Egyptian Qalaa Holdings, the most dominating investment company in the Middle East and Africa, is positive about how its new mega refinery will reduce the country’s dependence on oil imports, according to what its Chairman, Ahmed Heikal, said in an interview with Reuters.
The $3.7b Egyptian Refining Co (ERC), which is currently being built on a land space spanning 300,000 square meter, will have the capacity to produce 4.2m tons of refined products annually. The refinery will sell its production to the state-controlled Egyptian General Petroleum Corporation (EGPC) at international prices under a 25-year agreement.
Although Heikal mentioned that ERC will be exposed to EGPC’s dollar shortages due to the foreign currency fluctuations that Egypt is currently experiencing, he explained that the contract, which binds the two companies together, will contain provisions that always guarantee the sufficient availability of oil products for three months in advance. “You have to remember what is the alternative for the government? The alternative is to import. So they will have to pay cash for the products,” Heikal told Reuters.
Qalaa owns a 19% stake in ERC, which is expected to become operational in the first quarter of 2017, The Hellenic Ship News wrote. Egypt, which has turned from a net energy exporter to an importer because of declining domestic production and the burden of costly subsidies, aims to end gasoline and possibly gasoil imports by 2019.