Egypt's tough energy question

That is the question in the minds of many observers as the people cast their votes to elect their president later in May and the new regime will face the tough issue of how to handle the declining supply of gas to power stations and to consumers at large from day one.

Power outage even before the summer picks up became a normality, in addition to long gas lines that were the result of growing subsidies, lack of new investments and accumulated arrears that belong to supply companies.

The subsidies that almost benefit everyone cost the treasury some $20 billion according to energy officials, and that amounts to one-fifth of the total government spending.

Moreover, because of this subsidy the government has to pay companies, including foreign ones, the difference. And all that resulted into $4.8 billion arrears that have to be handled to ensure that these companies continue to provide supplies.

However, in the meantime, Cairo started to look for options like a quick import of petroleum products to the tune of $1 billion that is being mooted.

Contacts are already under way with Algeria’s Sonatrach, which is known as a major gas exporter in the region to provide some gas supplies to Egypt.

The figure of 400 million cubic meter a day is being discussed, though there is no concrete outcome as yet. But importing liquefied natural gas (LNG) requires establishing an LNG import facility that is not available yet.