Multilateral Investment Guarantee Agency (MIGA), a World Bank Group member, has decided to provide guarantee of up to $102.6 million in support of the construction, operation, and maintenance of six solar power projects in Egypt.
Once developed, the power projects will collectively have a combined capacity of up to 250 MW, and represent the first step towards the development of the 12 projects approved by MIGA’s board in support of Egypt’s Solar Feed in Tariff (FiT) program.
Energy generated from these projects will be sold at a tariff of $0.084/kWh to the Egyptian Electricity Transmission Company under a 25-year Power Purchase Agreement (PPA). The PPA is backed by a guarantee from Egypt’s Ministry of Finance.
The guarantees are being provided against the risks of expropriation, transfer restriction and inconvertibility, breach of contract, and war and civil disturbance. Approximately $5.0 million of coverage will be provided for equity holder ib vogt GmbH of Germany for up to 15 years.
An additional $97.6 million of cover will be provided for up to 20 years to Industrial and Commercial Bank of China (ICBC), bolstering the longer-term strength of the projects against fluctuating tariffs.
The combined cost of the six solar projects will be $385.8 million.
“Significant investments are needed in Egypt to meet the growing demand for power, and diversify the country’s energy mix,” said MIGA Executive Vice President and CEO Keiko Honda. “We are proud to be supporting Egypt’s ambitious efforts to deliver reliable power to its citizens, while helping tackle climate change,” added Honda.
The projects will contribute to the government’s target of ensuring that the renewable energy base occupies approximately 20 percent of the total power generation by 2020. The projects will also lend support to the FiT program, which seeks to attract private sector investment for up to 4.3 GW in solar and wind power generation.
In line with the changing needs of time, Egypt has begun relying on the abundant solar energy to meet its growing energy demands.
Mercom had previously reported that a consortium of investors led by the International Finance Corporation (IFC), a member of the World Bank Group, finalized a $653 million debt package to finance the construction of 13 solar power projects near the Egyptian city of Aswan that will be a part of the larger Benban Solar Park.”
In December 2017, the Egyptian Electricity Transmission Company (EETC) tendered 600 MW of grid-connected solar photovoltaic (PV) projects to be developed in the West of Nile Area.
“According to Mercom’s recently released 2017 Solar Funding and M&A Report, announced large-scale project funding in 2017 reached $14 billion in 167 deals, compared to $9.4 billion raised in 133 deals during 2016.