Bloomberg/ Victor J. Blue
The plants, which have a total capacity of 14.4 gigawatts, were inaugurated in July as the latest in a series of large-scale infrastructure projects under President Abdel-Fattah El-Sisi.
Tuesday 28, May 2019
(Bloomberg) --Egypt is considering offers from a Blackstone Group unit and Edra Power Holdings of Malaysia to take over three power plants co-built by Siemens, a move that could cut the North African nation’s debts while bringing in much-needed foreign investment.
Mohamed Shaker, Egypt’s Electricity Minister, said that both Blackstone’s Zarou and Edra have voiced interest in the state-owned facilities.
“We received an expression of interest from the two companies to take over and operate the power plants and we’re looking into it,” Shaker said.
The plants costed EUR 6 billion ($6.7 billion) to build and were mainly financed by a consortium of lenders led by Deutsche Bank, HSBC Holdings and KfW-IPEX Bank.
Such a deal would bring welcome funding for the Arab world’s most populous country, which has cut energy subsidies and devalued its currency to revive an economy that stalled in the wake of its 2011 uprising.
Edra, which already owns three gas-fired thermal power plants in Egypt and is a subsidiary of China General Nuclear Power Corporation, stated that it was premature to provide any comments at this juncture.
Jennifer Aleeya Wong, the Assistant Vice President of China General Nuclear Power Corporation, said that the company supports Egypt’s efforts to become a regional energy hub and looks forward to being part of those developments.
If a deal is reached, a power-purchasing agreement would be signed with either Edra or Zarou and the company would sell the electricity produced to the government while working alongside Siemens, Shaker said.
Siemens Egypt, which is operating the three combined-cycle plants under an eight-year contract, said that power purchase agreements between utilities and private power companies or investors are common worldwide.
A deal with Edra or Zarou would also set the stage for the company to assume responsibility for any financial dues, Egypt is seeking to ease the country’s debt burden.
The state-owned Egyptian Electricity Holding Company secured a loan to finance about 85 per cent of the power plants’ cost that was provided by the banking consortium and backed by a sovereign guarantee.