Students study for their high school certificate exams at the Library of Alexandria during the rolling electricity power cuts introduced by Egyptian authorities to compensate for a shortage of fuel for its power stations. Reuters
Students study for their high school certificate exams at the Library of Alexandria during the rolling electricity power cuts introduced by Egyptian authorities to compensate for a shortage of fuel for its power stations. Reuters
Students study for their high school certificate exams at the Library of Alexandria during the rolling electricity power cuts introduced by Egyptian authorities to compensate for a shortage of fuel for its power stations. Reuters
Students study for their high school certificate exams at the Library of Alexandria during the rolling electricity power cuts introduced by Egyptian authorities to compensate for a shortage of fuel fo

Egypt's energy crisis unleashes rare wave of criticism


Hamza Hendawi
  • English
  • Arabic

Exacerbated by scorching summer temperatures, Egypt’s rolling power cuts have unleashed a wave of criticism of the government on social media with a fearlessness unseen since President Abdel Fattah El Sisi took the helm 10 years ago.

The criticism has caused a flood of posts on pro-government accounts with messages that vary between praise for Mr El Sisi’s leadership and achievements and stern warnings against action that could bring instability.

They also called for unity in the face of national security threats posed by conflicts raging in Egypt’s neighbours and explained the criticism away as part of a malicious campaign of rumours.

The power cuts have hit a sector long touted by Mr El Sisi and his government as a success story.

In 2018, Egypt and German giant Siemens said they had added 14.5 gigawatts to the power grid by upgrading power plants and building new ones, in a record-breaking two-and-a-half years.

That alone is more than half of Iraq's electricity production capacity, but it is failing to meet soaring demand.

In a nation where 30 per cent of its 106 million people live in poverty, according to official figures, the power cuts have deepened the suffering of millions struggling in the face of skyrocketing prices, a plummeting currency and reduced state subsidies on goods and services.

“Whoever wants to destroy his nation because of the price of gas, bread and milk should not worry because these items will be available free of charge in refugee camps,” declared one post from a pro-government Facebook account, echoing often repeated comments by Mr El Sisi that instability would plunge the county into chaos.

West Cairo natural gas electrical power station in the skyline of Giza, the twin city of Egypt's capital. AFP
West Cairo natural gas electrical power station in the skyline of Giza, the twin city of Egypt's capital. AFP

The criticism on social media has gone beyond frustration over the power cuts and even economic woes, touching on the wider question of how Egypt has been ruled since the military seized power in a 1952 coup.

“The people have been harvesting non-stop defeats, political, economic and civilisational setbacks since the republic was founded in 1953 and that’s because of one key reason: The absolute powers of presidents,” Anwar El Hawary, possibly the most outspoken of all government critics on social media, wrote on Facebook.

Some of Mr El Sisi’s supporters have joined the critics in vilifying the government, but with the important caveat that it is Prime Minister Mostafa Madbouly and his cabinet to blame, not the president, although he has supreme power.

Legislator Mustafa Bakry, a television talk show host and a staunch supporter of Mr El Sisi, has been at the forefront of efforts to discredit the critics while absolving the president of any responsibility.

His argument is partially founded on the notion that Mr El Sisi, a former army general who runs the economy down to the smallest detail, has not received the help he needs to translate his vision into action.

“The [Egyptian] people can only endure so much and had it not been for their faith in the political leadership [Mr El Sisi] they would not have remained silent,” said Mr Bakry.

“We have a skipper [Mr El Sisi] who is a patriot. You can say whatever you want but he has been unlucky, surrounded by challenges and problems from every direction while only a handful of people are sincerely lending him a helping hand.”

People cool off by the River Nile at night during high temperatures in Cairo, Egypt. Bloomberg.
People cool off by the River Nile at night during high temperatures in Cairo, Egypt. Bloomberg.

Speaking at an Egypt-EU investment conference in Cairo on Saturday, Mr El Sisi also appeared to be absolving himself and his government of responsibility for the economic crisis. He cited the Covid pandemic, the Russia-Ukraine war and the Gaza conflict as the main contributors to the country’s financial woes.

The furore over the power cuts is being played out against a backdrop of a severe economic crisis – some say it is the worst in memory – that critics chiefly blame on what they say is reckless borrowing, high spending on mega infrastructure projects that are unnecessary or could have waited given the dire state of key sectors like health and education.

Mr El Sisi says the new infrastructure, including thousands of kilometres of motorway, is vital to maintain economic momentum in the coming years.

The Egyptian pound has lost two-thirds of its value since early 2022. Servicing the country’s foreign debt, which stands at $160 billion, or over three times government revenue, eats up much of the country’s foreign currency earnings.

A bailout package worth about $50 billion from the IMF, World Bank, the EU and Gulf nations saved the country from a complete meltdown this year.

On Saturday, European companies declared their intention to sign deals potentially worth more than $42.85 billion, according to European Commission President Ursula von der Leyen. But the implementation timeline for these investments is uncertain.

It is unclear why authorities have so far tolerated the more outspoken posts by government critics. One explanation gaining traction is the government had no choice but to allow critics to vent, to prevent popular discontent from boiling over into unrest on the streets.

A greengrocer at his Cairo market stall. EPA
A greengrocer at his Cairo market stall. EPA

A shortage of diesel and natural gas to run the country’s power stations at full capacity is behind the electricity crisis.

The government had argued that the power cuts – lasting three hours a day but reportedly twice as long in some places – save the treasury hundreds of millions of dollars that would have otherwise been spent buying diesel and natural gas for power stations.

Egyptians have been asked to endure the power cuts for the good of the nation. The cuts, which began a year ago, initially lasted an hour and were later extended to two. Last week, the cuts were increased to three hours, coinciding with one of several heatwaves.

Mr El Sisi has repeatedly defended the cuts as a small sacrifice, warning that Egyptians will have to pay twice or three times what electricity is costing them now if they want uninterrupted power.

However, many Egyptians saw the cuts as an inexplicable and inexcusable dereliction of the government’s duty to deliver a basic service.

The prime minister, meanwhile, recently told Egyptians they should consider themselves lucky because other countries in the region suffered much longer cuts.

His comments were widely interpreted as insensitive, but his tone changed dramatically after the state-controlled media last week reported that the president had ordered the government to end the electricity crisis.

“The subject of electricity is very sensitive to us as officials because we empathise with the people’s suffering regardless of how long the power cuts last,” he told a nationally televised news conference after apologising to Egyptians.

Egyptian President Abdel Fattah El Sisi. UAE Presidential Court.
Egyptian President Abdel Fattah El Sisi. UAE Presidential Court.

“We were all sad to take the decision to extend the power cuts to three hours … our overwhelming concern now is to get through this crisis,” said Mr Madbouly, who took office six years ago.

Mr El Sisi was full of praise for Egyptians on Saturday, commending them on their perseverance.

“Egyptians are a strong and steadfast people who faced huge challenges that were absolutely not of their making,” he said.

“I would like to greet every Egyptian, man and woman, who are recently enduring life's hardships and rising prices,” he said in an address on Sunday.

Critics, meanwhile, are taking issue with the president’s decision to keep Mr Madbouly as prime minister after he dismissed the government nearly four weeks ago.

“What worries me the most is the narrative adopted by the official media that the new government will be an extension of the outgoing one and that it must build on the same policies and the successes already achieved,” said Ziad Bahaa El Deen, a former deputy prime minister who was in charge of the economy.

“If we are convinced that the management of the economy in recent years was successful and that it’s imperative, even necessary, to build on its achievements, then there is no hope for economic improvement.”

UK's plans to cut net migration

Under the UK government’s proposals, migrants will have to spend 10 years in the UK before being able to apply for citizenship.

Skilled worker visas will require a university degree, and there will be tighter restrictions on recruitment for jobs with skills shortages.

But what are described as "high-contributing" individuals such as doctors and nurses could be fast-tracked through the system.

Language requirements will be increased for all immigration routes to ensure a higher level of English.

Rules will also be laid out for adult dependants, meaning they will have to demonstrate a basic understanding of the language.

The plans also call for stricter tests for colleges and universities offering places to foreign students and a reduction in the time graduates can remain in the UK after their studies from two years to 18 months.

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

Race 3

Produced: Salman Khan Films and Tips Films
Director: Remo D’Souza
Cast: Salman Khan, Anil Kapoor, Jacqueline Fernandez, Bobby Deol, Daisy Shah, Saqib Salem
Rating: 2.5 stars

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The specs

BMW M8 Competition Coupe

Engine 4.4-litre twin-turbo V8

Power 625hp at 6,000rpm

Torque 750Nm from 1,800-5,800rpm

Gearbox Eight-speed paddleshift auto

Acceleration 0-100kph in 3.2 sec

Top speed 305kph

Fuel economy, combined 10.6L / 100km

Price from Dh700,000 (estimate)

On sale Jan/Feb 2020
 

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