Middle-east Arab News Opinion | Asharq Al-awsat

Saudi Arabia and Egypt sign historic electricity exchange agreement | ASHARQ AL-AWSAT English Archive 2005 -2017
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File photo of Riyadh skyline. (AAA)

File photo of Riyadh skyline. (AAA)

File photo of Riyadh skyline. (Asharq Al-Awsat photo)

Riyadh, Asharq Al-Awsat—Saudi Arabia and Egypt signed a historic USD 1.6 billion deal on Saturday to link their electricity grids as part of a project that will allow the two countries to share power.

This agreement, signed by Saudi minister for electricity and water Abdullah bin Abdulrahman Al-Hosain and Egyptian energy minister Ahmed Eman, will require the construction of a 12-mile underwater cable to facilitate electricity exchange.

A well-informed source told Asharq Al-Awsat that the Saudi Electricity Company and Egyptian Electric Holding Company are set to discuss the mechanisms of implementing this power grid interconnection and energy exchange over the coming days.

The source stressed that a request for tender for the project is open to international companies, in addition to local Saudi Arabian and Egyptian companies.

He added that financial and technical departments at the Saudi and Egyptian electricity companies are set to finalize a comprehensive plan for the mechanism needed to implement the electricity exchange project over the next few days.

The Saudi and Egyptian electricity companies will take responsibility for funding, ownership, operation, and maintenance of the power grid and electricity cables inside their respective territories. Ownership, funding, and operation of the underwater cable, which will cross the Gulf of Aqaba, will be shared by Cairo and Riyadh.

Egypt’s energy minister, Ahmed Eman, said the linkage project is expected to take between 24 and 30 months to complete.

Speaking following the signing ceremony in Riyadh, he revealed that “Egypt will pay around 40% of the cost, while Saudi Arabia will pay the remaining 60%”

“This project will allow both countries to share power of up to 3,000 megawatts, and will achieve a return on investment of 13% for each country,” he added.

The electricity interconnection project is expected to relieve peak-time pressures on the electricity grid in both countries. Peak-time summer power consumption in Saudi Arabia falls between noon and mid-afternoon, when air conditioners are used intensively, while in Egypt peak time falls after sunset.

Saudi Arabian minister of water and electricity Abdullah Al-Hosain described the project as a “beautiful dream that has now been realized,” adding, “studies have shown that this project will have many benefits, particularly due to the difference in peak time loads between Saudi Arabia and Egypt.”

He added that when this project is complete, it will effectively lead to the power grid interconnection between 14 Arab states, including the GCC.

“This is one of the most important projects of its kind between Arab states,” he noted.