Egypt’s growing population (85m) and the increasing power demand has resulted in the power sector facing chronic shortages over the past few years. Consequently, the Egyptian government is encouraging investments in cooperation with the private sector to expand the sector’s capacity.
Egypt aims to meet a rising electricity demand of 6% per annum and to improve the quality of providing public services. It has a 2010-2020 overall plan to increase generating capacity by 30,000MW, almost doubling electricity generation. Capacity in 2010 was 26,912MW and was estimated at 29,809MW in 2012. This plan includes investments in many projects across Egypt with an annual investment cost exceeding $3bn for generation, transmission, and distribution.
Oil-fired power plants have all been converted to run on natural gas, which makes 84% of electricity generation in Egypt thermal. The remaining 16% are hydroelectric, mostly coming from the Aswan High Dam.
The Ministry of Electricity and Energy is currently seeking to obtain a financial guarantee worth 2.8 Bn USD from the Ministry of Finance for establishing the Beni Suef power station. The 2250MW station will work via the combined cycle system.
The Ministry of Electricity and Energy has announced several combined cycle projects to international companies. Two steam units in the two power stations of Ismailia and Damietta will be built to increase their capacities from 1000 to 1500MW and from 500 to 750MW, respectively. The total investment cost is estimated at $900 million.
Egypt’s Ministry of Electricity and Energy plans to establish a steam power plant in Qena with a budget of $250 million and a capacity of 1300MW via the BOO system. Another power plant is to be established in South Helwan with a capacity of 1,950MW and a budget of $1,950 million while a third power plant will be established in Samalout (an EPC project) with a net worth of $2,900 million. Its steam turbines have a capacity of 3,167MW.
The EEHC will build a steam power plant in Ain El Sokhna. It is a mega project that will be built via the BOOT system. It involves 2 steam turbine generators, each with a capacity of 650MW. The budget of the project is estimated at $2,190 million and its total capacity reaches up to 1,300MW.
A Combined Cycle Power Plant will be built in North Giza via the CEPC. The project is an EPCM type of contract with a net worth of $1,900 million. The power plant will include 6 combustion turbine generators with a capacity of 250MW each and 3 steam turbine generators with a capacity of 280MW each, making the total capacity of the project 2,340MW.
In an effort to diversify its power sources, the EEHC is planning to build an energy park in Safaga that will include a coal-handling terminal. The first phase of the project is a coal-fired power generation plant in Safaga that will be the first that uses coal as feedstock. It will have a budget of $800 million and will include 2 gas turbines with a generating capacity of 650MW each. The Safaga complex will have a total generating capacity of 5000MW.
The EDEPC plans to build a thermal power plant at Suez, with a nominal generating capacity of 650MW. The budget of the project is estimated at $972 million while the type of the contract is EPCM. The plant will operate using natural gas and mazout in emergency situations. The project will include the construction of a 500kV Gas Insulated Switchyard Package and a power plant desalination unit.
The EEHC plans to build five independent power projects (IPP) in Egypt with a total capacity of 3,500MW. The first IPP will be built in Benha with a capacity of 750MW and a net worth of $800 million. The type of the contract is EPCM. The second IPP will be built in Dairut in the Behira Governorate via the BOO system with a budget estimated at $2,500 million. The power plant includes 6 gas turbines and 3 steam turbines, each with a 250MW capacity.
The EEHC plans to build 3 Steam Power Plants, each with a budget of $300 million in 3 different locations. The first, in West Cairo, will have 2 steam power plants each with a capacity of 650MW. The second, in Damanhour, and the third, in Assiut, will each have a 650MW capacity.
Getting into the Market
Egypt is an attractive market that can offer major business opportunities to informed traders and investors. Trade and investment between the UK and Egypt is promising. However it is not always an easy market. A successful entry into Egypt will be determined by the quality of the information and advice upon which the decision to enter is based. Continued success is also dependent upon the ability to navigate the laws and practices of Egypt.
The Egyptian market requires careful study and a sustained sales effort. There is strong competition from other exporting countries. Price and credit terms are a deciding factor when obtaining contracts, though quality is increasingly important. Back-up servicing facilities and the supply of spare parts is also important.
Having a local partner can be vital to successful penetration of this market. There are several reasons for this.
Firstly, given the continuing bureaucracy, a local partner can shepherd the foreign business through the delays and obstacles.
Secondly, foreign companies require a local agent to bid for government tenders.
Thirdly, as the Egyptian market becomes more sophisticated there is a growing demand for after sales service, which a local agent can convincingly provide.
In general, British products and services are very highly regarded in Egypt for their quality. The main obstacle facing the growth of British involvement in the Egyptian market is that British products have a reputation as being expensive compared to some foreign products, though this has lessened slightly over the past year as exchange rate fluctuations have been in favour of UK exporters.
British companies wishing to develop their business in the Egyptian market are advised to undertake as much market research and planning as possible in the UK.
Market intelligence is critical when doing business overseas, and UKTI can provide bespoke market research and support during overseas visits though our chargeable Overseas Market Introduction Service (OMIS).
To commission research or for general advice about the market, get in touch with our specialists based overseas – or contact your local international trade team.
UKTI runs a range of events for exporters, including seminars in the UK, trade missions to overseas markets and support for attendance at overseas trade shows.