Illuminating Egypt

WRITTEN BY: Abdelnaby Gafar

Cooperation between Egypt and the Islamic Development Bank (IsDB) has grown considerably in recent years, with a total funding of USD 12.4 billion. The majority of this (79.4%) has been spent on growing Egypt’s energy sector. The expansion and development of gas and electricity power plants across Egypt has improved the capacity of electricity generation to keep pace with increasing demand. IsDB’s involvement in Egypt’s energy sector is in line with IsDB energy policy, government priorities and the country’s energy sector strategy. In 2019, IsDB and Egypt agreed a further USD 3 billion to be allocated until 2021 to support several development projects, including electricity, transportation, education and a private sector partnership.

As I do every year, I traveled to spend my annual vacation in Egypt. As I took my seat on the plane, an elderly man arrived, greeted me and sat down. We soon started a conversation and I got to learn a bit about him. Ahmed was an electrical engineer from the governorate of Assiut and had been working for the Bin Laden Company for over 10 years. I explained that I was an employee of IsDB in Saudi Arabia and had worked there for nearly 18 years. As soon as Ahmed heard this, he smiled and said, “You work in an institution that is a symbol of development in Muslim countries.” 

I told him that he seemed to know the Bank well, as if he was one of its employees. Ahmed replied, “This institution is well known at the level of economic and social development in the Muslim world, especially in times of disaster and crisis. IsDB is a strategic partner in development in many countries, including Egypt. In fact, it was one of the strategic partners responsible for advancing the electric and gas power sectors in Egypt.” 

I asked why IsDB had been involved in these sectors specifically, and he explained that the electricity and gas crisis in Egypt in 2014 had a disastrous effect on all other sectors in the country, and many electricity networks and gas lines were destroyed. Ahmed described how during the crisis, daily life in Egypt was severely affected. The transportation sector was disrupted, particularly the railways and subways. Bakeries and water pumping stations stopped working, and Egypt witnessed daily queues for gas, bread and water; even vital state institutions were not spared.

The crisis was made worse as Egypt struggled to secure loans from international banks, which meant that it was unable to build new power plants. As a result, inadequate power grids operated at full capacity to meet increasing demand, and regularly scheduled shutdowns for maintenance were canceled. This led to decreased efficiencies, shorter lifetimes and a high risk of further power cuts. But in mid-2015, the government announced that a new law would be passed liberalizing the electricity sector. Under the law, the state would no longer manage utilities, but instead regulate and coordinate them. Production, distribution and transmission of electricity would be separated and privatized, and the state’s role would be limited to keeping the sector competitive. 

"As strategic partners, Egypt and IsDB have worked together to achieve important development measures, which can clearly be seen on the ground."

To assist, IsDB worked closely with the Egyptian government to establish crucial energy projects in key governorates. The International Islamic Trade Finance Corporation, an autonomous entity within IsDB, signed a murabaha financing agreement with the Egyptian government of up to USD 3 billion to import petroleum products, wheat and other commodities.

The electricity sector in Egypt has grown rapidly during the last five years, with the installed capacity of electricity increasing from 30 GW in 2013 to 55 GW in 2018. IsDB financing has facilitated the efforts of the Egyptian government to generate an additional 4,000 MW of energy and construct 174 km of transmission and distribution lines. The sector intervention has increased the reach of electricity to over half a million people, with plans to benefit over 22 million upon complete implementation of active projects. The expansion and development of power plants has raised the living standards of the Egyptian people and increased the capacity of the electricity generation system to keep pace with increasing demand. 

Ahmed and I continued our discussion over the course of our flight. It was interesting to learn from one another about the progress Egypt had made over the years, since it was a country that was dear to both of us. We spoke further about the replacement and renovation of 22 stations, and the installation of complete pumping units in areas where it has brought about the desired change. IsDB had financed the supply of maintenance and replacement equipment for 29 stations, and the supply of 50 electric motors and gear boxes for 36 stations. It also provided training and capacity building for employees of the Ministry of Irrigation, as well as workshops and the financial auditing of completed projects. 

We both agreed that it was truly amazing what could be achieved through good cooperation. As strategic partners, Egypt and IsDB have worked together to achieve important development measures, which can clearly be seen on the ground. Egypt now has large power generation plants and a surplus of electricity and gas; its agricultural area has increased; and the performance of most sectors has improved. I looked forward to seeing this for myself during my visit. 

When we were asked to fasten our seatbelts before landing at Cairo Airport, Ahmed turned to me and said, “It is a nice opportunity to meet with an IsDB employee. Many people consider IsDB the greatest institution for development in the Muslim world, and I extend my thanks to the Bank and its employees.” I smiled and thanked him in return for his company. As our plane began to lower itself, I looked through the window and watched the thousands of glittering lights scattered like stars across Cairo, lighting up the entire city.