The Ministry of Electricity is preparing to hold a meeting with new and renewable energy investors within the next three weeks. This meeting comes in response to demands by 30 companies and alliances to meet with Minister of Electricity Mohamed Shaker and review obstacles and difficulties in the implementation of feed-in tariff projects.
The renewable energy companies have faced many problems with the feed-in tariff projects, most notably problems resulting from the shortage of US dollars and the high exchange rate as well as the withdrawal of international institutions funding the projects. This situation has forced companies to also consider withdrawing from the projects. Other companies have resorted to reducing the project capacity, while some companies sought to sign an energy-purchase agreement with local banks.
According to sources at the Ministry of Electricity, Shaker will meet with a quartet committee, which includes chairperson of the Egyptian Electricity Holding Company (EEHC) who also chairs the supervisory committee for the feed-in tariff projects, the head of the Egyptian Electricity Transmission Company (EETC), the head of the New and Renewable Energy Authority (NREA), and the head of Egyptian Electric Utility and Consumer Protection Regulatory Agency.
They will discuss the proposed projects and energy-purchase agreements. The participants will emphasise the state’s position regarding conducting international arbitration at the Cairo Regional Centre for International Commercial Arbitration. The minister will also review with investors the second phase of the feed-in tariff projects.
Shaker will also meet with a number of representatives of companies that requested to meet him, including Orascom Construction, Cairo Solar Company, Canarde, Nile Capital, EDF, Hassan Allam, ICD, Innovation Solar, Lakela Power, Neoen, Philadelphia, Phoenix Group, Scatec Solar, Elsewedy Electric, First Solar Egypt, Suninfinite Energy, and Taqa Arabia.
UAE Axis Power notified the Ministry of Electricity that it wants to sign a purchase agreement, said representative Sharif El-Hag. However, this agreement would decrease the new solar power plant’s capacity to only 50 MW despite the ministry having allocated large plots of land to the company in order to produce 150 MW in Benban, Aswan.
The company is facing difficulties negotiating with international banks, which have refused to lend to the company in protest of the arbitration item in the agreement. El-Hag said that the company has decided to finance the solar power plant on its own.
El-Hag said that Axis Power earlier agreed to fund three solar power plants in Benban at a cost of $300m with the International Finance Corporation and the European Bank for Reconstruction and Development; however, the arbitration item in Cairo halted the agreement.
Orascom Telecom Media and Technology Holding (OTMT) is negotiating with five local banks to finance the construction of a solar power plant in Benban at a cost of $100m, deputy CEO Tamer El-Mahdy said.
He added that the Commercial International Bank (CIB) is responsible for organising the loans with the other four banks, and OTMT seeks to finalise this agreement with the banks in September.
The power purchase agreement and the signing of contracts must be completed as the delays—in conjunction with the high US dollar exchange rate—will increase the problems in the feed-in tariff projects and increase the cost of construction, El-Mahdy said.
Triangle Electrical Services will launch a solar power plant with a capacity of 50 MW in alliance with Adenium, said the head of the business finance sector at the company, Mohamed Ali. The company is negotiating with Qatar National Bank (QNB) and Ahli United Bank to finance the project.
The crisis of low US dollar reserves must be solved, Ali said, especially since it could reach a terrifyingly high rate on the informal market—nearly 50% higher than the formal market. He continued: “The dollar price should be the same in both markets and the floating of the pound has become a necessity.”
