Egypt and Hamas reached an energy agreement Thursday to help end the energy crisis in Gaza, and that will ultimately connect Gaza's electricity grid to Egypt's, the Palestinian Ma'an news agency reported.

According to Ma'an, Hamas spokesman Taher al-Nunu said Hamas Prime Minister Ismail Haniyeh struck a deal with Egyptian officials and the Islamic Development Bank after "intensive negotiations."

The deal, to be implemented in three stages, begins with Egyptian companies pumping fuel into Gaza under contracts signed with individual companies.

In the next stage, the Islamic Development Bank will fund projects to increase the capacity of Gaza's only power plant by 40 megawatts.

Finally, Gaza will connect its electricity grid to Egypt's and convert the power plant to run on gas instead of diesel.

Egypt decided to let more fuel into Gaza and increase the amount of electricity it supplies to the Palestinian enclave on Tuesday, a move aimed at easing a power crisis that has embarrassed the ruling Hamas movement.

The Egyptian government said the amount of electricity supplied to Gaza would be increased to 22 megawatts from an existing 17 megawatts already supplied for free. In addition, emergency diesel would also be supplied.

"The increase comes in the framework of a quick attempt to relieve the suffering of the Palestinian people," Hassan Younes, the Egyptian minister responsible for electricity and power, said in a statement.

Gaza depends heavily on fuel smuggled in from Egypt to keep its lone power station on line. But supplies were unexpectedly cut last week, forcing Hamas, which runs the coastal territory largely cut off by Israel, to impose lengthy blackouts.

Many locals have accused Hamas of mismanaging the situation, relying too heavily on smuggled fuel, which it taxes heavily, rather than seeking alternative sources of energy via legal channels on which it could not impose levies.

The crisis enabled the Palestinian Authority to intervene with Egypt and broker a deal.

Gaza's energy supply is bad at the best of times, with a rickety infrastructure system badly degraded during fighting over the past five years between Israel and Hamas, which is committed to destroying the Jewish state.

There has been widespread anger across Gaza over the recent blackouts, with electricity available just six hours a day during one of the coldest weeks of the year. There has also been a severe shortage of diesel for cars.

Hamas suspended imports of fuel for the power plant from Israel last year and instead relied on smuggled stock, and was totally unprepared for sudden halt to supplies from Egypt.

Reuters contributed to this report.

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