Russia and Egypt: An Energy Partnership Breakthrough
Arhive | 14.08.2016 | WORLD

Russia and Egypt: An Energy Partnership Breakthrough

Alexander KUZNETSOV

The media circulated reports in early August that Moscow and Cairo had agreed on a contract to build Egypt’s first nuclear power plant. The Egyptian president’s official spokesman released a statement that «the Egyptian minister of electricity has presented the president with the final version of the contract to build the Dabaa nuclear plant [the site is not far from Alexandria – A.K.and informed him that all the previously unresolved issues with the Russians have now been settled»

A package of contracts governing the nuclear plant is expected to be signed this year – an integrated EPC contract covering the engineering, procurement, and construction work, a contract to provide the fuel for the plant’s entire operational lifespan, a service contract, and a contract to eventually retire the plant (the back end of the fuel cycle) at the end of its planned service life. The contract to build the nuclear power plant is worth an estimated total of $25 billion, which just might make it one of the world’s biggest nuclear plant construction projects. Back on Nov. 19, 2015, Egypt and Russia also signed an agreement stipulating that Russia would offer Egypt a government loan to build the Dabaa nuclear plant.

The Egyptian media views the contract with Rosatom as extremely advantageous for Egypt in several ways. First of all, all the equipment for the plant will be entirely Russian-made, thus preventing any potential sabotage of the construction by outside countries. Second, Russia is not burdening the project with any political fine print. Third, some of the plant’s components will be manufactured locally in Egypt. Fourth, the Russian nuclear experts will not be paid until after the plant is up and running, which is motivation to avoid any unnecessary delays in the work.

Egypt has long dreamed of building a nuclear plant, but those plans stagnated until Russia got involved. The idea first emerged in Egypt in 1960, but the 1967 Arab-Israeli war put the construction plans on hold.

After President Anwar Sadat took power in Cairo and the Egyptian-American rapprochement began, US President Richard Nixon promised to provide nuclear plants to both Egypt and Israel. However, later it became clear that the Americans wanted the right to continue to inspect the plant and retain real control of its operations. That didn’t go over well with the Egyptians. In 2006, the government of Egypt once again began to focus on the development of a domestic nuclear power industry, and it asked the Australian company WorleyParsons Limited to review the construction plans for the plant. That firm was unable to choose a construction site, and by the time its professional review was completed, the Arab Spring was already at hand, a riot had broken out on Cairo’s Tahrir Square, and the Egyptians had plenty of other things on their minds.

But without nuclear energy the country could be hit with electricity shortages in the next few years. Prior to the 1990s, most of Egypt’s electric power was generated by the Aswan hydroelectric dam that was built with the help and guidance of Soviet consultants.

The Aswan hydroelectric plant created enough electricity to satisfy Egypt’s needs for a long time. However, more time passed and the country’s growing population, which has tripled since the 1960s (it is currently estimated at more than 90 million) meant a growing need for electricity. Gas-fired thermal power plants gradually supplanted Aswan as the primary producers of Egypt’s electric power. But Egypt – always strapped for cash – is very aware that it could potentially sell its gas for export instead of burning it.

The shift to nuclear power is necessitated by yet another factor – the Nile is drying up. The water level in this great river is dropping at a disastrous rate. If this continues it will soon be impossible to operate hydroelectric power plants in Egypt.

The Nile’s water shortage could get even worse after the Renaissance dam begins operating in Ethiopia, home to a major tributary of the Nile. The Grand Ethiopian Renaissance Dam promises to be the most powerful hydroelectric power station on the African continent, with a storage capacity of 74 billion cubic meters. And then what will happen to the 55 billion cubic meters that Egypt is currently allotted each year? 

Egypt, Ethiopia, and Sudan have asked a group of consultants – representatives from the French companies BRL and Artelia – to draft a report on the possible impact of the construction of this dam. However, analysts with the Egyptian newspaper Al-Ahram believe that the Renaissance will be operational by 2017, regardless of the conclusions of the study.

Last March the presidents of Egypt, Sudan, and Ethiopia signed a declaration announcing their joint efforts to forestall any negative repercussions from the Renaissance dam, but in truth this document is in no way binding on Addis Ababa. Mohamed ElBaradei, the well-known Egyptian diplomat, politician, and former head of the IAEA, believes that the optimal solution would be to require Ethiopia to keep the dam open in the summertime, when water from the Nile is needed to irrigate fields in Egypt (85% of Egypt’s Nile water is used to irrigate fields and 15% for drinking).

After President Abdel Fattah el-Sisi took power in Cairo, in many respects Egypt began a return to its policy of Arab nationalism. Egypt under the administration of President Gamal Abdel Nasser had been the biggest champion of that movement. It is no coincidence that a very senior Arab journalist, Mohamed Hassanein Heikal, who had been Nasser’s friend and cohort, became a presidential adviser to Sisi and the author of a number of his speeches. (Mr. Heikal died recently, in March 2016, at the age of 92.)

It should be noted that the new leaders of Egypt have taken a constructive position on Syria. Cairo opposed any quick overthrow of Bashar al-Assad, in effect supporting the operations of Russia’s Aerospace Defense Forces in September 2015. In March 2016 the moderate Syrian opposition convened a conference in Cairo that excluded the radical Islamists and set about to develop a model for a national reconciliation in Syria. In Libya, President Abdel Fattah el-Sisi’s government has backed the secular Libyan government based in Tobruk and headed by Abdullah al-Thani and General Khalifa Haftar, who are leading the fight against Islamic State terrorists.

By accepting the responsibility of building a nuclear power plant in Egypt, Moscow is reasserting a presence in the Middle East that now goes beyond mere military matters. Russia is not hesitating to dive right into the economy of that part of the world, thus raising its standing in the eyes of its Arab partners. It’s not surprising that a visitor to the Al-Monitor website, which is popular in the Arab world, had this to say about the nuclear-energy deal between Russia and Egypt: «Egypt is now closer than ever to Russia. Good work Putin».

Tags: Rosatom  Egypt 

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