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Experts decry Egypt’s ‘schizophrenic’ approach to energy

That Egypt is in the grips of a severe energy crisis is no longer a matter of dispute. But a recent roundtable on energy efficiency highlighted tensions between government officials and outside actors as to how the problem should be resolved. At the March 26 event, organized by Egypt Oil and Gas magazine under the auspices of the Ministry of Environment, government representatives were keen to promote the efforts of their agencies, while academic and industry experts decried Egypt’s lack of a unified energy strategy and called for clearer standards and better regulation.

“Our country is in danger,” said Anhar Hegazy, head of the energy efficiency department at Cabinet think-tank IDSC. In past decades, studies predicted that Egypt would have an energy deficit equivalent to 32 million tons of oil by 2022. “To my surprise, today we have such a deficit, which we were expecting to have in 2022,” she said.

Not only does Egypt have a deficit, but the country is not using its energy resources appropriately, Hegazy added. “We are consuming most of our energy while we are wasting it,” she said. “Our economy will continue to be unsustainable unless we look to the energy sector and how to be sustainable.”

“Any one of us who’s wasting energy is in fact stealing from his colleagues and citizens. As a citizen we have certain rights, but not to exceed it and what others are in need for,” said Hegazy. “I hate to listen to people saying the government did not give us. Even when they gave us, we wasted. We have to be all responsible in doing this.”

Other speakers, including Environment Ministry adviser Samir Mowafy and former Petroleum Minister Osama Kamal, cited additional complications: daily power cuts, Egypt’s crippling energy subsidy bill, security of supply, and arrears to foreign companies which are now estimated to stand at US$4.5 billion.

“What are the actions that we should do? How are we going to deal with that?” asked Hegazy.

Opening the discussion, Emad Hassan, head of energy consulting firm Nexant called the previous presenters to task. “I was a little bit uncomfortable to hear government representatives screaming for solutions, because that sets a signal that we really are in danger,” he said. “If the government is looking for support, then we really have a major problem.”

Egypt needs a clear energy efficiency strategy, he argued. “What is the vision, and what does it take to get to the practice?” he asked.

At the moment, Hassan said, Egypt is facing an institutional challenge. “Do we have the proper government scheme in the energy sector? Do we run our energy sector in the right manner? One person’s opinion is the answer is ‘no’.”

“You have this schizophrenic approach to implementation between electricity and petroleum,” Hassan added, addressing previous speakers. “Everything I heard in your tone was blaming the electricity sector.”

“We’re still dealing with ‘I did the right thing but he didn’t’,” Hassan claimed. “If we take this approach, we’re going to continue to pull in both directions, and the boat is never going to move. If we want the boat to move, we have to own the problem, all of us collectively.”

Hassan suggested the government consider joining the ministries of Petroleum and Electricity, creating a unified regulatory body, and setting benchmarks and indicators for every energy-consuming sector, from transportation and manufacturing to residential consumers.

Other participants largely supported Hassan’s critique. “We do not need more councils,” said Magdi Nasrallah, chair of the petroleum energy engineering department at The American University in Cairo. “We need decisions on the executive level.”

Mohammed El Sobky, director of the Energy Research Center at Cairo University added that the government should set out obligatory energy standards, and conduct regular energy audits.

From the business perspective, Ahmed Moaaz, country manager of Sea Dragon Energy called for a practical set of recommendations from the government: “Something like a timetable with an action plan, so we can all at least contribute to the future of this government and this country.”

In response, Hegazy challenged the suggestion that Egypt needs actions rather than institutions. “I beg to differ, because actions will be based on those,” she said. “The policies and the institutions are targeting the action.”

“How many years have we been talking about energy efficiency?” asked Hassan. “Everybody around the room, who has gray hair as I do, has been doing this for 30 years. Can anybody stand up today and say, ‘This is what we’ve done with 30 years of energy efficiency. This is what we’ve accomplished? We were at point A and now we’re at point B?’ I don’t think so.”

Referee or player?

Another issue raised by roundtable participants was Egypt’s need for a single, independent regulatory body. At present, regulation falls largely to two different bodies: the Egyptian Electric Utility and Consumer Protection Regulatory Agency, known as EgyptERA, which is responsible for electricity, and a separate body that looks at gas.

“Who has got the ownership of the energy efficiency?” asked Moaaz of Sea Dragon Energy. “It’s great to talk about it, but I cannot evaluate myself. I need either a regulator or a body in the government who is going to be over all, looking at energy efficiency, which is a very crucial part of the future development on energy in Egypt.”

When asked why Egypt has two separate regulators, Hegazy responded that the government had recently considered the issue. “EgyptERA, which is the regulator for electricity has been established several years ago. And it is well established, while the gas is just starting. So we thought that there is a transition period where also to have to give a chance for the gas regulatory to be developed, then we think about integrating them,” she said.

Shereen Abdulla, a senior efficiency engineer at EgpytERA, outlined the many activities her agency is involved in. In addition to public outreach which ranges from social media channels to children’s art competitions and a new Android app, the ERA meets regularly with energy distribution companies to discuss their energy efficiency activities.

EgyptERA is also participating in a new, World Bank–funded energy efficiency unit at the Ministry of Electricity, Abdulla explained. The unit is still selecting its technical team, which will eventually develop indicators and benchmarks for the electricity sector, and support the implementation of a national energy efficiency plan.

While applauding the ERA for its many initiatives, Hassan questioned whether the agency might compromise its mission as a regulator by getting involved in implementing a national energy efficiency plan.

Ideally, Hassan said, a regulator should maintain its independence, avoiding situations where they might have an institutional stake in the success of a particular plan.

“Consumers, when they see something that is not proper on the government side, they should be able to go to the regulator. That’s the role of the regulator,” he said. “It is not preferred to be both a judge and a player.”

Abdulla asserted that the ERA is an independent organization, before she was interrupted by former Minister of Petroleum Osama Kamal. “Reporting to whom? Reporting to whom?” he challenged, alluding to the regulator’s status as part of the Ministry of Electricity.

As the roundtable drew to a close, Hassan said such discussions need to be ongoing. “We need to use this model of societal dialogue, and make it a little more effective in terms of policy making.”

The last word, however, went to Nasrallah from AUC, who spoke about energy subsidies but also summed up the mood of the day.

“You have a patient who is bleeding to death. Do you leave him to die, or do you start taking very serious action to stop the bleeding? Awareness and talking about alternatives and so on, these are all fine measures that can go in parallel. But right now you need very bold decisions.”