WATANI International
17 October 2010
All appearances indicate that Egypt’s nuclear project is underway. A study by the Egyptian Centre for Economic Studies (ECES) indicates that, by yearend, Egypt will start building its first nuclear power plant after decades of delay. Contributing to the delay was a prolonged dispute between government officials—who were calling for the nuclear reactor to be constructed at the site of al-Dabaa, west of Alamein—and a group of investors who sought to build a luxury tourist resort there.
A balance between supply and demand is necessary to guarantee the sustainability of nuclear energy. Hence a feasibility study is needed to choose the sort of nuclear energy fitting for Egypt and find the best way for meeting the country’s future power needs. The ECES study focused on the expectations of supply and demand of electric power in Egypt up to 2050, taking into account the other variables affecting the use of electric power as well as factors in relation to population growth, income levels and GDP.
Supply and demand
The ECES study shows that the first nuclear plant is expected to be constructed by 2015 and the second by 2020. There will be four reactors by 2030 and six by 2050. As for economic feasibility, the cost should not exceed USD2.682 billion, while the maximum cost per kilowatt should stand at 6.03 cents. The minimum energy generated should be 4.4 billion kilowatts for every 1000 megawatt. The reactor’s minimum time of operation is 33 years while its minimum capacity has to be 905 megawatt.
Tareq Selim, professor of economics at the American University in Cairo and author of the ECES study, told Watani that the oil and natural gas reserves in Egypt will certainly prove insufficient to cover the country’s power needs in the future. It is of major significance then to start generating nuclear power to meet the surge in consumption. “If Egypt’s nuclear project is to see light, the contribution of nuclear power to the total generated electric energy in Egypt will grow gradually. By 2017, nuclear power will account for 4 per cent of the country’s power supply. Its contribution will increase to 10, 12 and 15 per cent in 2025, 2030 and 2050 respectively. The best alternative for Egypt is to use open-fuel cycle light water reactors.”
Dr Selim remarked that, at a mere 1 per cent contribution to the country’s power supply, alternative energy sources are almost non-existent in Egypt. However, Egypt should be able to substitute solar energy for oil.
International funding
Abdel-Rahman Gaballah, economics professor at Helwan University, says that since the project requires huge financial resources it cannot possibly be funded by a single party. “The group that will establish the reactor could have a share in its capital,” he says. “If international financial institutions such as the World Bank accept to make a contribution in financing the project it will acquire credibility and attract other financial bodies to contribute.” Dr Gaballah says a contribution by the World Bank would allow Egypt a grace period of some 30 years, a privilege not available with other sources of funding.
Renowned economics expert Hamdi Abdel-Azim argues that a number of considerations have to be borne in mind when financing nuclear plants. “For instance, operating a nuclear station requires the establishment of a reliable transportation network including roads, railway lines and marine transport,” he says.
Those thorny subsidies
Dr Selim commented on the controversial matter of electricity subsidies: “Subsidies on electricity have to be phased out if we are to rationalise the use of energy. It goes without saying that low income families will bear the brunt of such a move.”
Tamer Abu-Bakr, an economics expert at a gas company, argues that lifting subsidies on electricity is not expected to cause any problems. “Natural gas is the cheapest source of energy and it could be easily connected to houses. Instead of exporting natural gas, it has to be totally allocated for local consumption,” he says.
Experts have said that removing the subsidies will reduce the budget deficit. Economics professor Abdullah Shehata says it will also rationalise the use of energy. “The largest share of electricity subsidies goes to the industrial sector for the purpose of endowing local industries with a competitive edge in international markets,” Dr Shehata says. “It consumes 50 per cent of fuel oil—also known as mazot. Cement alone absorbs 60 per cent of the country’s gas consumption. It could be said that a handful of companies monopolise the energy supply in the market.”