Private Gas Imports Won’t Resolve Egypt’s Energy Woes, Analysts Say

From The Wall Street Journal

By Summer Said

Egypt’s move to allow private-sector firms to import natural gas using the government’s network is unlikely to help bridge the country’s energy shortfall – that has forced some cement and steel companies to cut their output in recent years, analysts and industry sources say.

The North African country, which was once a gas exporter to markets from Asia to South America, was pushed to become an importer for the first time last year after failing to keep pace with its demand growth. It has in the past guaranteed subsidized energy supplies to the private sector, while exporting about a quarter of its gas output.

While allowing the private sector to find a reliable supply of natural gas on its own will offer some relief for Egypt’s rising budget deficit, several local companies won’t be able to afford paying for unsubsidized fuel and may face shutdowns, industry experts said.

“The cheapest price for the private sector would be around $12/MMBtu as well as the fee that will be paid for the government for using its network and other administrative costs. This compares to $6/MMBtu currently paid by the heavy industries,” said Tamer Abu Bakr, president of the Energy Committee of the Federation of Egyptian Industries.

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