Debt paralyses coal production

Debt paralyses coal production

Masud Hesham, Chairman of the Egyptian Mineral Resources Authority (EMRA), called for the government to forgive EGP2.1bn owed by the country’s coal mining project to various government agencies and banks. (AFP Photo)

Masud Hesham, Chairman of the Egyptian Mineral Resources Authority (EMRA), called for the government to forgive EGP2.1bn owed by the country’s coal mining project to various government agencies and banks.
(AFP Photo)

By Mohamed Adel, Basma Tharwat and Inam al-Adawi

Masud Hesham, Chairman of the Egyptian Mineral Resources Authority (EMRA), called for the government to forgive EGP2.1bn owed by the country’s coal mining project to various government agencies and banks.

He further called on the country’s coal mines to be reopened and operated, with their production to be used as fuel for cement factories, in light of recent shortages seen in natural gas.

Hesham added that the government’s recent coal production project was capable of producing upwards of 6,000 tons of coal per day, and 160,000 yearly, saying however that production had temporarily halted due to the project’s accumulation of debt. Other impediments included the lack of available ports which could be used to export coal, preventing it from being properly exploited as an industrial fuel, or to be used within electricity producing stations.

The project’s total debt had reached EGP2.1bn, according to Hesham, and was owed to various government agencies, including the National Investment Bank (NIB). Debt had accumulated as a result of interest obtained on loans, and dues owed to the ministries of Finance and Justice for unpaid taxes and fines.

A source from within one of Egypt’s cement factories stated that companies welcomed the use of coal as alternative source of fuel, saying that the ministries of State for Environmental Affairs, and Petroleum and Mineral Resources had begun to develop new procedures in order to regulate the importation of coal, which would not begin until the end of the year, he said. This was due to the fact that the country’s ports needed to first be equipped with the necessary machinery in order to import coal, in particular the Al-Dakheila port, which is expected to receive the largest shipments of all of Egypt’s ports.

The source said his factory, which produces nearly 5 million tons of cement per year, was operating at 70% energy capacity due to persistent shortages seen in natural gas. He called for storage depositories capable of holding 5 million tons of coal needed by cement factories to be installed within Egyptian ports.

Faruq Mustafa, Managing Director of the Misr Beni Suef Cement company, stated that cement factory owners have asked the Ministry of Industry and Foreign Trade to approve the use of coal as an alternative source of fuel. The Ministry responded saying that such a decision would require approval from the Ministry of State for Environmental Affairs, adding however that the importation of coal would face a number of obstacles. Mustafa meanwhile called the Ministry of State for Environmental Affairs to expedite its approval of the use of coal within factories, in order to allow the state to begin equipping ports with the necessary machinery and technology to import coal, whose value is expected to be worth hundreds of millions of pounds.

He added that EGAS had cut off a total of 50% of its gas shipments to the Beni Suef Cement company, despite the fact that the latter’s stated share is 25 million cubic meters per year. Such moves would cut down the company’s production capacity by the same rate, an amount equivalent to 3,000 tons per day. He stated that 20 factories within Egypt were currently waiting for the Ministry of State for Environmental Affairs to approve the use of coal within factories as a partial solution for shortages seen in other types of fuels.

Meanwhile Omar Mahana, chairman of the Suez Cement Company, stated that locally produced coal was not fit for cement factory consumption. Cement companies had presented several requests to the Ministry of Industry and Foreign Trade to approve the importation of coal, he said, particularly considering persistent shortages seen in the availability of natural gas. Factories were also pursuing new forms of renewable energy as alternatives to gas and MAZUT, such as wind power.

Ahmed Shabal, previous managing director of the Lafarge Cement company, said that the amount of coal set to be made available by the EMRA was miniscule and would only be enough to last companies for upwards of one month. He said two Egyptian cement factories had already begun preparations to equip their factories with the necessary furnaces and mills to begin burning coal. He added that Egyptian factories were also ready to begin importing coal, despite its high cost, which has almost reached that of natural gas, at $6 per 1 million BTU’s, due to shortages seen on the local market.

Translated from AlBorsa newspaper

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