New industrial zones are thirsty for natural gas supplies

The Egyptian national economy has arguably taken significant leaps in the past few years. This fact was best reflected in the growth in domestic production last year which hit roughly seven per cent, and was also supported by international reports declaring Egypt one of the highest investment attracting countries.

And the recent breakthrough in the number of newly established industrial projects, whether in Lower or Upper Egypt, is by all means unprecedented. However, this significant growth in industrial ventures has called for greater energy supplies, especially natural gas. And since Minister of Trade and Industry Rachid Mohamed Rachid has announced a new pricing mechanism for electricity and natural gas used by industrial sectors, there has been a significant increase in energy prices, especially electricity, for industrial purposes.

As a result, an increasing number of investors resorted to natural gas which is considered now as a less expensive source of energy for industrial zones. This, in fact, caused demand on natural gas to take an upturn, as many investors have switched from other energy sources to it. But the problem is that natural gas supplies are not available for all industrial enterprises all over the country. This problem was crystal clear in Upper Egypt, especially in Sohag governorate.

In a memo scheduled to be sent to Prime Minister Ahmed Nazif, the investors stressed that connecting natural gas to their enterprises would help them remain afloat. “Connecting natural gas supplies to industrial zones in Sohag will help manufacturers reduce production cost, which in turn will lead to increasing the competitiveness of their products,” said Eng. Mahmoud El-Shandaweeli, of the Sohag Investors Association. Some projects in the zone are facing great obstacles and might be shut down unless natural gas is connected to them.

According to Al-Ahram Newspaper, the memo highlighted that electricity providers in the governorate wanted investors to pay for the setting up of electricity-generating plants, let alone the cost of cables connecting electricity to the zone.

Many plants, indeed, have stopped operation in the past few months due to different reasons, on top of which was high energy prices. The energy input in many projects was too high to the extent that caused their profits to erode. Some of them resorted to raising the prices of their products, which weakened their competitiveness in markets.

Nevertheless, the ministry of petroleum quickly responded to the desperate calls of Sohag investors, assuring them that a natural gas line would be connected to the industrial zones in Sohag. “The new line will start from the Sugar Cane Plant in Abu Qurqas, then south-westwards across Bahr Youssef Canal, and then to Cairo-Assiut Road. The line will pass by Assiut Cement Plant, an oil refinery company, Al-Walidiya power plant, and Assiut Fertilizers Plant,” Gamal Amer, deputy chairman of GASCO, told the weekly business Al-Mal. Expected to fulfill the needs of most of industrial zones located in Assiut and Sohag, the new natural gas line costs LE620 million.

GASCO has carried out a study to assess the environmental effects of the project before starting implementation, in compliance with Environment Law. The study showed that the project has no negative effects on the surrounding environment.

By Mohamed El-Sayed