1 - USAid

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