No gas? No problem, Morsi govt assures industry
Courtesy: Suez Cement Group

“Our government has decided to solve the energy crisis with coal,” says Ahmed al-Droubi, the Egypt-based Greenpeace Arab World representative.

Unable to ensure a sufficient supply of electricity to its citizens and natural gas to industry, President Mohamed Morsi’s government is trying to apply a quick fix strategy to the energy sector, which some analysts say could have dire consequences.

The cement industry, which accounts for 2 percent of the country’s GDP, will be the first energy intensive industry to transition from natural gas to coal to power its 43 kilns spread across the country. Although coal is the most competitive fuel option in terms of price, the government is not taking into consideration the future health bill that will result from the import and processing of this highly pollutive raw material, as well as the cost in terms of environmental degradation.

The steel industry already imports a quarter of a million pounds of coal a year, but this pales in comparison to the 6 million tons of coal Egypt is expected to import once the upgrade in infrastructure within the cement industry is completed.

Medhat Stefanos, chairman of the Cement Association, estimates that the industry needs between 18 and 27 months to upgrade the existing infrastructure to handle this massive coal import.

“All the cost falls on the cement industry itself,” he says. “We need to transition from natural gas powered kilns to coal kilns, increase the capacity of the ports, and upgrade the roads, the rail tracks and the Nile transportation system in order to be able to function properly.”

According to Stefanos, the government did not consider importing natural gas to maintain its gas powered kiln system for two reasons: First, terminals would need to be built to receive the gas, and second, the machines to transform gas from a liquid to a gaseous state are too expensive.

Amr Ali, the executive director of the Hurghada Environmental Protection Conservation Association (HEPCA),  says he is revolted by the government’s move. Although neither the government nor the industry has announced which port will be used to ship the coal, Ali suspects that the coal will be discharged via the Red Sea.

“They are considering using either the port of Safaga or Hamrawein, North of Al-Quseir,” he says.  Because there is a high likelihood the new coal shipments would be imported from South Africa — allowing businesses to save money by avoiding paying Suez Canal fees on shipments — then the closest ports for that trade route would be those located on the Red Sea coast.

The environmental consequences of discharging coal on the Red Sea would be catastrophic, Ali argues. These ports ports already export Egypt’s phosphate, and “the dusts deposited on the coral reefs are doing irreversible damage to the corals, not to mention the surrounding citizens’ health, which is already bad because of the phosphate dust,” he explains.

“The coal will be transferred from the port on trains, which tracks go through Egypt’s natural parks,” he says.  “How much money do you make out of coal, and how much do you lose in terms of natural resources?”

Coal for all energy intensive industries?

Droubi and Ali both believe that as soon as coal is imported, there won’t be one single industry or electricity plant in Egypt that won’t start using coal immediately. “The infrastructure will be in place and there won’t be any cheaper alternative,” says Droubi.

Stefanos claims that it is illogical and wasteful to use natural gas in any industry aside from petrochemical and fertilizer operations. “In these two industries, natural gas is used as a raw material and its added value is a hundred times higher,” he says. “No one in the world uses natural gas to power cement or electricity plants, and Egypt’s electricity plants should also switch to coal.”

Acknowledging that coal’s carbon emissions are much higher than natural gas, Stefanos suggests the government address that problem by implementing incentives to reduce those emissions.

What about renewables?

“When the government announced its project to remove the subsidies on diesel two months ago, we thought it was the most positive signal so far to start implementing renewable energy on a large scale. Now the government killed it,” Ali says.

Stefanos, when questioned about the possibility of using renewable energy instead of coal, vehemently dismissed the idea.

“Solar? Wind? This is all a dream! The prices are too high and not competitive.  If there is even one industry [solely] powered by renewable energy in the whole world, I don’t know about it. Even Germany, despite its leadership role in Europe to foster renewables, does not power a single industry with solar or wind, it only uses it for the housing sector,” he adds. 

Developing renewable energy sources should be the government’s long-term vision, not the industry’s, he argues.

Until now, there has been no consultation with the population, no public forums and no discussion with civil society organizations to discuss the coal imports. “The only information we have been able to get was leaked by the Ministry of Environment, who acts as a negotiator,” Ali explains.

The ministry set up a committee composed of various experts to assess the environmental and social impact of the coal imports, and the final report should be submitted soon. “They will give us their recommendations and stress which plants can function with coal or not,” Stefanos says.

Failed government

“It is a shame that everyone is blaming the cement industry for the move and not the government,” says Stefanos, alleging that the massive coal imports would not have been considered if the government had kept its promise to supply natural gas to the industry in sufficient quantities.

In 2007, when the cement industry received its licenses for kilns and lines, they paid the government between LE140 million and LE251 million per kiln to safeguard the supply of natural gas, Stefanos explains. “And now we have to transition because the government has not kept its promise.”

He adds that back in the ’90s, the government forced cement companies to transition from mazout to gas, “and again the industry paid for the cost. Now it’s demolished and we need to start again!”

Ali feels these issues stem from post-revolution politics, which favors quick fixes, which he says government officials call “quick wins.”

“The Muslim Brotherhood government and the industrials are uniting on one front, and no one except the Ministry of Environment and some civil society groups are opposing them,” he says, concluding that coal has managed to unite tycoons from the deposed regime with the Muslim Brothers.

Louise Sarant 

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