Egypt's $500 Million World Bank Loan to Give Gas Access to Poor Households

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--A $500 million loan from the World Bank will allow Egypt to extend natural gas access to 1.5 million households.

The expanded supply will serve 11 governates, including three governates (Sohag, Qena and Aswan) located in Upper Egypt, where poverty levels are highest, said World Bank Vice President Inger Andersen.

The expansion will support the Egyptian government's household natural gas connection program to replace household consumption of liquefied petroleum gas (LPG), of which the major part is imported, with grid-connected natural gas, Andersen said.

"The project will provide financial support to finance the connection charges in disadvantaged areas so that poor households can also connect to the gas grid," said Husam Mohamed Beides, the project's task team leader. "We are working closely with the European Union and the French development agency to ensure that this project is a success."

Poverty rates higher than Egypt's national average exist in 52% of the neighborhoods targeted by the project. Piped gas is considered to be a more convenient cooking fuel with higher reliability, and better health-and-safety benefits.

The project will provide special benefits to people who have difficulty obtaining LPG cylinders and transporting them, such as people with disabilities, the elderly, and women from vulnerable income groups, who often have to stand in line for long periods to purchase cooking gas.

Currently, more than 75% of Egyptian households buy LPG cylinders from an inefficient distribution network characterized by persistent shortages, an informal market, and difficult physical conditions for handling cylinders.

The country is going through its worst energy crisis in decades, due to declining gas production, rising consumption and generous power subsidies. Foreign investment in the sector has been inhibited by the government's move to divert gas destined for export to the domestic power market.

For related information, see September 9, 2014, article - Egyptian Blackout Hits Steel, Utilities, Transport.

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