A new USD 1.6 billion agreement has been signed between Saudi Arabia and Egypt to link electricity grids between the two countries.
Initially, an international tender for the project was planned in 2010. After facing a delay of several years due to political turmoil and social unrest in Egypt, an agreement was finally signed in Riyadh. The project will take about 24-30 months for completion and will allow both countries to trade power. In Saudi Arabia, power consumption during summer soars between noon and mid-afternoon as air conditioning is used intensively. However, the peak time in Egypt is usually after sunset. Therefore, both countries will be able to divert resources and meet increased demand in their regions.
Speaking to Reuters, Egypt’s Electricity Minister Ahmed Moustafa Emam stated that; “Egypt will pay for around 40 per cent of the cost while Saudi Arabia will pay for the remaining 60 per cent. The project will allow both countries to share power of up to 3,000 megawatts, and will achieve a return on investment of 13 percent for each country.”
Egypt would have incurred a cost of up to 30 billion Egyptian pounds to produce the same amount of electricity itself.
Project details show that power lines will be extended by 1320 kilometers in total — 820 kilometers in Saudi Arabia and 480 kilometers in Egypt. The cost of a 20 kilometer undersea cable will be shared by the Kingdom’s majority state-owned utility, Saudi Electricity Co (SEC), and Egypt’s state power company Egyptian Electric Holding Co. No official details about prices, tariffs, or other commercial arrangements are available as yet.
According to Saudi Transport, Water and Electricity Minister Abdullah bin Abdul-Rahman al-Husayen, the project will eventually lead to the linkup of power grids of 14 Arab countries, including the six-member Gulf Cooperation Council.