Learning from Power Sector Reform
The challenge of power sector reform in the Arab Republic of Egypt has long been dominated by extremely high subsidies, with prices set well below the costs of supply. These subsidies have taken a variety of forms: explicit subsidies in the government budget, implicit subsidies in the underpricing of fuel supply (particularly natural gas) to the power sector, accumulation of arrears from the sector, poorly-maintained physical capital, and cross-subsidies across customer classes. Egypt's social contract was linked to expanding energy access with good quality supply based on public financing and huge subsidies. Egypt has been able to achieve universal access with more or less reliable power over the entire period, except when chronic underinvestment in the sector caused blackouts in 2011–14 at time of severe political uncertainty. The social compact came under pressure in 2014 when energy subsidies reached 6.8 percent of gross domestic product. Since then, the reform process has been revived based on new electricity, gas, and renewable energy laws; price and subsidy adjustments; structural reforms with a deliberately long time frame; and greater emphasis on the role of the private sector.
| Main Authors: | , |
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| Format: | Working Paper biblioteca |
| Language: | English |
| Published: |
World Bank, Washington, DC
2020-02
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| Subjects: | POWER SECTOR REFORM, ELECTRIC UTILITIES, POWER GENERATION, ACCESS TO ENERGY, STATE-OWNED ENTERPRISES, REGULATION, ELECTRICITY PRICING, SUBSIDIES REFORM, |
| Online Access: | http://documents.worldbank.org/curated/en/344841582641079201/Learning-from-Power-Sector-Reform-The-Case-of-the-Arab-Republic-of-Egypt https://hdl.handle.net/10986/33394 |
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| Summary: | The challenge of power sector reform in
the Arab Republic of Egypt has long been dominated by
extremely high subsidies, with prices set well below the
costs of supply. These subsidies have taken a variety of
forms: explicit subsidies in the government budget, implicit
subsidies in the underpricing of fuel supply (particularly
natural gas) to the power sector, accumulation of arrears
from the sector, poorly-maintained physical capital, and
cross-subsidies across customer classes. Egypt's social
contract was linked to expanding energy access with good
quality supply based on public financing and huge subsidies.
Egypt has been able to achieve universal access with more or
less reliable power over the entire period, except when
chronic underinvestment in the sector caused blackouts in
2011–14 at time of severe political uncertainty. The social
compact came under pressure in 2014 when energy subsidies
reached 6.8 percent of gross domestic product. Since then,
the reform process has been revived based on new
electricity, gas, and renewable energy laws; price and
subsidy adjustments; structural reforms with a deliberately
long time frame; and greater emphasis on the role of the
private sector. |
|---|