Volkswagen is pushing for tax breaks and localisation incentives in Egypt before it commits to producing natural gas-powered vehicles in the country with the largest economy in North Africa.

The German carmaker wants to be allowed to bring in foreign staff to work on the local assembly lines to be used to manufacture the vehicles in the country. If approved by the government, the company will produce natural gas-powered versions of Crafter and Caddy 5 vans for the Egyptian market.

Egypt is the country with the third-largest deposits of natural gas in Africa, after Nigeria and Algeria. Although it has 76 trillion cubic feet of reserves which is less than half of the reserves in Nigeria and Algeria, it produced 2.3 Trillion Cubic Feet from those tanks in 2019, which is very high in comparison to Nigeria’s 1.74 Trillion Cubic Feet. Over 80% of the produced gas was for domestic consumption mainly through the country’s 40,000 MW of gas-fired electricity supply.

Volkswagen is not the only carmaker to signify interest in the Egyptian Autogas plan, though the German maker has been more enthusiastic. Toyota and Nissan have also expressed interest. Nissan has withdrawn, but Toyota, like Volkswagen, is pushing for incentives. The Japanese maker plans to manufacture 240,000 minibuses that will run on dual-fuel engines. Russia’s Skoda is not on the local assembly plan, but natural gas-powered versions of its Octavia and Rapid models will be imported into Egypt by local agents.

Volkswagen announced last year that was planning to invest in the country’s Autogas plan. The plan is to convert two million vehicles into dual-fired engines that could be fuelled by both gasoline and natural gas in the next three years.

Earlier this year, President Abdel Fatah el-Sisi of Egypt said licensing of vehicles will be conditional on cars that possess natural gas engines. This is part of the government’s five-year national programme to convert 1.8 million cars to run on both natural gas and gasoline. The initiative is aimed at providing low-interest loans through Micro, Small and Medium Enterprises (MSME) Development Agency to owners of vehicles that are over 20 years old to aid them to purchase a new dual-fuel vehicle. Zero-interest finance will also be granted to owners of new vehicles to enable them to purchase new engines.

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