Joint project between the Egyptian government and World Bank designed to advance reform measures in energy sector
CAIRO: The Egyptian government has announced that it will spend $470 million (LE 2.7 billion) to build a 700-megawatt power plant in southern Cairo. The World Bank has also announced that it will help finance the project with an approved $260 million (LE 1.5 billion) in loans.
El-Tebbin Power project is quite a large undertaking by the Egyptian government in terms of financing. However, it reflects the government’s publicized commitment to shake up reform measures in the energy and power sector. As Egypt becomes a more market-based economy, the growth of the energy sector (thanks to the abundance of natural gas) has to undergo a makeover if it is to contribute serious numbers to the country’s GDP, something the government is well aware of, which is why a flurry of reforms in the sector within the last two years have picked up.
According to the World Bank, one of the main reasons behind their financial backing of the project is to assist the Egyptian government in enhancing the supply of energy in a sustainable manner through investment in new generation capacity.
The bank is also trying to assist the government in strengthening the performance of this sector through various measures aimed directly at improving the financial performance and efficiency of the energy sector, according to an official statement released by the bank.
Furthermore, the World Bank is doing more than making a few suggestions before handing out the cash. In fact, the bank will also contribute to the development of a legal framework for the sector, take part in future gas and electricity pricing and assist in advancing the implementation of reforms that are already in place.
“This project represents a re-engagement between the Egyptian government and the bank at a time when the government is making important steps on reforms in the power sector, said Anna Bjerde, the project’s task team leader, in an official company statement.
El-Tebbin Power Plant will consist of the construction of a 700 MW power plant comprised of two units of 350 MW steam turbines and boilers using natural gas as fuel.
The technical assistance offered for the project will address key issues facing the sector, such as the need for better financial performance, the strengthening of the pricing structure and energy efficiency.
The project is also expected to have a significant, positive impact on employment in the area, as it will create an estimated 2,000 jobs during the construction phase and 800 additional jobs once it starts operating.
“Our support is expected to contribute to the need for public financing of infrastructure as laid out in the Country Assistance Strategy, but also [aid with] the know-how and lessons learned from other countries on key sector issues related to energy efficiency in the power sector and development of regulatory and legal frameworks conducive to a liberalized power sector, said Bjerde.
The World Bank’s enthusiastic assistance can be attributed to the fact that the project is inline with the goals of the Egypt Country Assistance Strategy, the World Bank’s work plan, which guides its operations in a country, and includes enhancing the provision of public goods through modernized infrastructure services to achieve higher growth.
The project is also supported by the World Bank’s 2003 Infrastructure Action Plan, which places great emphasis on the central role of infrastructure in economic growth and the reduction of poverty.
The project will come with a 20-year maturity, including a five-year grace period. The loan will be issued by the International Bank for Reconstruction and Development (IBRD), an arm of the World Bank Group that provides loans and technical assistance to middle-income countries.
