Despite the recent change in leadership in the North African country, Egypt still has a long way to overcome corruption which could threaten its energy sector, according to Transparency International (TI). The corruption watchdog group released a new study, “Global Corruption: Climate Change,” that suggests the country’s national strategy to incorporate 20% of renewable energy sources into its total energy generation will be more difficult.
The report includes a section pertaining to solar and wind energy in North Africa, saying that dubious actions could be discouraging much needed private investment. "[Foreign] investment often does not occur because of complex and lengthy bureaucratic procedures and uncertainty as to whether public officials will expect bribes," says the chapter, authored by Nadejda Komendantova and Anthony Patt.
The World Bank noted in 2008 that 45% of the companies involved in foreign direct investment (FDI) in Egypt found the levels of corruption to be a major deterrent. On April 17, Egypt’s former prime minister and two other cabinet members were charged with corruption in the country’s latest campaign to bring officials from the Mubarak regime to justice. The ex-prime minister and cabinet members are accused of giving a German businessman a deal to sell license plates without allowing a public tender as required by law. Prior to this allegation, Hosni Mubarak and his sons were detained for a 15-day period under an investigation on corruption charges and deaths of hundreds of protestors.
However, the TI study notes that the dishonest practices affect all sectors including renewable energy. "A failure to address corruption will result in higher quantities of investment being required for concentrated solar power (CSP) deployment in North Africa… Another [result] is that investors will simply seek other regions for investment," the chapter concluded.
Egypt had hoped to obtain $110 billion of investment to be allocated toward its energy sector by 2027 with ambitions of reaching 7,200 MW of wind energy capacity by 2020. However, with a new leader on the horizon as elections scheduled for later in the year approach, many are optimistic that this problem will be minimized compared to the previous ruling party. It is going to take longer than a few months to restore faith in Egypt’s markets and undoubtedly, investors are going to be leery watching initial bid rounds more closely before jumping into the mix.
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