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Egypt: laying the foundations for a more secure energy future

Published by , Editor - Hydrocarbon Engineering
World Cement,

Speaking at the World Economic Forum, Ahmed Heikal, Chairman and Founder of Qalaa Holdings, gave audiences a private-sector perspective on the challenges and opportunities that Egypt currently faces as it strives to rebuild its economy amidst an energy crisis and limited fiscal resources. Heikal spoke at a session headlined ‘Shaping Egypt’s Economic Transformation,’ during which Egyptian President Abdel Fattah El Sisi gave a keynote speech outlining Egypt’s economic roadmap and his 2020 vision for the Egyptian economy.

“We need to look beyond immediate concerns to more fundamental issues, because we have today a once-in-a-generation opportunity for a reformist government not just to lay the foundation for a more secure energy future, but to create whole new industries — and perhaps hundreds of thousands of jobs in the process,” said Heikal. “We can do so by delving into two questions: What’s the optimal energy mix for Egypt? And how can we most efficiently harness the resources we have today.

“Staying the gutsy course upon which we embarked last July when the administration began removing fuel subsidies is key,” said Heikal. “Behaviour is key to efficiency, and nothing ensures responsible behaviour — on the part of consumers and business alike — than market prices alongside a cash-based social safety net for the most needy in society.

“With the state’s energy subsidy bill for the current fiscal year already down c. 30%, I would argue that the Government of Egypt should consider channelling some of the windfall into both exploring a healthier mix of energy sources (one that includes renewables) — and into new industries to derive maximum benefit from those resources we have. In parallel, we need to convince some 90 million people to change their behaviours as we move from a ration-based system to one of cash transfers for the needy.”

“The new legislation that has been passed by the Egyptian government in the last 3 – 4 months is very promising, but we must stay the course and not shy away from bold measures,” said Qalaa Holdings Co-Founder and Managing Director Hisham El-Khazindar. “?President El Sisi sent at the World Economic Forum this year a clear and important message to the global business community that Egypt is heading in the right direction.”

Qalaa Holdings’ energy portfolio includes investments in refining, energy distribution, power generation and renewables. Its largest energy investment to date is the Egyptian Refining Company (ERC), a US$ 3.7 billion refinery that has the potential to more than halve Egypt’s current diesel imports and reduce the country’s current sulfur emissions by nearly one-third when it starts production in 2017.

“On a one-year, three-year and ten-year horizon, Qalaa has been the largest investor in Egypt. We look to play our part in the future. Today, the risks are declining and economic policies are clearer. We will continue investing behind our existing assets. In my mind Egypt, offers a very attractive risk-return trade off — so much so that today, 90% of my personal wealth is in Egypt. My bet is that Egypt will roar,” concluded Heikal.

Adapted from press release by Rosalie Starling

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