Egyptian Electricity Holding Company (EEHC) was formed in 2000 out of an amalgamation of distribution companies and the Egyptian Electricity Authority, which had been established in 1976 to be responsible for all power plants, transmission and distribution networks.

Since 2001, it has had 16 subsidiaries, comprising six companies for electricity production, the Egyptian Electricity Transmission Company and nine companies responsible for electricity distribution. Decision-making remains the prerogative of the holding company.

Essentially EEHC was formed to give the government’s power liberalisation plans an institutional framework.

Affordable electricity

For years, EEHC was forced to sell power at subsidised prices, which reduced its profit-making opportunities. Electricity Minister Mohammed Shaker says EEHC sells electricity at a significant loss. It is sold for about 23 piasters (2.9 cents) a kilowatt-hour, while it costs about 48 piasters a kilowatt-hour to produce. The government is forced to make up the difference.

New legislation will split off the distribution companies from EEHC… making it easier to introduce feed-in tariffs

Since 2011, EEHC’s subsidiaries have lost roughly 30 per cent of their capital as a result of being forced to offer affordable electricity, according to Hafez Salmawy, head of the electricity regulatory agency EgyptERA.

Change is afoot. New legislation will split off the distribution companies from EEHC, granting them more autonomy and making it easier to introduce feed-in tariffs for renewable projects.

Among EEHC’s duties are providing power at the different voltages needed, developing transmission projects and schemes to produce electricity from thermal power plants, and managing the national control centre to oversee the production, transmission and distribution of electrical energy.

MoUs signed

EEHC signed memorandums of understanding (MoUs) with several regional power providers in March. In one, signed with Abu Dhabi’s Masdar and Saudi Arabia’s Acwa Power, the groups have committed to explore developing up to 4GW of renewable and natural gas-fired power generation projects in Egypt.

The non-binding framework agreement will help increase power generating capacity in Egypt and support economic growth.

Under the MOU, Masdar will lead development of renewable energy projects in partnership with Acwa Power. The partners will evaluate 2GW of schemes, including 1.5GW of solar and 500MW of wind.

The first project to be considered is a 200MW photovoltaic plant. An agreement to develop 3GW of solar was made with Canadian group SkyPower, and a further 2GW with Bahrain-based Terra Sola, which also committed to construct a 200MW module factory.

On the wind side, Germany’s Siemens signed a binding agreement to build 2GW of capacity. Another MoU involving EEHC is expected to be signed with General Electric of the US to build a 4,500MW combined-cycle plant. A study on the scheme is under preparation.

Loans secured

EEHC secured new financing in May 2015 with 10 regional and local banks, contributing to a $521m loan to support the electricity sector.

EEHC is also tapping development bank financing. UK-based European Bank for Reconstruction & Development this year agreed a $200m loan for the Damanhour combined-cycle power plant. Luxembourg-based European Investment Bank is also in the process of approving a $600m loan for the plant.

EEHC and West Delta Electricity Production Company are providing $240m of equity to the project, which was tendered in early 2015.

The Arab Fund for Economic & Social Development will provide $200m, while the African Development Bank is providing $80m. EEHC would be given a one-year grace period and the loan would be paid back over four years.