1 - USAid
1 - USAid
1 - USAid
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1 . 1 BACKGROUND<br />
Contract No. PCE-I-00-99-00008-00<br />
Task Order No. 801<br />
Page 3 of 11<br />
In 1975 when USAID provided initial funding for the power sector, power supply<br />
facilities were not sufficient to meet customer demand. Scheduled maintenance<br />
was frequently deferred to maximize the generating capacity. This lead to<br />
excessive generating unit failures and frequent service interruptions. The<br />
country's electric network was not monitored properly or coordinated on the<br />
basis of economic operations. The distribution facilities were in poor<br />
condition and caused additional system failures. The Egyptian Electric<br />
Authority (EEA) was over staffed and under managed. EEA was ill equipped to<br />
correct the problems that were disrupting Egypt's energy sector.<br />
Since 1975, USAID and the Government of Egypt (GOE) have jointly implemented a<br />
total of eleven projects consisting of 24 subprojects in the electric power<br />
sector. Over $1.8 billion in project and commodity assistance has been<br />
provided for the construction of power plants, transmission/distribution lines,<br />
substations, control centers, technical assistance and training. USAID has<br />
supported urban electric distribution system modernization, transmission line<br />
upgrades and long-term training. USAID has increased generating capacity by a<br />
total of 4,340 MW and rehabilitated an additional 2,700 MW.<br />
As a result of these efforts, there have been substantial reductions in energy<br />
losses, fewer outages, more reliable service and savings in fuel costs. The<br />
system has grown from a disconnected, unreliable operation to a modern,<br />
centrally controlled electric grid operated by a competent organization. USAID<br />
funds have contributed to the development of this vital sector of the Egyptian<br />
economy, enabling it to close the gap between demand and supply within a twenty<br />
year period. Presently, 97% of the Egyptian population has access to<br />
electricity and Egypt is ready to start exporting power to Jordan with an<br />
approximate annual value of LE 300 million.<br />
USAID with the approval and cooperation of the Ministry of Electricity and<br />
Energy (MEE) performed a Policy Reform and Institutional Development Assessment<br />
of the Egyptian Power Sector under the direction of the Private Sector Energy<br />
Development program (PSED). A two volume report was completed in 1993 which<br />
focussed on EEA and the distribution of electricity under the Egyptian Electric<br />
Distribution Company (EDC). Recommendations from this report led to power<br />
sector assistance to the GOE focussed on implementing policy reforms and<br />
institutional development within the existing industry structure.<br />
Some of the objectives of this policy/institutional assistance have been<br />
institutionalized by EEA and some remain in various stages of implementation<br />
and adoption. An electric utility regulatory board has been authorized and a<br />
technical secretariat is being formed to assist the regulatory board.<br />
Additional initiatives remain to be implemented. The GOE has recently decided<br />
to push ahead with privatization of the power sector.<br />
Restructuring in 1998 combined the geographical areas of the seven existing EEA<br />
zones with the associated EDC distribution networks. This reorganization of<br />
EEA was completed in 1998. The GOE has also announced its intention to transfer<br />
20 percent of these new organizations into private ownership as soon as<br />
possible. Cairo Electricity Company will have the first public offering.