19 July 2007
Sale of gas from EIB-financed LNG plant in Egypt at discount prices raises questions about who benefited from the deal.
A controversy erupted in Egypt this past week after a Spanish journalist questioned the Egyptian Minister of Trade and Industry concerning the “generosity” of the price at which Egyptian liquefied natural gas is being sold to Spain. In 2005-2006, Egypt charged Spain $5.20 per million British Thermal Units (BTUs) of gas, while the market price was closer to $10.
Defending the government, the Minister of Petroleum, Samih Fahmi, argued that the price was set when a Spanish-Italian consortium entered into an agreement with Egypt to build the liquefied gas facility in Dumyat, a $1.3 billion investment. However, revelations about the nearly 50% discount on the price of gas exported from the plant have many asking, who benefited from this deal? This case serves as a poignant reminder of the importance of contract transparency in the extractive industries sector.
In 2004, the European Investment Bank (EIB) provided €188 million for the construction of a Liquid Natural Gas (LNG) plant in “Demietta” (Dumyat) consistent with the objective of its energy sector strategy to secure a sustainable energy supply to Europe. The link between the EIB and the Spanish-Italian consortium is not clear.
Although the EIB website lists the “Damietta LNG plant” on its site, the Bank provides no project documents or further details about the investment. The systematic lack of information about the EIB’s operations outside of Europe has evoked criticism from many civil society organizations, who demand higher standards of transparency and accountability from the public institution.
Resources