Power plant programme enters next phase

28 March 2003
The Egyptian Electricity Holding Company (EEHC) is preparing for the next phase of its 10-year emergency power plant construction programme, with tenders expected in the fourth quarter for five gas-fired power projects - four of which are extensions to existing generation plants (MEED 28:2:03).

The three largest projects involve the installation of steam turbines at Cairo West and Ayoun Moussa, increasing capacity at both plants by an additional 650 MW, and the installation of 625 MW of new capacity at the planned Kureimat power plant (see below). The two smaller projects involve expanding capacity at the El-Walidia power station by 325 MW and building a new 325-MW plant at Gamasa, which will be expanded by an additional 325 MW at a later date. Awards for all five projects are expected by the end of June 2004.

The decision to press ahead with the expansion programme follows the selection of Germany's Siemensfor the $157 million steam turbine contract on the largest project in the scheme to date, the 1,500-MW Nuberiya combined cycle plant. EEHC is also preparing to award the contract for the 750-MW second phase of the Cairo North project.

Financial offers have been opened for the second phase of Cairo North, for which bids were submitted in late January by Siemens, GE Power Systemsof the US and Japan's Mitsubishi Heavy Industries. The three financial offers are underwritten by loan guarantees from, respectively, Germany's Kreditanstalt fuer Wiederaufbau, Export-Import Bank of the US and Japan Bank for International Co-operation (MEED 10:1:03).

Two other 750-MW combined cycle plants, to be located at Talkha and Kureimat, are under consideration. A tender is expected by the end of the year for the Talkha project, once financing has been secured from the African Development Bank and the Kuwait Fund for Arab Economic Development. The Kureimat scheme is expected to be tendered about four months afterwards. The local/US Power Generation Engineering & Services Company (PGESCo)is advising the government on the expansion programme (MEED 14:2:03).

The expansion programme comes in response to revised EEHC estimates of a 7.5 per cent annual increase in demand for electricity in Egypt over the next decade. Privatisation of the country's generation assets and the use of the build-operate-transfer model of power station construction have been ruled out by the government for the time being, and the 10-year programme is expected to be financed solely from development loans from international aid agencies. However, the government is considering privatisation of two of Egypt's eight distribution companies, responsible for the Greater Cairo and Alexandria areas. EEHC is expected to invite expressions of interest for the advisory mandate by the end of the year.

The government has been engaged over the last two years in the gradual restructuring of the power sector on the basis of a report produced by Merrill Lynch. Privatisation of the distribution companies is awaiting completion of a masterplan for the sector being drawn up by Nexantof the UK and financed by the US Agency for International Development (USAID).

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