CAIRO: The World Bank and the Clean Technology Fund announced that Egypt will receive $220 million loan for a transmission line project to bring energy produced by wind farms in the Gulf of Suez to supply Egypt’s growing energy needs.
Out of $220 million figure, $150 million will be provided by the Clean Technology Fund, which is part of the Global Environmental Facility, while the remaining $70 million will come from the World Bank.
The World Bank will be leading supervision of the project, explained Mohab Hallouda, senior energy specialist at the World Bank in Egypt. “In total, the project will create around 200 jobs,” he said.
“This project is critical”, he continued, highlighting that “the transmission line, once completed, will transmit 800 GW of power.”
Reaching the 20 pct target
The project will be part of the effort to help Egypt attain its objective of ensuring that 20 percent of its energy needs are met by renewable sources by 2020.
Hallouda pointed out that the “wind farms are setting Egypt on the right path, but whether the 20 percent target will be reached, depends largely on effective implementation.”
Donors failing to provide funds in a timely manner or protracted bidding processes for deciding which firms would implement new projects were some of the impasses that could prevent Egypt from hitting the 20 percent target, he added.
The $220 million will be provided through what specialists term a “soft loan”, one with low interest rate — often below 3.5-4 percent — that will be repaid over a 40-year period.
“Providing such types of loans entices governments to bear the financial burden,” Hallouda stated.
“In fact, all Clean Technology Fund loans are provided as soft loans,” he added.
After a securing a loan for such a project as the transmission line, a competitive bidding process amongst firms ensues, rather than simply granting a contract to any firm.
“In these cases, both international and local firms are involved in the bidding process, and the firm that usually gets the contract is one which is, of course, the most competitive, but the one that is [also] more specialized in whatever type of project is being contracted out,” he explained.
Planning for the future
The World Bank has several other energy projects either under construction or near completion in Egypt, which will help bridge the country’s energy needs.
Currently, a steam energy project in Ain Sokna, representing 1,300 MW of power and worth $600 million in loans, is under construction. A second steam project in El Tebbina is nearly complete, which will provide 650 MW of power at a price tag of $650 million.
A combined cycle power plant has been launched in the north of Giza, costing $600 million and expected to produce 1,500 MW.
While these plants do not count towards the 20 percent target, as they are not considered sources of renewable energy, a forth World Bank project in Al Kurymat will.
Thanks to a $50-million-grant, an integrated solar thermal power plant will produce 140 MW, of which 20 MW will be derived from solar energy.
The project is slated for completion by 2010, Hallouba mentioned.
The new transmission project comes on the back of other projects being driven by other foreign donors, such as the European Union.
Recently, the first EU co-financed project — a 200 MW wind park situated in the Gulf of Zayt — saw the European Development Institutions provide €271 million, explained Gerhard Krause, head of the economic sector at the Delegation of the European Union to Egypt.
