Cairo North combined cycle gets green light

18 October 2002

The Egyptian Electricity Holding Companyis understood to have decided to move ahead quickly with the second 750-MW combined cycle module at the Cairo North power station. The decision is reflected in the revised tender issued at the start of October for the switchyard substation at the plant. The substation has been reconfigured so that it will be able to serve both modules (MEED 11:10:02, Tenders). The first tender package on Cairo North module 2 is expected to be issued by the end of November.

The government is understood to have identified three prospective sources for the estimated $300 million in external finance that will be required for the second module at Cairo North. They are German development agency Kreditanstalt fuer Wiederaufbau, the Japan Bank for International Co-operation and the Export-Import Bank (Eximbank) of the US. The European Investment bank (EIB), the Arab Fund for Economic & Social Development (AFESD) and the Islamic Development Bank are financing the first phase.

The EIB and AFESD, along with the Kuwait Fund for Arab Economic Development, are also financing the 750-MW first phase of the Nuberiya power station.

Bids for the first package at Nuberiya - for the supply of gas turbine generators - are scheduled to be submitted by 7 November (MEED 27:9:02). The consultant on all the new projects is the local/US Power Generation Engineering & Services Company (PGESCo).

The decision to speed up the power station construction programme has been taken in light of the larger-than-expected increase in demand for electricity. Peak demand has risen by 7.5 per cent over the past year. Electricity & Energy Minister Hassan Younis said on 1 October that two days previously peak demand had reached a record 14,400 MW, because of the combined effect of a heatwave and the return of schoolchildren and office workers after the summer holidays. Total installed capacity stands at 16,500 MW, but industry experts say effective capacity tends to fall in hot weather, just as demand is pushed up by heavy use of air conditioners.

The government is relying on loans from development agencies for the new cluster of power station projects. However, analysts say that the banks and agencies are starting to question whether the investment programme can be sustained with the present tariff structure, which includes a significant subsidy to most domestic users.

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