Egypt – New Electricity Power System
The new electricity law has reconstructed the electric field to make it more competing. It is also responsible for confirming a consistent long term supply of electricity with reasonable prices and well-maintained environment. It settled up the single user for electricity and allowed private production companies to sell their services to the users. The electricity law designed two electricity marketplaces. The first is the competing market where skilled users (high voltage (HV) consumers) are allowed to easily choose their electricity suppliers based on direct bilateral negotiations and transmitted electricity prices. The second is the regulated market where unskilled users (medium voltage MV and low voltage consumers LV) will pay a fixed rate and will buy electricity from the distribution firms who will be fulfilled by a public dealer. The Electric Utility and Consumer Protection Regulatory Agency (ERA) is also reconstructed to be an objective institutional supporter responsible for managing, producing and organising between electricity generators, conductors, distributors, and end consumers. It has become the electricity transformer regarding permitting, designing and maintaining charges, providing a separate conflict resolution mechanism, and promoting a competitive market design and formation. It is also useful for assuring a reliable long term quantity of electricity at reasonable prices and a preserved environment.
Electricity Licenses and Permits
An investor wanting to produce, distribute or sell electricity must obtain a license from ERA and must establish an SPV in the form of a joint stock company. A temporary permit will be collected to undertake the preliminary work and studies needed to inaugurate the project. The licenses and the temporary licenses shall be published in the Egyptian Gazette and newspaper. Producers of electricity for its use may be released from the necessity to obtain the permits and licenses.
The permission will be issued for a maximum span of 25 years. You can get your license with the help of any professional electric lawyers in Egypt. It may be renewed for a similar time. The ERA will yearly observe the continued approval of the license’s conditions and issue a certificate verifying the validity of the license.
Fee for getting the license will be ‰1 of the price of every electricity unit generated or obtained, or of the cost of interconnection with the networks as the case may be. The price for getting the short permit will be not less than EGP 10,000 with a maximum of EGP 1000 for every MW of the allowed capacity.
It is not permitted to assign the license or the permit to the third party unless written permission is received from ERA to this effect.
Electricity Production and Transmission
EETC is directed to enable investors to trade electricity directly to users using its transmission channels and the delivery networks subject to access cost (wheeling charge) via network link contracts. EETC will manage the transmission and maintenance of electricity countrywide and will be the TSO of the control system in Egypt. EETC is authorized to ensure the enduring capacity of the transmission procedure to meet the requirement of electricity and to make the system reliable, safe, and efficient. For example, it is allowed to:
1. Perform, supervise and support the ultra-high and high voltage (UHV & HV) transmission method.
2. Allow third parties to manage its transmission system on a reasonable basis to meet the electricity demands of consumers and distributors.
3. Generate and achieve ultra-high and high voltage (UHV & HV) transmission plans.
4. Control the electricity need in the controlled market by buying electricity from approved generators.
5. Performing interconnection plans with neighbouring nations.
EETC can execute its projects either in its own or in cooperation with the private fields.
Private electricity sellers are entitled to produce and perform electricity delivery projects on low and medium voltage (LV & MV) and to work and manage the delivery system in the authorised area. They are permitted to market LV and MV electricity to specific users supported by ERA. In case the Cabinet declared a price less than that sponsored by ERA, the Government will pay the difference between them to the authorised distributors.
Additional Incentives and Reforms
Following are some other incentives to electricity plans that Egyptian government is introducing:
- Subsidies Policy Reform
It is understandable that the feed-in tariff scheme works in unsubsidised energy conditions. The Egyptian government subsequently declared a progressive liberalisation of the electricity rates over the coming five years with an aim to entirely remove electricity allowances by 2019. The Egyptian Prime Minister announced implementing orders with the raised electricity tariff for the years 2014 till 2019.
- Further Non – Tax Incentives
On 12 March 2015, the Presidential Decree 17/2015 was announced to offer substantial changes to the Egyptian Investment Law no. 8/1997. The changes usually aim at drawing new investments to Egypt by offering additional springs and incentives, reducing difficulties, and streamlining the system. Incentives involve, for instance, trimming sales charge to 5% from as high as 10%, and establishing customs revenues on equipment used for generation at 2%.
Extra non-tax motives are offered to particular sectors including electricity projects:
1. Allotting the land occupied by the government free of cost or at discounted rates.
2. Financing the technical education programs of the workers as well as the social insurance agreements.
3. Refunding the fees paid to increase infrastructure tools to the project’s land. Such payment will be after the initiation of the project.
- Sovereign Guarantee of Off-taker fees
The Egyptian government symbolised by the Ministry of Finance is empowered by Law 14/2013 to assure all financial commitments of the Egyptian Electricity Holding Company and its associated corporations under all plans they perform in connection with the private domain. This indicates that the Ministry of Finance will ensure the responsibilities of EETC as the government off-taker under the PPA (power purchase agreements) concluded with electricity generators.
If you are looking to know more about the new electricity law in Egypt, please feel free to make contact with one of the reputable electricity law firm in Egypt!
Sherif Saad Law Offices 