The Ministry of Electricity and Renewable Energy is in talks with three foreign energy companies in an attempt to add a capacity factor of 6,750 MW to Egypt’s electrical grid.
The contracts, worth $7.5bn, are at various stages of completion, and will finance the construction of three combined cycle power plants, according to Fouad Mansour, the head of private sector project department at the Egyptian Electricity Holding Company (EEHC).
In the first contract, the ministry is negotiating the legal and contractual parameters with the Saudi company ACWA Power to establish the Dairut power plant.
The ministry will soon commence negotiations with the British company Benchmark PLC to construct a 2,300 MW combined cycle power plan in the Tobs area of Kafr Sheikh Governorate.
In the third contract, the Ministry of Electricity is in talks with ACWA Power and the Emirati Masadar company to implement a 2,200 MW combined cycle power plant in western Damietta.
Mansour expects the contracts with ACWA power to be finalised in the coming weeks.
Projects that are financed by direct contracting follow a different method of negotiation than those that proceed through a competitive bidding system.
The companies are waiting to sign an agreement with the Egyptian Electricity Transmission Company to purchase energy produced by the power plant, Mansour added.
The Ministry of Electricity received a governmental guarantee draft for implementing the Dairut plant. The draft includes investments in the project at a cost of $2.5bn and a six-month operating bill.
Under the Ministry of Electricity’s five-year plan to be carried out from 2012 to 2017, the ministry will add 2,250 MW to the Dairut power plant.
Dairut is the first project of its kind ever to operate under the build-own-operate (BOO) operation model. Under this framework, the investor will have the right to use the land for 25 years and to sign agreements with the Egyptian Electricity Transmission Company (EETC) to purchase the produced energy.
Hassan Ameen, the regional manager of ACWA Power, said the company will hold weekly meetings with officials to reach a final agreement to finance the Dairut power plant.
