On the fourth of August 2014, darkness suddenly appeared in Egypt, and the country and those in it sank into an extended darkness that accompanied their heavy day into night, a country whose lights never subside, where everything related to energy was disrupted; Subway traffic stopped, factories were noisy, bakery doors were closed, and communications networks were damaged. The electricity was cut off for everyone, and the summer heat did not accompany anyone, and while everyone searched for an explanation for the absent voice of the authority, the government presented only a statement the next morning saying that the expected deficit in electricity production during the coming period exceeds 3200 megawatts per day, and therefore the darkness that The Egyptians experienced it during their last night, and it will not be the last.

Those who attended those days cannot easily forget them, but tonight is not always like yesterday. Yesterday's Egypt, which wrestled with darkness, achieved self-sufficiency in electricity within six years, and is just entering a fierce struggle for energy export. While Cairo is preparing itself to become a regional center for exporting electricity to Africa and Europe, it faces a fierce competitor in the electricity-hungry African market, and as expected, this competitor is only Ethiopia, and through the Renaissance Dam project itself, which aims to generate six thousand megawatts of electric power annually. It is not only water, then, that puts the relations of the two countries on a course of competition and geopolitical conflict, but rather the energy file, whose full dimensions seem to have not yet been revealed.

Investment in the electricity sector is one of the main factors that positively reflected in Egypt's bid farewell to darkness. According to official data issued by the Egyptian Ministry of Electricity, the annual investment in electricity distribution networks before 2014 amounted to approximately one billion and 100 million pounds (70.1 million dollars), but the recurring days of darkness at that time prompted the government to raise investments in the development of distribution networks, up to 11 billion EGP ($701 million), which represents 11 times the value of investments between 2003-2014. The government says that the plan to develop the electricity sector cost it until the end of last year 2020 about 515 billion pounds ($32.8 billion). Instead of being satisfied with implementing the urgent plan, which stipulated adding 13,000 megawatts to prevent power outages in 2014, Egypt continued to produce electricity until it now owns 17 1,000 megawatts of reserves per day, after achieving self-sufficiency in electricity since 2015.

The latest official data in the annual report of the Egyptian Electricity Holding Company in 2019 reveal that the total electric power production amounted to about 58.35 thousand megawatts, while the current consumption volume is only about 30 thousand megawatts at peak times, which means that there is a surplus of generated energy that increases with the decline in consumption In winter. This rapid transformation in the energy path in Egypt from a country that faces a daily deficit to a country with a surplus has erased the history of darkness in a few years, and is now pushing Egypt towards exploiting its central geographical position, and starting to prepare an ambitious plan to become a regional center for the export of electricity with investments amounting to one trillion pounds, a vision that trusts Cairo is succeeding as it mediates with many energy-hungry countries, the most important of which is of course Sudan, which is on the verge of a political and economic transformation that may increase its energy needs, at a time when Cairo seeks to strengthen its ties with it at all levels, including infrastructure. (1)

The Egyptian plan to put the electricity sector on the path of export has gained greater confidence among international bodies that were previously skeptical about the performance of the Egyptian economy, including the World Bank, which later contributed to financing projects in the sector. For example, the research firm Fitch Solutions, a subsidiary of Fitch Ratings Agency, announced that Egypt will be one of the fastest growing non-hydroelectric renewable energy markets in the region during the decade to 2031. In order to achieve this goal, Egypt contracted during a visit President Abdel Fattah El-Sisi to Germany in 2015 with the German company "Siemens" to build power plants at a cost of six billion euros ($7 billion). It also aims to establish three giant gas-fired power plants in the Administrative Capital, Burullus, and Beni Suef, the largest in the Middle East so far, with a production capacity of 14,400 megawatts. According to the newspaper "Akhbar Al-Youm"The government stations will save 1.3 billion Egyptian pounds ($83 million) as a result of saving fuel consumption, and will cover 50% of local needs. (2)

The Egyptian government is also seeking to invest in clean energy, which is cheaper and more economical in the long run, which currently covers only 3% of the country’s needs. It has built one of the largest wind power plants globally in the Red Sea region at a cost of 12 billion Egyptian pounds (673 million dollars) and a capacity of With a production capacity of 580 megawatts, it also obtained a loan from the International Monetary Fund and several international institutions worth $653 million, to build a giant solar power plant in Benban Park in Aswan, corresponding to the area of ​​fifty football fields, and with a production capacity of 1,465 megawatts, and could rise to 1,800. Which is equivalent to about 90% of the production of the High Dam.

Ultimately, Egypt aims to meet 40% of its energy needs from renewable sources by 2035.

The giant solar power plant in Benban Park in Aswan

Although the Egyptian government succeeded in doubling the capacity of the electricity sector with huge investments in a short period; This additional capacity has not reduced electricity prices to consumers, and instead energy prices continue to rise steadily. In June of last year, the Egyptian government decided to raise electricity prices by rates ranging between 16-30% as part of a plan to permanently lift subsidies, with the continued imposition of price increases until 2025. It is noteworthy that the increase coincided with a glut in the surplus, which now represents about half of production, Whereas, the percentage of electricity reserves in any country does not exceed 15%.

The former head of the Syndicate of Journalists, Mamdouh Al-Wali, who published five books on the Egyptian economy, says that the Egyptian government did not initially plan to deal with the surplus, which reached double what the country needs, before expanding production, as the volume of electricity exported by Egypt reached 0.003% of the total electricity generated locally for the year 2019. Al-Wali explains that the successive increases in electricity prices approved by the government contributed to reducing household consumption, which is the most important source of consumption at the present time. This resulted in an increase in the surplus, and a decrease in the financial returns that the government needs to finance projects whose results have not yet been harvested, in addition to the fact that it has not paid the rest of the debt shares decided on it so far to foreign implementing companies and international donors.

In order to overcome the surplus crisis, the government adopted a vision to make Egypt a regional energy center by exporting electricity and obtaining the largest possible return, solving the problem of "wasting resources" untapped until now. Therefore, I decided to announce the export of electricity abroad at a subsidized price, and the Executive Director of Egypt’s Sovereign Fund had previously announced to the American “Bloomberg” agency that the fund is currently conducting negotiations with the Egyptian government in order to sell electricity to European and African countries at a price of 2.4 US cents (about 40 Egyptian piasters) per kilowatt-hours.

According to statements made by the Egyptian Minister of Electricity to several local newspapers, Egypt is currently exporting 200 megawatts to Libya, 200 megawatts to Jordan, and 80 megawatts to Sudan, and the last figure is scheduled to rise to 300 megawatts after the implementation of the second phase of the electrical interconnection project between Cairo and Khartoum in October 2022; This means that Egypt is now exporting 500 megawatts, which represents less than 1% of its total electricity production. On the other hand, there is still no electrical connection between Egypt and the three countries that contracted with it to export energy, namely Saudi Arabia, Cyprus and Greece, and the last projects will not be launched before 2023 after being delayed more than once. The numbers, then, reveal the size of the losses that Egypt could incur due to the surplus of electricity if it did not succeed in implementing an ambitious export project. This explains its quest to enter the African market, hungry for electricity, and the government's continuation of its plan to gradually lift subsidies on the Egyptian consumer.

Egyptian Minister of Electricity "Mohamed Shaker"

In this context, a study published by the International Energy Agency in late 2019 indicates that 580 million people in Africa live in darkness;

Either because they are in areas not served by an electric grid, or because they are not connected to an existing network.

That number represents about 44% of the 1.3 billion African population living in 54 countries.

And because the costs of connecting electricity networks impede Egyptian access to the heart of the continent, the government developed a plan to target East Africa and its neighboring countries, the same region that Ethiopia ironically targets with a similar plan through the Renaissance Dam.

(3) (4)

Ethiopia laid the cornerstone for the construction of the "Renaissance Dam" in 2011 to be the largest national project to produce electricity in Africa with a capacity of about 6,450 megawatts. This will meet its energy needs internally, in addition to transforming it into a regional center for clean energy with the aim of exporting it to the East African Energy Pool, which is made up of seven countries: Egypt, Sudan, Ethiopia, Kenya, Rwanda, Burundi and Congo. Addis Ababa has the advantage that 80% of the sources of the Nile are located above the Ethiopian highlands, in addition to being geographically located in the heart of that region.

According to official data, the naturally occurring hydroelectric power in Ethiopia is about 45,000 megawatts, and it is exploitable through the implementation of several projects on its 11 rivers, but Addis Ababa is facing difficulty in financing ambitious projects of the size of the Renaissance Dam itself, which cost it a huge investment to implement. As a result, Addis Ababa has started building several smaller dams in order to generate energy, and an intelligence document of the American “Stratfor” Center for Strategic Research indicates that Ethiopia plans to build 40 dams on those rivers, motivated by the desire to get rid of the specter of darkness that hangs over them. 70 percent of its homes, in addition to the economic reform and development ambitions pledged by the current prime minister, Abiy Ahmed.What is more, Ethiopia is already planning to rely on its energy exports as a major source of income, and is currently exporting 200 MW to Sudan, and about 100 MW to Djibouti, which is slated to increase to 400 MW, and has also signed an agreement with Kenya and Rwanda to start exporting 400 MW each .

Ethiopian Renaissance Dam

Simultaneously, Addis Ababa is in talks to supply Yemen with about 900 megawatts via a submarine cable.

The Ethiopian government expects to earn $2 billion annually from exporting the dam’s surplus electricity to neighboring countries, led by Sudan, which may constitute an arena for competition between Egypt and Ethiopia in this field, as Khartoum suffers an annual energy deficit of 3,800 megawatts, which represents 52% of the country’s needs.

While Egypt says that it is ready to sell electricity to African countries at a price of seven cents / per kilowatt, the head of corporate planning at the Ethiopian State Electricity Company confirms in a statement to "Reuters" that Addis Ababa is ready to sell at a price of six cents.

It is not excluded, then, that the two parties will enter into a price war to provide competitive advantages to acquire a larger share of the African market, as Ethiopia is preparing to produce energy that exceeds its needs by more than 50% after the completion of the Renaissance Dam, which is the same percentage of surplus that Egypt is currently achieving.

In contrast to the Ethiopian moves to finance electrical connection operations in East Africa, Cairo is also intensifying its presence to maintain its influence in the countries of the region, as Egypt is currently building the “Nyerere” dam in Tanzania at a cost of $2.9 billion, and it is being implemented by two of the largest Egyptian companies in the construction sector, namely The Arab Contractors and El Sewedy Electric; for the purpose of generating hydroelectric power. Add to this other moves in Ghana to conclude deals in the field of electricity as well, and most importantly, Egypt's recent intensified efforts to strengthen political, economic and military ties with Sudan.

It seems, then, that the Renaissance Dam, and the diplomatic struggle that Cairo is waging to control and schedule its filling in line with its national and water security priorities;

It will also affect Cairo from other aspects beyond the water file, to reach other important issues, foremost of which is the competition for the export of electricity and energy.

Despite the complexity of the negotiations over the Al-Nahsa Dam file so far, and the remarkable Ethiopian intransigence in this regard, Cairo is focusing its efforts on strengthening its alliance with Khartoum, at a time when the two parties are realizing that their water and energy security is at stake, and that full coordination between them has become an indispensable necessity in any situation. Upcoming political, diplomatic, or even military moves.

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Sources

  • Annual report of the Egyptian Electricity Holding Company 2018-2019

  • Egypt Power Report

  • SDG7: Data and Projects

  • Annual report of the Egyptian Electricity Holding Company 2018-2019