On Sunday, the Egyptian government signed a financial closure agreement with a consortium of German financial institutions for the development of three power projects. The projects will be developed under the supervision of German industrial giant Siemens, through their local partners Orascom Construction, and El-Sewedy Electric.
Power projects secure financial loan
The sum total of the three projects amounts to €6 billion ($6.3 billion). The agreed loans will be paid back over a 15-year period, with a three-year grace period, Thomson Reuters reported.
The banking consortium includes Deutsche Bank, HSBC Germany and German Bank of Reconstruction (KfW), who will finance a total of €4.1 billion ($4.2 billion). According to the Egyptian electricity minister, Mohamed Shaker, the funds will cover 85% of the total cost of the three Egyptian projects, media reported.
Present at the signing was Egypt’s Prime Minister, Sherif Ismail.
The three power projects, which will have a combined generation capacity of 14,400MW, will use a unique financial model, the Energy Performance Contracting (EPC) system. This unique financial model “uses cost savings from reduced energy consumption to repay the cost of installing energy conservation measures,” Thomson Reuters reported.
Power project development
The first project, which will be located in Beni Suef, the governorate’s capital, about 115km south of Cairo, will have a generation capacity of 4,800MW.
The site of the second project is in Burullus 210km north of Cairo and the third project is said to be located in the Egyptian new administrative capital city.