Solar Energy Investors Await International Institution Funding

Consultations on "Arbitration Clause" and "Loan Value"… Financial Closure Expected Within Two Months

Renewable energy companies are awaiting bank approvals to finance solar power plants in the Benban area of Aswan under the feed-in tariff system, paving the way for project implementation. These projects were announced in September 2014 but remain unresolved.

The head of one of the official energy companies stated that all investors are waiting for financial institutions' positions on feed-in tariff projects to proceed with station implementation and complete financial closure before October, as required by the tariff law.

He added to Al-Borsa that recent discussions between investors and financial institutions have led to preliminary financing agreements. However, unresolved issues include the exact loan amounts and negotiations over the "arbitration in case of disputes" clause.

Currently, feed-in tariff projects depend on financial institutions, while the New and Renewable Energy Authority is working on selecting companies to handle site services at Benban, including infrastructure preparation, road expansion, vehicle access, and water supply.

A total of 39 companies and consortiums qualified to establish solar power plants under the feed-in tariff system are seeking funding for projects with investments of around $2 billion and a capacity of 2,000 MW.

The Ministry of Electricity and Renewable Energy aims to generate 4,000 MW from solar and wind projects under the unified tariff scheme, with purchase prices set at 102 piasters per kWh for solar energy and 82 piasters per kWh for wind energy.

A government source revealed that Prime Minister Sherif Ismail met with representatives from international financial institutions to discuss lending to energy companies in Egypt. The meeting focused on project consultations as renewable energy companies seek funding for solar projects in Benban, Aswan.

Companies are expected to receive final approval from the International Finance Corporation (IFC) this month and secure additional funding through syndicated loans. Financing will cover 75% of project costs, while companies will contribute 25% in equity, with financial closure set before October under the renewable energy feed-in tariff law.

Dr. Mohamed Salah El-Sobki, head of the New and Renewable Energy Authority, stated that the next steps involve investors securing bank financing, signing power purchase agreements, and starting project implementation.

He emphasized that the arbitration clause poses no issue, as all companies and financial institutions will proceed with project execution and financial closure before October.

Hesham Tawfik, Chairman of Cairo Solar, confirmed that the company is negotiating an $82 million loan from the IFC and expects to complete financial closure by early August. "We are awaiting banking approval to sign the purchase agreement and start implementation," he said.

Ahmed Ayad, Project Director at Philadelphia Solar, mentioned that his company has secured preliminary agreements with four financial institutions from Norway, France, Germany, and Jordan.

However, the total loan amount is yet to be finalized and will be determined after lenders review the contracts. The project requires an investment of $120 million, with an initial agreement in place for the Arab African International Bank to finance 30% of the local component purchase.