Continuing Energy Crisis Angering Ordinary Egyptians

A growing energy shortage is causing anger among ordinary Egyptians, who are frustrated by the apparent inaction of Egypt’s new military-led government. At the heart of the issue is the fact that Egypt no longer produces enough energy for rapidly rising domestic demand at its deeply subsidized prices. The leadership is unwilling to raise prices for fear of setting off unrest in the streets and is unable to buy enough fuel to meet the current demand.

International energy companies have complained that Egypt has failed to pay them for pumping its petroleum and have refused to allow them promised gas to export. British company BG, one of the country’s biggest gas producers, warned that its Egyptian liquefied natural gas business “is increasingly at risk” without “concerted action from the Egyptian government.” More than a year ago, a joint venture partially owned by the Italian oil company Eni mentioned similar reasons when it closed the only other Egyptian plant making liquefied gas.

According to a statement by the company, BG is owed $1.4 billion from Egypt, with more than half of the amount overdue. In its statement, the company also said that the productivity of its gas fields was deteriorating and partially blamed the decrease on the government not paying enough to justify investment in maintenance work. The military-led government has received as much as $20 billion over the last 10 months from Persian Gulf monarchies, but has little to show for it.

The continuing energy crisis has been a blunt reminder of the challenges still facing the new government. A shortage of energy was one of the primary reasons for the protests against President Mohamed Morsi before his ouster last year. The energy reserves in Egypt are just enough to avoid a calamitous currency devaluation, around $17 billion, but the country owes international energy companies about $5.7 billion in back payments. That amount is high enough to sink the currency if it were deducted from the reserves.

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