Egyptian authorities are considering an application from Arab Investment & Development Company to develop a 5,000MW coal-fired power complex at Safaga, on the Red Sea coast.

It is the first time the country has considered building a coal-fired power plant, and is part of a wider trend to move away from its traditional reliance on gas-fired plants.

The company has applied for environmental permits from the Red Sea governorate and the National Environment Agency (Nea). If approved, the independent power project (IPP) will go ahead in several phases, the first of which will add 750MW of capacity.

The scheme has been made possible by reforms proposed by the Electricity & Energy Ministry to allow private investors to develop power plants independently of the government. Developers will have to secure an agreement with customers to buy the power before they can launch their projects.

If the Safaga coal-fired plant receives the necessary environmental permits, the next step will be for Arab Investment & Development Company, which is led by Egyptian businessman Mohamed Metwalli, to conclude a power-purchase agreement with the government.

With gas feedstock for power generation in short supply in Egypt, it is expected that more power schemes in the country will use alternatives, including coal or nuclear, in the future.

According to one local power industry executive, projects that were originally planned as combined-cycle plants, using both gas and steam, could also be converted to use only steam turbines.

Cairo is already pushing ahead with plans to develop nuclear power plants. It is negotiating a consultancy contract for the programme with the US’ Bechtel. The discussions are expected to be concluded in early March.

The government is also moving ahead with a series of conventional power projects, most of which will use steam turbines, rather than rely on gas feedstock.

West Delta Electricity Production Company (WDEPC), a subsidiary of Egyptian Electricity Holding Company (EEHC), has already signed contracts for the steam turbine and boiler packages on the planned Abu Qir power plant near Alexandria.

A team of Japan’s Mitsubishi Heavy Industries and Toyota Tsusho Corporation will supply the plant with two 650MW steam turbines. Italy’s Ansaldo Caldaie will supply the boilers for the project on an engineering, procurement and construction basis.

WDEPC retendered the civil works package on the project after deciding the original prices offered by bidders were too high. Bids were submitted by the local Orascom Construction Industries, Athens-based Consolidated Contractors Company with the local Hassan Allam Sons, Arab Contractors, also local, and Greece’s Archirodon.

The bidders’ latest financial offers were due to be opened on 4 February, with an award to follow in March.

All the packages for the Abu Qir plant, including those covering mechanical and electrical works and transformers, will be awarded by the end of the third quarter of 2008.

Following the Abu Qir plant, the next project to be implemented in the country will be the 1,300MW Ain Sokhna plant.

The project will be the first in the country to use supercritical technology, which increases the overall efficiency of the plant, allowing a faster response to fluctuating demand, and reducing emissions. The scheme is supported by the World Bank, which is providing a $600m loan.

The client, East Delta Electricity Production Company (EDEPC), which is wholly owned by EEHC, has already issued tenders for the supply of two 650MW turbines and boilers for the project. Bids for the contracts are due in March and April respectively.

The project will be followed by a scheme to build a 750MW combined-cycle plant at Nuwaiba in the east of the Sinai peninsula.

EDEPC will issue the first tender on the project by the end of February. The tender documents, which will be available from 22 February, will cover the design, supply and installation of two 250MW gas turbines for the plant. The deadline for bids is 3 May.

EEHC has applied for a loan from the European Investment Bank to cover part of the project’s expenses.

Under EEHC’s 2007-12 expansion plan, the 750MW plant was originally to be built at Sharm el-Sheikh. Following difficulties securing a site, however, EEHC was given a new site at Nuwaiba. The project is the last under EEHC’s expansion plan up to 2012.

Under its next five-year plan, EEHC has estimated that an additional 10,500MW of new generating capacity will be needed by 2017. It is likely that some of the projects it is planning, which were originally to be financed by the government, will be offered to the private sector instead.

Until now, the government has relied on loans from multi-national lenders to see its projects through, but this appears to be unsustainable in the long term.

“Most international financial institutions seem to be getting cold feet now,” says one electricity industry source. “Lending is cooling down a bit and it is likely that the government will allow IPPs as part of its expansion programme. There is no way it will be able to finance nearly 11,000MW of new projects in five years.”