Five banks operating in the local market signed two contracts worth EGP 37.4bn to support the electricity sector on Tuesday, in one of the largest financing transactions between the Egyptian banking system and the electricity sector.
The first contract was signed with the Egyptian Holding Electricity Company (EEHC) worth EGP 19.4bn under the agency and management of the National Bank of Egypt (NBE).
This loan is intended to finance renovation of medium and low voltage grids, as well as the installation of smart metres.
The second contract was signed with the Egyptian Electricity Transmission Company (EETC) with financing of EGP 18bn under the agency and management of Banque Misr (BM).
The loan is intended to strengthen the unified and high-voltage grid.
In addition, the loan aims to strengthen and develop the national network for the transfer of electricity, through the implementation of new transformer stations, and the expansion of some existing stations, as well as the purchase of transformers and cells necessary for them, and the implementation of cables and transmission lines across the republic.
The total duration of these funds extends over 15 years, including 3 years that represent the period for companies to withdraw the financing values. After that period, the repayment of the funds will begin in the next 12 years.
The consortium that signed the agreement includes syndicating loans worth EGP 12.2 funded by the NBE and another EGP 12.2bn by BM. QNB will fund EGP 8bn, AAIB with EGP 3bn, and CIB with EGP 2bn.
The two contracts were signed at the Ministry of Electricity in the presence of the Minister of Electricity Mohamed Shaker, a number of ministry leaders, and the leaders of the banks participating in the loan.
NBE and BM have been playing a prominent role in providing the necessary financing for the implementation of several power plants, which boosted the capacity of the electricity sector and enabled it to achieve a huge production boom that contributed to the surplus of electricity even on the most peak days.
Over the past five years, the banks have engaged in banking alliances with a group of banks to arrange and provide various co-financing for a large number of electricity sector projects.
These funds contributed to the implementation, construction, and expansion of the capacity of 20 power plants, as well as the financing of a number of mobile generating units, in addition to the direct financing granted by NBE and BM separately for the implementation of some power stations.
The electricity sector plan aims to complete the process of replacing, renewing and increasing the capacity of the network within a maximum of three years by strengthening the unified electricity network and improving the capacities at the level of the republic, with a focus on strengthening electricity transmission networks in Upper Egypt.
The plan also includes the expansion and construction of 15 500/220 kV plants, the construction of about 2,000 km of 500 kV lines and the establishment of four 220/66 kV stations. In addition, it includes three mobile stations with a voltage 220/66 kV.
