Egypt and China have made plans to cooperate in the energy sector, particularly when it comes to the construction of coal-powered power plants. Egypt’s government is looking for alternatives to expensive natural gas.
Egyptian Holding Electricity Company will sign seven partnership agreements with private Chinese companies operating coal-powered plants; a statement by Egypt’s Ministry of Electricity and Renewable Energy said on Tuesday.
The agreements were discussed and drawn up as Egypt’s Electricity minister is accompanying President Abdel-Fattah El-Sisi, in his first visit to the world’s second-largest economy, which began on Monday.
The Egyptian government has also signed other memoranda of understanding with Chinese companies operating in renewable energy, in addition to three other agreements to renew the national electricity grid, develop the electricity transmission net and create a smart grid, all of which are expected to optimise energy efficiency.
During the visit, Egypt will sign an additional 18 agreements with Chinese government as well as private companies, mainly in energy and transport, bringing the total to 25.
Egypt’s government is looking for alternatives to natural gas and Mazut to power its plants and factories as production of domestic natural gas fields has diminished over the last years while production from new fields was halted due to political unrest.
The less expensive coal option is also easier to import. The international price of coal is $4 per tonne while the price of gas is $14 per million British Thermal Units (BTU).
In April, the government said it validated coal import for power generation within cement factories but was faced with strong opposition from public opinion and environmentalists.
Nonetheless, the plan moved forward, Suez Cement, Egypt’s largest listed cement maker by market value, recently announced that it plans to spend LE600 million ($84 million) in 2015 to equip two factories to run on coal due to the country’s energy crunch.