Concrete boots already for new EBRD energy policy? Potential support for Egyptian coal projects attracts criticism

In what is shaping up to be another controversial chapter in the European Bank for Reconstruction and Development's already troubled entry into Egypt in 2012, questions are being asked of the international financial institution as to whether it intends to support coal power financing, specifically to assist Egypt's cement industry.

The Egyptian government approved the use of coal for power generation on April 2 this year. The Cairo-based NGO Egyptian Centre for Economic and Social Rights (ECESR) points out that the decision is currently being contested before the higher administrative court, lacks parliamentary approval and is provoking public discontent.

ECESR and other NGOs have been engaged in dialogue with the EBRD on this emerging issue, most recently in correspondence urging that the bank “does not partake in the move towards coal by providing funding for the cement industry which already occupies a privileged position and does not have the welfare and sustainable developmental priorities of Egyptians at its core.”

The groups in fact allege that the government's coal move violates the constitution on sustainable development, and a range of experts, activists and rights groups have now lined up to counter government and cement industry claims that coal's extreme environmental and health impacts can be mitigated.

The Daily News Egypt website also reported in late April that Laila Iskandar, Egypt's environment minister, is critical of new coal developments, joining other dissenting voices such as the official doctors union, the governors of coastal cities, and Egypt's ministry of tourism. The environment minister believes that the coal plans, if realised, “will cause health problems for Egyptians after 30 years and will lead to sanctions from the international community.”

Of major concern for ECESR and other groups are the clear indications that the EBRD appears to be deploying argumentation that would permit it to engage in Egyptian coal financing, this in spite of the bank's adoption last year of a new energy policy that effectively rules out EBRD backing for coal projects – unless they involve production processes where coal is essential and where its use cannot be easily replaced technologically or economically.

Mahinour El- Badrawi of ECESR commented to Bankwatch Mail:

“It's pretty hard to argue that coal is an essential source of power for the Egyptian cement sector, unless you happen to be a representative of the industry. The cries for coal being heard during the frequent blackouts that continue to hit the country are absurd. The major cause of these blackouts are export agreements sending Egyptian gas to Spain, Turkey and Israel. And now we want to replace gas with coal, when these agreements could be revised to help cope with the acute domestic energy shortages?”

Kuba Gogolewski, MENA coordinator for Bankwatch, said:

“It's very disappointing to see the EBRD lining up to get involved in this new Egyptian coal folly, with a range of spurious arguments and just a few months after the ink has dried on its supposedly new, progressive, coal-free energy policy. The bank needs to set its sights firmly on supporting renewable energy projects in Egypt, that have so far not received a single euro of investment from the bank, and too on the SME sector, the backbone of the Egyptian economy, that has received significantly less than ten percent of EBRD funding in its first year of operations in Egypt.”

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