Saudi Arabia and Egypt on Saturday signed a 6 billion riyal ($1.6bn) agreement to link their electricity grids, a project that will allow power trading between the two countries.
Peak-time summer power consumption in Saudi Arabia falls between noon and mid-afternoon, when air conditioners are most intensively used, while in Egypt peak time is after sunset.
Egypt’s Electricity minister Ahmed Mustafa Emam said the linkage is expected to take 24-30 months to complete.
“Egypt will pay for around 40 percent of the cost while Saudi Arabia will pay for the remaining 60 percent,” Emam told Reuters after the signing ceremony in Riyadh.
“The Project will allow both countries to share power of up to 3,000 megawatts, and will achieve a return on investment of 13 percent for each country.”
Power lines will be extended by around 1320 km, 820 km in Saudi Arabia and 480 km in Egypt. The kingdom’s majority state-owned utility, Saudi Electricity Co. (SEC), and Egypt’s state power company Egyptian Electric Holding Co. will share the cost of a 20 km undersea cable.
Emam said since peak hours in Egypt and Saudi Arabia fall at different times of the day, both countries will be able to divert resources as necessary to meet increased demand.
He declined to give details on prices, saying tariff and commercial agreements have not yet been finalized.
Emam said it would cost Egypt around 30bn Egyptian pounds to generate an additional 3,000 megawatts itself.
Saudi Transport, Water and Electricity minister Abdullah bin Abdul-Rahman al-Husayen said the project, when completed, will effectively lead to linking the power grids of 14 Arab countries, including the six-member Gulf Cooperation Council.
“This is one of the most important projects of its kind between Arab countries,” he said during the signing ceremony.
Egypt and Saudi Arabia had been discussing the power linkage for several years.
An Egyptian official said in 2010 that an international tender for the project was expected to be issued in 2011, but political turmoil in Egypt that forced president Hosni Mubarak to step down two years ago forced a delay in the project.