Power cuts are becoming more frequent and more painful- and there’s no end in sight. By Lamia Hassan
(Business Today Egypt Magazine, September 2010)
Lucille’s is one of the busiest restaurants on Maadi’s buzzing Road 9. A wooden bench outside the Cairo institution is perpetually packed with people waiting for tables. During Ramadan, the restaurant does a booming business as customers break the fast with one of Lucille’s signature burgers.
But one day last month, things didn’t go as smoothly as usual.
With the dining room full of people preparing for their iftar feast, the power went out. Some hungry customers waited around in the darkness and heat, but within the hour, everyone had left to break their fast somewhere else.
The blackout lasted four hours, spoiling food and wreaking havoc with the restaurant’s sensitive kitchen equipment. By the time the power returned, even management had gone home.
“It happens a lot these days,” Mohamed Mabrouk, the restaurant’s manager, says about power outages. “Even if we decided to continue our working day while the power is off, clients will not stay without lights or air conditioning.”
For people across the country, stories like this have become all too familiar. Since the end of July, waves of rolling power cuts — some lasting as long as six hours — have swept across Egypt, plaguing factories, homes and even hospitals.
By some reports, thousands of businesses in Cairo alone have been affected by outages during working hours, resulting in losses in the millions. (The cuts follow on the heels of government assurances that power would not be cut during Ramadan and after that, only in the evenings.)
The government-mandated cuts, a byproduct of heavy summertime electricity consumption, are part of a larger plan to save energy in what has become a power-starved country. And if the nation’s ailing power grid and steadily rising consumption are any indication, people will have to get used to living in the dark.
The country currently has a stored capacity of 24,000 MW of electricity. In June, peak consumption hit 22,700 MW — a new record. Though the government is exploring alternative energy options and improvements to the existing power grid, such solutions are years away. The nation’s first nuclear power plant is slated to add just 1,200 MW to the power grid, coming online in 2019.
In the meantime, national energy consumption is growing 7–8% annually according to the World Bank. Energy analysts predict that peak consumption will more than double by 2027 and by that time, Egypt will have become a net energy importer. That sort of strain on the power grid is increasingly unsustainable and solutions are in short supply.
“This is not only the story of Lucille’s,” says Mabrouk. “It’s happening everywhere around us and even across different areas in Egypt.”
In the Dark
Blackouts are affecting more than iftar plans. Until recently, the term “lights out” was a phrase used in Hazem Badie’s Dokki dental clinic only when a patient was put under heavy anesthetic. Recent power cuts made him think a little more literally.
“It really strikes me when I am working with one of my patients, and the power goes out when I just gave him anesthesia and started to make a cut to remove his tooth,” Badie says. “It is getting really frustrating because they are doing it haphazardly.”
Ministry of Electricity and Energy spokesperson Aktham Abu El-Ela says the cuts happen only during peak hours, from 8pm to 10pm. The government also “decided that [it is] not going to apply them during Ramadan,” he told BusinessToday.
However, local newspapers reported that almost 1,200 factories and workshops in Shubra suffered power cuts during working hours last month, which slowed down production and shorted out machinery.
The press also reported multiple outages in Naga Hamadi, costing the Egypt for Aluminum Company LE 78 million in lost productivity. Despite assurances, the cuts often come during the work day with no warning.
“It is really ridiculous to just cut off power randomly, especially on factories and clinics, and places that should be informed beforehand,” says Badie.
Abu El-Ela says some of the cuts during the day in Ramadan have been accidental. But many aren’t sold.
“I still do not understand why the government is cutting off [electricity for] people and businesses, while charging the commercial side a lot of taxes and high electricity rates,” says Badie. “Instead of cutting it off in buildings, they should at least turn off the outdoor ads they have on all day and night.”
Summer in the City
It’s no coincidence that the sudden strain on the country’s electrical grid comes in the heat of summer. The number of air conditioning units countrywide stood at 3 million in 2009, up from 700,000 three years earlier. Abu El-Ela expects that number to increase by a million more in 2010.
And people aren’t afraid to use them. According to the Ministry of Electricity and Energy, home power consumption in Egypt outstrips industrial consumption. In 2009/2010, home consumption stood at 39.9% of national output, compared to industrial consumption at 32.8% for the same period. Since 2005/2006, home electricity consumption has increased 3.1%.
Current power stations are having trouble coping with the increased load. A press release issued by the ministry cited a 1,600 MW decrease in energy production, due in part to the types of fuel that power stations use.
In the statement, Mohamed Awad, the head of the Egyptian Electricity Holding Company, said that the stations were designed to primarily use natural gas, with low-grade oil as an alternate fuel. According to the statement, usage of natural gas in power stations has dropped to 79%, down from 98% a few years ago. Low-grade oil, which contains impurities that can damage power station equipment, is filling that gap.
Oil industry expert Ibrahim Zahran, the former CEO of Khalda Petrochemical, points to the increasing substitution of natural gas with lowgrade fuel as one of the major reasons behind the country’s power shortage.
“We have been warning about this since the beginning of natural gas exportation in 2004, and we warned that this will cause problems,” he says.
The low-grade oil can erode a power station’s boilers and decrease output. It’s also more expensive. According to Zahran, Egypt exports natural gas to Israel for $1.25 (LE 8.5) per every million thermal units. It pays $15 (LE 85.5) for the same quantity of low-grade oil.
With existing power stations degrading, new facilities are not being built fast enough.
“The reason the government is forced to cut power off now is because there were power stations that should have been built a couple of years ago that are not built yet, so there is a 1,600 MW shortage in power generation that they have to compensate for,” Zahran says.
That inevitably leads to increasing power cut quotas.
Zahran estimates that officials will have to shut off 60% more juice this year than they did in 2007 through rolling blackouts.
Power cuts are just the beginning; the cabinet of ministers has proposed other projects to save energy.
One such project that was suggested is applying a system similar to Europe’s, where shops close at 8pm, with pharmacies, cafes and restaurants being exempted.
With companies and factories already suffering from power cuts during working hours, energy- saving measures such as these could make a bad situation worse for many businesses.
“The peak time for buying and selling, especially with gift stores and similar businesses, is usually after 8pm, when all the people are back from work and schools,” says Faten Aly, owner of several gift shops in Mohandiseen. “This will really have a huge impact when it is applied.”
But according to Abu El-Ela, the ministry has no intention of forcing power-saving plans down peoples’ throats.
“People have to be convinced of the project and want to apply it,” he says. “All that we can do in the meantime is help people find ways to save energy. At the moment we cannot immediately provide a new power plant; it will take at least five years to build it.”
With no large-scale solutions to what is swiftly becoming a power crisis, many are anxious about Egypt’s future energy prospects. Energy consumption and population growth show no signs of stopping.
“This is something that the government should have thought of a long time ago, and should have planned ahead for it,” says dentist Badie. “I don’t really understand why the government is acting like they all of a sudden they woke up and found out that Egypt’s population had reached 80 million.” bt