The proposal has been made by a leading energy consultant. If accepted, it would be the first ever move by Egypt to develop power plants using coal as feedstock.

The plant would be part of a wider energy park, which would include a coal-handling terminal and associated storage facilities. The estimated cost of the plant and coal-handling infrastructure is $6-7bn.

According to one source close to the project, the coal could be sourced through long-term fuel purchase agreements with South Africa and Poland.

The scheme is the latest evidence that Egypt is looking to develop new power generation abilities to supplement its gas-fired plants.

However, Cairo is reluctant to confirm the move towards coal as, by doing so, it would effectively confirm that the country is suffering from a shortage of gas.

“It is about politics,” says the source. “There is no gas in Egypt but no one can say coal unless the Petroleum Ministry says we don't have gas.”

If the proposal is adopted by the government, some of the planned gas-fired capacity could be replaced by coal-fired power generation plants.

The Egyptian Electricity Holding Company's current expansion programme envisages the addition of an average of 3,000MW of new capacity a year between 2013 and 2027.

Some officials have already indicated the possibility of using coal as feedstock for power plants.

“Oil production is declining and we don't have new large supplies,” says Hafez el-Salmawy, managing director of the Egyptian Electric Utility & Consumer Protection Regulatory Agency, which regulates the country's electricity sector.

“We are heading to an energy problem. We might go for other fossil fuels such as coal. We are suffering from a security of supply problem. Our gas supplies are not huge. Most of the reserves are in deep water so they are very expensive to develop.”

Egypt is already developing a nuclear power programme and a nuclear law is expected to be presented to parliament before the summer recess in June (see story right). However, the first 1,000MW nuclear plant will not come on line until 2017/18.

“Nuclear [power] takes time,” says a source close to the coal project. “[Coal] is the only option for Egypt.”

Egypt also plans to produce 20 per cent of its power from renewable sources by 2020.

Already, the country will need to bring a 1,500MW emergency power plant on line in 2011 to cover potential demand.

The new gas-fired combined-cycle plant will either be built in Giza, southwest of Cairo, or at Ain Mousa in the western Sinai.

Egypt is not the only country pursuing the coal option in the region. Morocco has already built coal-fired power plants and Dubai and Oman are both moving in this direction.