the Egyptian government like the announcement of feed-in tariffs for renewable energy “should help to promote more foreign investments.”
Younger told The Cairo Post that the MENA region is “new” to renewable energy technology and “needs to gain experience and developers.”
“The biggest challenges so far are the disruption of the political events of the last few years beginning with the Arab Spring, and some of its aftermath that made it difficult for governments in Egypt, Tunisia and Libya to move ahead as rapidly as they would like,” Younger added.
The World Bank and the IFC are both deeply involved in developing and financing wind and solar projects such as Jebel El-Zeit wind and Kureimat and Kom Ombo solar in Egypt, and elsewhere in the region such as in Jordan and Morocco, according to Younger.
“Policy makers need to be convinced with the renewable energy position in MENA,” said Michael Geyer, the Director for International Development at Abengoa Solar.