Hassan Mohammad lives in a village within the Aswan governorate of southern Egypt, and was unable to regularly turn on the lights, charge his phone, or heat his home from 2014 until the date of this report.
This wasn’t due to a power shortage, the situation was quite the opposite, Egypt’s electricity output exceeded demand yet about two percent of the 133 villages in Aswan were left powerless.
2.1% of Egypt's rural homes are partially connected to the grid
Click to view the data
Source: Central Agency for Public Mobilization and Statistics – Comprehensive survey of the characteristics of the Egyptian countryside
In 2014, the total power generation capacity of the Egyptian Electricity Holding Company stood at approximately 32 gigawatts, while demand was approximately 26 gigawatts.
Despite these numbers, the Egyptian government claimed that it started building more power plants to resolve the crisis of villagers like Mohammad being undersupplied, yet the data says otherwise.
Investigation by Arab Reporters for Investigative Journalism (ARIJ) reveals that the Egyptian government built power plants between 2014 and June 2020 using externally and locally obtained loans, wasting billions of dollars as power plants are constructed but underused.
It added 38 plants to the public electricity network at a cost of 322.8 billion Egyptian pounds, or $17.5 billion, without solving the problem for its constituents and building an additive loss.
2020 represents the highest electricity surplus in Egypt
Capacity in megawatts
Source: Egyptian Electricity Holding Company (EEHC)'s annual reports for 2014-2020
The electricity surplus is calculated by measuring the difference between the capacity and the maximum load, and then subtracting the result from the reserve margin.
The government doubled its power production capacity within seven years to reach approximately 59.5 gigawatts by mid-June 2020 although the maximum load during the same period did not exceed 31 gigawatts, producing a 24-gigawatt surplus.
“The stations operate usually to supply the needed capacity of electricity of the day. This renders the remaining generation hubs idle despite the fact that their turbines continue to run and consume quantities of fuel or gas without supplying any electricity which eventually reduces those turbines’ lifespan,” said Abla Jado, a professor of electrical engineering at Menofia University and a former general manager of studies and development at the South Delta Electricity Distribution Company.
An official from the Egyptian Electricity Holding Company spoke to ARIJ on the condition of anonymity, stating that the number of generating stations were stopped due to the surplus.
Yet the annual report of the Egyptian Electricity Holding Company during 2015 and 2020 showed that 51 out of 91 plants connected to the grid were operating at half their capacity, whereas in 2015, it was only 19.
|Station||Company||Station Type||Operation Year|
|Sharm El-Sheikh||East Delta||Gaseous||1997|
|Al-Masaeed Gas||East Delta||Gaseous||2018|
|Al Mahmoudia Aljadeda||middle Delta||Gaseous||2016|
|Kafr El Dawar||West Delta||steamy||1986|
|Damanhour steam||West Delta||steamy||1969|
|Damanhour Compound||West Delta||Combined cycle||1995|
|Abu Qir Al Ghazi||West Delta||Gaseous||1983|
Source: Egyptian Electricity Holding Company (EEHC)'s annual reports for 2010-2020
An approximate calculation of the cost of unused electricity surplus over the seven years could have been sold for a profit of approximately 3 million Egyptian pounds, or around $163,000 in 2020.
Click on the year to view the details
Note: Lost profits were calculated by multiplying the average price of the seven bands of electricity prices by the amount of annual electricity surplus; these are estimated figures.
This predicted profit could have helped pay off the interest on loans that the Egyptian Electricity Holding Company borrowed to construct these new power plants.
The analysis of the financial statements issued between 2014 and 2020 by the Egyptian Electricity Holding Company shows that its borrowing rate has increased by 242%.
The total sum of loans in 2014 amounted to about 82 billion Egyptian pounds or $4.5 billion, and in 2020, this sum reached 282 billion Egyptian pounds, or $15.3 billion.
In billion pounds
Source: Holding Company (EEHC)'s annual reports for 2015-2020
This resulted in a 231 percent increase in financing burdens due to interest rate payment commitment during the same period. In 2014, the loans incurred 15 billion Egyptian pounds or $816 million in interest compared to 51 billion Egyptian pounds, or $2.8 billion in 2020.
Overshooting market demands for electricity is a costly investment since loans were secured initially to pay for those plants that currently have no economic return, explained Amr Adily, a professor of political economy at the American University in Cairo.
Total generated power (GWh) Total exported power (GWh)
All the surplus electricity generating capacity fails to provide houses with power on a hot or a cold day in the life of Mohsin Shalabi who is an inhabitant at Bahtit village in Abu Hammad Center in Sharqia Governorate.
“Sometimes in the summer, the electrical power is cut for nearly ten hours a day,” said Shalabi.
He attributes the poor electricity supply and the recurrent outages to the insufficient number of transformers available in his village as the electricity company failed to install enough to meet the needs of the village.
Others such as Hafiz Salmawi believe that as the government builds more plants, it fails to coordinate it with the expansion of its electric transmission networks to reach constituents.
The number of transformers increased by an inadequate 21% percent between 2014 and 2020 while the total capacity produced by the power plants in that same period went up by 85 percent.
Rate of increase in electrical capacities The rate of increase in transformers
Source: Holding Company (EEHC)'s annual reports for 2014-2020
Source: Holding Company (EEHC)'s annual reports for 2020
These figures are not swaying Egypt’s momentum to build more plants as the 2020 Electricity Holding Company report indicates that the government plans to add 4.760 megawatts between 2022 and 2027, bringing its total capacity to 70.000 megawatts.
The Egyptian Ministry of Electricity and Renewable Energy did not respond to ARIJ’s emails requesting clarification of the policy to build more power plants despite the surplus available by the time the report was published.
Meanwhile, people like 45-year-old Mohammad in his village of Nagaa Gubran in Aswan continue to search for other ways to endure the dark without electricity.