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Germany has pledged to help Egypt in its economic reform programme and in boosting its electricity production
By Nesma Nowar
Germany pledged $500 million to support Egypt’s economic reform programme and the country’s small and medium-sized businesses in an announcement made during German Chancellor Angela Merkel’s two-day visit to Egypt last week.
It was agreed that Germany would provide $250 million to support Egypt’s economic reform programme, as well as $250 million to support other sectors, including micro-enterprises and small and medium-sized enterprises, the Ministry of Investment and international cooperation said.
The support will come in the form of grants and concessional funds, a government official told Reuters, but it is not yet clear when the funds will arrive.
In addition to the aid pledges, the visit also aimed at boosting trade ties between the two countries. President Abdel-Fattah Al-Sisi said after his meeting with Merkel that it was important to increase German investment in Egypt and that Germany was Egypt’s most important economic partner in Europe.
Prior to the visit, German Ambassador to Egypt Julius Georg Luy said that Germany was interested in investing in Egypt, but German investors needed assurances before they could do so. He added that his country was waiting for Egypt’s new investment law to be approved so it could be presented to investors.
The new investment law has been finalised and is now under discussion in parliament, according to Sahar Nasr, minister of investment and international cooperation, speaking at the Egyptian-German Business Forum held in Cairo last week.
German investments in Egypt are estimated to total €1.5 billion, providing around 22,000 jobs, Luy said.
Germany is investing in one of Egypt’s major mega-projects — the building of three power stations that will eventually generate around 45 per cent of the country’s electricity and serve around 45 million people.
During Merkel’s visit, Al-Sisi and the German chancellor inaugurated the first phase of a mega-project carried out by the German conglomerate Siemens in collaboration with local partners Al-Sewedy Electric and Orascom Construction.
In 2015, Siemens signed contracts worth €8 billion for high-efficiency natural gas-fired power plants and wind power installations that will add an additional 16.4 gigawatts (GW) to Egypt’s national grid to support the country’s economic development and meet its growing population.
The three plants are located in Beni Sweif, Borollos and the New Capital city.
Together with its local partners, Siemens will supply on a turnkey basis three natural gas-fired combined-cycle power plants, each with a capacity of 4.8 GW for a total combined capacity of 14.4 GW.
Siemens also signed a nine-year maintenance contract for the three plants last Friday to help ensure the long-term reliability, availability and optimal performance of the units.
The natural gas-fired combined-cycle technology used in the three power plants is the first to be introduced in the Middle East, and the power stations will be the largest gas-fired combined-cycle power plants in the world, said Sherif Kotb, deputy project director at Siemens.
Kotb said that financing had been a challenge, but with the collaboration of Al-Sewedy Electric and Orascom Construction the government had been able to borrow €6 billion from 30 banks.
The stations will begin operations in May 2018, and Siemens has already connected a total of 4,800 GW, out of the targeted 14.4 GW, to Egypt’s national grid.
The Electricity Ministry has also signed a €238 million agreement with Siemens to build six power-transmission stations to help transport power generated from the new plants, which are expected to save Egypt an annual $1.3 billion per year in fuel savings.
The mega-project is set to put an end to shortages in Egypt’s electricity production, a problem that has caused recurrent power cuts across the country over the last few years, said Mohamed Al-Dessouky, project director at Orascom Construction.
He said that the power stations would be the most efficient available and have the lowest construction and operating costs.
Al-Dessouky said that electricity was a prerequisite for development and that Egypt was following a strategy for development that did not only include new power plants, but also upgrading the national grid.
This development was not only confined to big cities like Cairo and Alexandria, he said, as new electricity lines would now reach people in Upper Egypt and Sinai.
“The main challenge to the project is committing to the three-year timeline,” Al-Dessouky told Al-Ahram Weekly during a site tour of the power plant in the New Capital. He said it was challenging to produce 4,800 GW from each station using such advanced technology in just three years and that the government had been putting forward concrete plans to eliminate problems in the electricity sector.
After he took office in 2014, President Al-Sisi pledged to solve the country’s energy crisis through the construction of power stations and to deal with the energy sector’s other problems. He has inaugurated several power stations that have improved the situation and blackouts have eased significantly.
In addition to building the new stations, Siemens will also support occupational training in Egypt by establishing and operating a joint training centre and strengthening an Egyptian vocational training institute in collaboration with the German overseas aid agency GIZ, according to Joe Kaeser, president and CEO of Siemens, speaking at a press conference in Cairo last week.
The programme has been designed in line with Egypt’s objectives outlined in the Egypt Vision 2030 plan to promote long-term economic growth, create new jobs and increase the competiveness of Egyptian industries.
The centre, to be built in the New Suez Canal Development Zone, will train 5,500 technicians and engineers over four years. Construction is scheduled to begin in 2017, with the facility scheduled to open in 2018.
Siemens has been doing business in Egypt since 1859 and has maintained a continuous presence in the country since opening its first office in Cairo in 1901.
Bilateral trade between Egypt and Germany stood at €5.6 billion in 2016, and Germany is the 20th largest investor in Egypt, according to official figures. Germany and Egypt enjoy close economic relations, especially in the area of trade. In 2015, bilateral trade grew by approximately 20 per cent compared with the previous year, to €5.2 billion, according to figures from the German foreign office.
It said that Egypt remained a desirable trading partner for Germany and with reservations concerning efficiency an attractive destination for German investment.
Al-Sisi paid a visit to Germany in June 2015 during his first official visit to Europe. Last November, German passenger flights resumed to Sharm El-Sheikh, putting an end to a one-year ban on flights to the Red Sea resort after a Russian passenger plane crashed in Sinai in late 2015.
Official figures show that 615,000 German tourists visited Egypt in the first 11 months of 2016, representing 12.7 per cent of total tourist arrivals in this period.
© Al Ahram Weekly 2017
