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Lighting the Way: Business Insights on Egypt’s Energy Shift

Lighting the Way: Business Insights on Egypt’s Energy Shift
Image Source: Energy Capital & Power

In August 2022, the Egyptian government unveiled a strategic shift to optimize energy consumption, including energy blackouts.

According to Prime Minister Mostafa Madbouly, the new policy will utilize mazut and diesel for electricity generation, diverting natural gas for export.

This transition is expected to generate approximately USD 450M monthly, translating to USD 4.5B annually.

The Alternative Policy Solutions (APS) think tank has assessed the shift in a recently published report titled “Electricity cuts and fuel switching for natural gas export: Is it truly making a difference?”

Rolling Blackouts and Their Effects

The government implemented rolling blackouts, initially lasting one hour per day, which escalated to several hours, especially during the sweltering summer of 2023.

Even as the heat wave subsided in November 2022, power cuts averaged two hours daily. 

These rolling blackouts pose significant challenges for businesses reliant on stable energy sources. Companies must adapt their operations to mitigate the impact of these outages.

Evaluating Policy Effectiveness

The report assesses the effectiveness of the government’s energy policies during the fiscal year 2022/23.

The reliance on mazut and diesel, while aimed at boosting export revenues, raises concerns about long-term sustainability and energy security.

As energy demand fluctuates, the need for a balanced energy mix becomes paramount.

“The measures taken to free up the country’s natural gas resources for export, including rolling blackouts and the substitution of certain power plant fuels with more environmentally damaging alternatives, have yielded suboptimal outcomes,” concludes energy consultant Ali Hashim.

Businesses should advocate for policies that promote renewable energy investments to ensure reliable electricity access.

Recommendations for the Private Sector

To navigate these turbulent energy landscapes, businesses should adopt strategic measures. 

Firstly, companies must invest in energy-efficient technologies and practices. This investment not only reduces operational costs but also enhances resilience during power cuts.

Secondly, forming partnerships with energy suppliers can provide businesses with more favorable terms, thereby mitigating supply chain disruptions.

While the government’s new energy strategy aims to improve export revenues, it introduces challenges for the private sector.

By prioritizing energy efficiency and advocating for sustainable energy solutions, businesses can better position themselves for success amidst these policy shifts.For further details, access the full report here.

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