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20% Milestone Reached in Egypt-Saudi Electrical Link Project

Technicians lay a submarine cable. (Reuters)
Technicians lay a submarine cable. (Reuters)
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20% Milestone Reached in Egypt-Saudi Electrical Link Project

Technicians lay a submarine cable. (Reuters)
Technicians lay a submarine cable. (Reuters)

Dr. Ahmed Mohina, the First Undersecretary at Egypt’s Ministry of Electricity, revealed that the progress on the Egypt-Saudi Arabia electrical connection project has crossed the 20% mark.

The project aims to kick off operations by the second half of 2026 and is poised to lay the groundwork for a shared electricity market among Arab nations.

The collaboration between Egypt and Saudi Arabia on this project, initiated in 2012 is worth $1.8 billion, with Egypt contributing $600 million.

Funding comes from sources like the Kuwaiti Fund for Arab Economic Development, the Arab Fund for Economic and Social Development, the Islamic Development Bank, and Egypt's own resources.

Mohina assured that there are no financial obstacles, with each party funding its share. He highlighted ongoing work, including specialized studies for the submarine cable route.

This initiative represents a milestone for high-voltage power exchange in the Middle East and North Africa, linking Badr City in Egypt to Madinah via Tabuk in Saudi Arabia.

Mohina explained that Egypt’s peak power demand occurs at night, while Saudi Arabia’s peaks during the day. By connecting the two, they can exchange up to 3,000 megawatts, potentially extending the linkage to other Gulf countries.

The project involves building three high-voltage conversion stations and connecting them with overhead transmission lines and submarine cables in the Gulf of Aqaba.

According to the Egyptian government, the project promises a return on investment of over 13%, with an 8-year cost recovery period for participating in electricity generation reserves.

However, using the connection for energy exchange during peak periods could yield a return of around 20%, with additional benefits like facilitating electricity trade, especially during winter, enabling surplus electricity export from Saudi Arabia to Egypt.

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IMF: Middle East Conflict Escalation Could Have Significant Economic Consequences

Displaced families, mainly from Syria, gather at Beirut's central Martyrs' Square, where they spent the night fleeing the overnight Israeli strikes in Beirut, Lebanon September 28, 2024. REUTERS/Louisa Gouliamaki
Displaced families, mainly from Syria, gather at Beirut's central Martyrs' Square, where they spent the night fleeing the overnight Israeli strikes in Beirut, Lebanon September 28, 2024. REUTERS/Louisa Gouliamaki
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IMF: Middle East Conflict Escalation Could Have Significant Economic Consequences

Displaced families, mainly from Syria, gather at Beirut's central Martyrs' Square, where they spent the night fleeing the overnight Israeli strikes in Beirut, Lebanon September 28, 2024. REUTERS/Louisa Gouliamaki
Displaced families, mainly from Syria, gather at Beirut's central Martyrs' Square, where they spent the night fleeing the overnight Israeli strikes in Beirut, Lebanon September 28, 2024. REUTERS/Louisa Gouliamaki

The International Monetary Fund said on Thursday that an escalation of the conflict in the Middle East could have significant economic ramifications for the region and the global economy, but commodity prices remain below the highs of the past year.

IMF spokesperson Julie Kozack told a regular news briefing that the Fund is closely monitoring the situation in southern Lebanon with "grave concern" and offered condolences for the loss of life.

"The potential for further escalation of the conflict heightens risks and uncertainty and could have significant economic ramifications for the region and beyond," Kozack said.

According to Reuters, she said it was too early to predict specific impacts on the global economy, but noted that economies in the region have already suffered greatly, especially in Gaza, where the civilian population "faces dire socioeconomic conditions, a humanitarian crisis and insufficient aid deliveries.

The IMF estimates that Gaza's GDP declined 86% in the first half of 2024, Kozack said, while the West Bank's first-half GDP likely declined 25%, with prospects of a further deterioration.

Israel's GDP contracted by about 20% in the fourth quarter of 2023 after the conflict began, and the country has seen only a partial recovery in the first half of 2024, she added.
The IMF will update its economic projections for all countries and the global economy later in October when the global lender and World Bank hold their fall meetings in Washington.
"In Lebanon, the recent intensification of the conflict is exacerbating the country's already fragile macroeconomic and social situation," Kozack said, referring to Israel's airstrikes on Hezbollah in Lebanon.
"The conflict has inflicted a heavy human toll on the country, and it has damaged physical infrastructure."
The main channels for the conflict to impact the global economy have been through higher commodity prices, including oil and grains, as well as increased shipping costs, as vessels avoid potential missile attacks by Yemen's Houthis on vessels in the Red Sea, Kozack said. But commodity prices are currently lower than their peaks in the past year.
"I just emphasize once again that we're closely monitoring the situation, and this is a situation of great concern and very high uncertainty," she added.
Lebanon in 2022 reached a staff-level agreement with the IMF on a potential loan program, but there has been insufficient progress on required reforms, Kozack said.
"We are prepared to engage with Lebanon on a possible financing program when the situation is appropriate to do so, but it would necessitate that the actions can be taken and decisive policy measures can be taken," Kozack added. "We are currently supporting Lebanon through capacity development assistance and other areas where possible."