September 6, 2014 / 3:13 PM / 3 years ago

Egypt president says no magic bullet for power problems after major blackout

CAIRO (Reuters) - President Abdel Fattah al-Sisi prepared Egyptians on Saturday for more blackouts after lights went out across much of the country this week, saying it would take time and cost the cash-strapped state $12 billion to upgrade the decrepit power grid.

Egypt's President Abdel Fattah al-Sisi answers a question upon his arrival at Algiers airport June 25, 2014. REUTERS/Louafi Larbi

Daily power cuts have become commonplace even in the capital Cairo but on Thursday extensive outages hit about half of Egypt, causing blackouts, halting factories and shutting part of the Cairo metro system.

The disruption sparked an uproar in the Arab world’s most populous country, where energy is a politically explosive issue.

Energy shortages and outages were a key factor in deepening discontent with Islamist President Mohamed Mursi, who faced mass protests before Sisi, then army chief, ousted him last year.

In a candid television address on Saturday, Sisi said the dilapidated state of Egypt’s power grid was the result of years of underinvestment and admitted there was no instant solution.

“Have we developed our electricity production to meet our needs? Made stations to meet our needs? This did not happen because the financing required is large,” Sisi said.

“We must understand that matter cannot at all be resolved and remedied overnight.”

Egypt needed to add 12,000 megawatts to its grid over the next five years at a capital cost of about $12 billion, the president said.

Each new power station would need fuel worth $700 million a year, Sisi added, saying that Egypt would struggle to find that cash while keeping its deficit under control.

Egypt’s economy has been hit by more than three years of political and economic turmoil following the 2011 uprising that toppled Hosni Mubarak after 30 years in power.

It is targeting economic growth of up to 5.8 percent in the next three years with the deficit staying at around 10 percent of gross domestic product (GDP), but the government is walking a fine line in its attempt to boost revenues and cut its deficit while luring investors and keeping services running.

The government raised fuel prices by up to 78 percent in July in a long-awaited step to cut energy subsidies and ease the burden on the government’s swelling budget deficit.

Oil-producing Gulf countries have also come to Egypt’s aid since Sisi took power, but major economic challenges remain.

Sisi said that electricity was not the only sector in need of investment; thousands of villages lack proper sewage systems and the government is struggling to recruit new teachers.

“If we work together on this, if we accept this challenge, if we are patient, we will succeed in putting Egypt in the place where it deserves to be,” he said.

Sisi has repeatedly called on Egyptians to make sacrifices as the government tries to shore up its finances. But his message that it was up to ordinary citizens to step up has proven tough to swallow for poorer Egyptians who struggle to remain above the poverty line.

Reporting by Lin Noueihed; Editing by Raissa Kasolowsky

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