Cement plants will need to provide their own energy, say government sources

Licenses issued for building new cement factories will require investors to independently secure energy needs, according to an announcement from Egypt’s Minister of Trade and Industry Rashid Mohamed Rashid. This stipulation represents a shift from the past where energy provisions were the government's responsibility.

Following a Supreme Council for Energy meeting held two days ago, Rashid said that the new policy will require investors to draw energy from either the local market or abroad, depending on their capabilities. According to the minister, the new cement licences will be granted early next year. He also noted that factories that face energy importation problems can secure what they need from the government’s own energy surplus by 2016, if available.

Official sources said the government hopes to encourage investment by offering new licenses for free or at very low prices. The sources said procedural protocol for importing energy will be established by the ministries of petroleum and mineral resources and electricity and energy.

If this strategy proves successful, the sources said, the government will extend a similar offer to other high-consuming industries.

In other news, Tamer Abu Bakr, head of the energy commission at the Federation of Egyptian Industries, said, in an exclusive statement, the only way for the government to solve the energy crisis is to cease its gas exports, revoke agreements signed with importing countries, and engage in negotiations to pay the fines stipulated in the contracts.

Abu Bakr said Egypt cannot afford to import huge amounts of energy to operate high-consumption stations and factories. He justified the position by explaining the high cost of importing. One million thermal units of fuel oil cost US$1 per unit, according to Abu Bakr, and the same quantity of solar fuel costs US$15 per unit. Egypt exports one million units of natural gas for approximately US$1.5 per unit.

Al-Masry Al-Youm recently uncovered a government decision to import energy through the ministry of petroleum or private sector firms, if local reserves prove insufficient.

In a similar context, Ahmed Shebl, managing director for the cement company Lafarge Egypt, said local gas provisions for high-consumption plants are sold at international rates. Prices are driven up, according to Shebl, because of transporting and shipping costs.

But one energy expert, who requested anonymity, characterized the government’s plan to allow energy imports for local factories as imprudent, saying the government adopted the decision haphazardly. The expert said the government failed to name the official body responsible for the importation prices, and called for determining such issues before proffering licenses.

Current legislation, according to the expert, give the state-run General Petroleum Corporation exclusive rights for importing oil products. The absence of private firms in the equation forces factories to issue requests directly to the Petroleum Ministry. The ministry has failed to honor its commitments in the past and, as a result, the industry suffers.

The expert, in an attempt to encourage policy change, noted that other nations allow the private sector to engage in importation.

Translated from the Arabic Edition.

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