Egypt Power Report Q2 2008

The new Egypt Power Report from BMI forecasts that the country will account for 10.42% of Middle East/Africa (MEA) regional power generation by 2012. BMI's MEA power generation estimate for 2007 is 1,130 terawatt hours (twh), representing an increase of 5.2% over the previous year. We are forecasting an increase in regional generation to 1,573twh by 2012, representing a rise of 39.3% between 2007 and the end of the period.

Thermal power generation in 2007 is estimated by BMI at 999twh, accounting for 88.4% of the total electricity supplied in the region. Our forecast for 2012 is 1,372twh, implying 37.4% growth that reduces slightly the market share of thermal generation to 87.2%, thanks in part to environmental concerns that should be promoting renewables, hydro-electricity and nuclear generation. Egypt's thermal generation in 2007 is estimated at 103twh, or 10.32% of the regional total. By 2012, the country is expected to account for 10.43% of thermal generation.

For Egypt, oil was in 2006 the dominant fuel, accounting for 49.5% of primary energy demand (PED), followed by gas at 44.0%, and hydro with a 4.9% share of PED. Regional energy demand is forecast to reach 865.6mn tonnes of oil equivalent (toe) by 2012, representing 27.2% growth over the period since 2007. Egypt's estimated 2007 market share of 9.07% is set to rise to 9.19% by 2012. Egypt's estimated 14.3twh of hydro generation in 2007 is forecast to reach 20.9twh by 2012, with its share of the Middle East/Africa hydro market falling from 36.78% to 33.37% over the period.

Egypt is ranked second, just one point below the UAE in BMI's newly revised Power Business Environment rating, thanks largely to its market size and high proportion of renewables (hydro-power) use. The power sector is modestly competitive, with some progress towards privatisation. The regulatory environment isn't particularly attractive. However, Iran is a non-threatening four points behind and is unlikely to challenge for Egypt's second place over the short-, medium- or long term.

BMI is forecasting real GDP growth averaging 5.75% per annum between 2007 and 2012, with the 2008 forecast being 6.70%. Population is expected to expand from 77.3mn to 84.5mn over the period, with GDP per capita and electricity consumption per capita forecast to increase significantly (by 75% and 30% respectively). The country's power consumption is expected to increase from an estimated 104.4twh in 2007 to 148.5twh by the end of the forecast period, providing export potential rising from an estimated 13twh in 2007 to 15twh in 2012, assuming 6.8% annual growth in generating capacity.