Dublin, June 16, 2020 (GLOBE NEWSWIRE) -- The "Egypt Power Report 2020" report has been added to ResearchAndMarkets.com's offering.

The Egyptian power sector is viewed as an attractive destination for investment due to a relatively stable government, economy and policy direction. However, a number of underlying tensions and challenges mean that long-term investments in the country are far from being risk-free. Egypt Power Report 2020 outlines the market's attractions and downsides for power developers, financiers and other industry stakeholders.

Sisi Tightens His Grip as Discontent Simmers

Following a leadership merry-go-round - which began with the dramatic ousting of President Hosni Mubarak in 2011 and ended with the military coup which deposed the democratically-elected and first ever Islamist leader, Mohammed Morsi - the former general turned president, Abdel Fattah El Sisi, has recreated a highly authoritarian and military-led form of governance whose foundations are security, control and economic efficiency rather than popular or democratic support.

This does not mean that President Sisi has - or had - no base. It is true that his two presidential election victories in 2014 and 2018 were both formalities as no serious opposition was permitted but even so, there is believed to be a substantial minority of the population whose preference is for competent authoritarianism over what they view as incompetent and potentially radical popular Islam. The July 2013 coup which brought Sisi to power was supported by mass demonstrations. The social compact on which Sisi's rule depends is thus identical to that which sustained Mubarak, Anwar Sadat and Gamal Abdel Nasser before him - that is the exchange of democratic freedoms for security and economic well-being.

For now, any threat to the current political settlement is unlikely to come from a resurgence of the popular Islamic movement. Millions would likely support such a movement if it emerged, but Sisi has crushed the Muslim Brotherhood (al-Ikhwan al-Muslimeen) and there is no other focus around which popular discontent can organise itself.

An Unbalanced Social Contract?

However, this does not mean that there will be no consequences should the authorities fail to deliver their side of the bargain - namely guaranteeing the economic well-being of the wider population. President Sisi is under pressure both from within the system and from a restive and frustrated population.

In the past five years, President Sisi has pushed through an impressive raft of macro-economic reforms in parallel with a statist and military-led re-energising of the command economy (the development of the Suez Canal Economic Zone being one such example).

According to its own parameters, the November 2016 to November 2019 International Monetary Fund (IMF) Extended Fund Facility (EFF) has succeeded. The devaluation of the Egyptian pound and cuts in subsidies and other spending have opened space for investment. While a great deal more structural reform is needed, at the end of 2018 foreign reserves were 19% of GDP. The government is targeting growth of 6-7% in the 2019/2020 fiscal year, while the IMF is forecasting growth of 5.9%. All three big credit rating agencies have issued upgrades between 2018-2019.

While this performance has won the confidence of multilateral financial institutions and foreign investors, the immediate effect has been a fall in living standards. Between 2015 and 2018 the proportion of Egyptians living below the poverty line increased sharply. This means that not only are the benefits of reform not being felt, the reforms are actually causing pain. This is the driver behind the re-emergence of popular protest.

Underlying Pressures

A campaign of mass arrests quickly shut down the street demonstrations which flared up in September 2019 following the dissemination on social media of allegations that members of President Sisi's close circle had enriched themselves via a lavish programme of presidential palace building. The government also eased up on some price rises and austerity measures to ease growing discontent. The first inchoate rumours of disquiet within the top ranks of the military following these protests suggest that the President is neither impregnable nor all-powerful, despite the constitutional changes passed in April 2019 which allow him to stay in power until 2030. If President Sisi cannot neutralise the source of popular anger, he could face a challenge from within, rather than from outside, the ruling structures. He may also find himself confronting the kind of leaderless social media-inspired protest that have destabilised Algeria, Sudan, Hong Kong and even some Western democracies.

Neither of these kinds of challenge would necessarily alter the system of governance. However, both could result in a less liberal outlook towards foreign investors and a reconsideration of policies such as the liberalisation of markets, including the electric power market. Alternatively, by stifling dissent while adopting more popular economic policies Sisi could ride out this period of dissatisfaction, particularly if he can find ways of better sharing the benefits of economic reform. In this latter case, the pace of reform would also be likely to slow down. These factors have contributed to African Energy issuing Egypt a D' rating for political risk, with a deterioration in democratic accountability' being offset by improvements in macroeconomic conditions.

Power Sector Context

The political imperative to avoid blackouts and to ensure the consistent availability of electric power at peak times has been a defining feature of the Sisi presidency. The collapse of the Mubarak regime and the brief rise and fall of the Brotherhood's Mohamed Morsi took place against a backdrop of a severe energy crisis.

The long-term mismanagement of the gas production and export industry meant that by 2012 Egypt not only had to cease gas exports, it also had insufficient production to supply domestic industry and power generation. The related balance of payments crisis made it difficult to import replacement liquid fuels. Morsi's failure to respond to these economic challenges (conspiracy theorists have alleged that his opponents - not least in the military - may have covertly exacerbated the difficulties) was an important factor behind his downfall. It is certainly the case that after taking control in July 2013, the military swiftly resolved the most debilitating aspects of the power supply crisis. Policies to guarantee sufficient domestic gas supply and a generous reliable reserve margin for power generation have remained at the top of the agenda ever since.

Other Topics Discussed

Key Topics Covered

1. EXECUTIVE SUMMARY

2. RISK MANAGEMENT REPORT

3. POLITICAL OVERVIEW
3.1 Structure of government

3.2 Key actors

3.3 Overview of main political parties

3.4 Elections

3.5 Major policy initiatives
3.6 Corruption

3.7 Security risks

3.8 Recent major developments

4. MACROECONOMIC OVERVIEW
4.1 Overview
4.2 GDP

4.3 Inflation
4.4 Current account
4.5 Balance of payments
4.6 Public debt

4.7 Credit ratings
4.8 Exchange rates
4.9 Key lending rates
4.10 Foreign reserves
4.11 Liquidity of local markets
4.12 WBG Ease of Doing Business
4.13 Major economic strategies

4.14 Major recent developments

5. POWER SECTOR OVERVIEW
5.1 Overview
5.2 Market structure

5.3 Profiles of institutions

5.4 Market operation
5.5 Sector history

5.6 Regional electricity trade
5.7 Financial health of the electricity supply industry
5.8 Main consumers of electricity

6. POWER SECTOR POLICY AND REGULATION
6.1 Overview
6.2 Major legislation

6.3 Sector plans

6.4 Legal requirements

6.5 Procurement

6.6 Tariffs

6.7 Sector programmes

6.8 IPP environment
6.9 Sovereign guarantees

7. FROM THE NEWSLETTER

8. RESOURCE AVAILABILITY
8.1 Overview
8.2 Natural gas

8.3 Solar
8.4 Wind

8.5 Hydro
8.6 Geothermal

9. COMPETITIVE LANDSCAPE
9.1 Overview
9.2 Project profiles: Landmark power projects

9.3 Project profiles: Under construction generation projects

9.4 Project profiles: Selected planned generation projects

9.5 Company profiles: Selected key developers

9.6 Selected key financiers

10. TRANSMISSION AND DISTRIBUTION
10.1 Overview
10.2 Interconnections

10.3 T&D losses
10.4 Planned grid improvements

11. OFF-GRID
11.1 Overview
11.2 Electrification & access rates
11.3 Regulation

11.4 Selected off-grid players/initiatives
11.5 Barriers to entry

12. DEMAND AND SUPPLY OUTLOOK
12.1 Overview
12.2 Demand projections
12.3 Commissioning policy
12.4 Decommissioning policy
12.5 Reshaping the network
12.6 Generation outlook

12.7 Reserve margins and surplus power
12.8 Thermal additions and decommissioning
12.9 Export options
12.10 Conclusion

Companies Mentioned

For more information about this report visit https://www.researchandmarkets.com/r/dh3zh6

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